BJM Private Clients
BHP BILLITON: It has worldclass assets diversified by commodity and by country, characterised by low cost, scale and long lives. It’s built-in growth through significant project flow over the longer-term. The company benefits from a significant cost base in a weak currency (rand) while its revenues are hard currency based. Management is highly regarded, cash flow is strong and the company ideally placed to benefit from the supercycle. FIRSTRAND: The FirstRand stable consists of successful and specialised brands, such as RMB, First National Bank, WesBank, Momentum and Discovery. The group has strong intellectual capital and an innovative senior management. We’re attracted to the decentralised business model, as it encourages accountability, and we also like the fact that management is focusing on organic as opposed to acquisitive growth. While we regard FirstRand as a good value proposition in its own right, management hasn’t ruled out selling to an international bank, which could unlock value for shareholders. REUNERT: Manages a number of businesses focused on electronics and low voltage electrical engineering. It’s a high quality business with many plusses. It has exclusive use of the Nashua brand and is well entrenched in the corporate office automation market. Nashua Mobile is also strongly entrenched, CBI has valuable proprietary technology and African Cables has strong market share and good margins. It’s an attractively priced counter through which to gain exposure to the consumer, commercial and infrastructure sectors of SA’s economy. WOOLWORTHS: It has a clear brand strategy and we like the mix between food and apparel. Food accounts for more than 50% of revenue and has strong growth prospects. On the clothing side management is making good progress towards a design-led process that will yield a more consistently appealing offering. Management is innovative and cash flows are strong. IMPALA PLATINUM: We like the outlook for platinum and PMGs. And notwithstanding recent strong price performance we don’t regard platinum stocks as expensive. While problems such as poor lease area cost performance has negatively affected Implats’ relative rating, those problems are likely to be worked out in the medium term. Cash flows are likely to remain very strong and shareholders should be able to look forward to some good dividend payouts.
BHP BILLITON: Buying BHP Billiton is the best way to invest in the commodity supercycle that results from the rapid development of China, India and the rest of Asia. It has world-class iron-ore, copper, nickel and aluminium assets and is expanding fast in oil and uranium. The market has consistently underestimated its future earnings. It’s a strong buy, even at its current alltime high. MTN: MTN will continue to grow rapidly in its licensed African and Middle Eastern markets. Secondary countries in its portfolio will expand to rival their operations in the big three: SA, Nigeria and Iran. Over the next five years mobile telephony will expand to nearly every man, woman and child and mobile handsets will increasingly become rich lifestyle appliances. Revenue growth will be driven both by voice and data services. WG WEARNE: This Gauteng-based ready-mix concrete concern is our favourite smaller company. The ready-mix market is expanding fast, thanks to new residential, industrial and infrastructural building activity. The Gautrain and 2010 Soccer World Cup stadium contracts are also in the pipeline. We’re most impressed by its management team that are both sensible and ambitious. SASOL: Despite its current travails, Sasol will benefit over the next few years from high crude oil prices and the global rollout of its propri- etary synfuels technology. All the world’s cheap crude oil is being consumed fast and the US, China and India will look to tap their coal and gas reserves. MASSMART: Massmart is already the world’s 140th largest retailer and expanding fast in southern Africa. We’re especially impressed by the rapid rollout of its Builders Warehouse division. We expect the spending power of the SA consumer to grow and Makro, Game and Dion will benefit from a huge appetite for household durable goods.¤