Search for trans­par­ent re­sults

Finweek English Edition - - Companies & markets - MICHAEL COUL­SON

AG IN­DUS­TRIES, for­merly African Glass, doesn’t make things easy for an­a­lysts. Try to ac­cess its web­site at the ad­dress given on its in­terim re­sults state­ment, or as pub­lished in the Stock Ex­change Hand­book, and you may end up at IT For Africa, trad­ing as AG In­for­ma­tion Sys­tems.

When, thanks to Google, you find the cor­rect site and click on “Latest fi­nan­cial re­sults” you ac­cess not the re­cent in­terim state­ment but the 2006 an­nual re­port – and only the sec­ond half of that. The in­vestor re­la­tions sec­tion is hardly more help­ful: the most re­cent me­dia re­lease on the slow-toload site is dated 22 May 2002.

That isn’t good enough for “an in­no­va­tive group that has cre­ated a dis­tinc­tive merger of glass and alu­minium sys­tems and fab­ri­ca­tion… SA’s lead­ing dis­trib­u­tor of glass and alu­minium fab­ri­ca­tion used in con­struc­tion as di­verse as sky­scrapers and mod­ern homes”.

Maybe it’s one rea­son why the share heav­ily un­der­per­formed the con­struc­tion ma­te­ri­als sec­tor be­tween 2002 and 2006. An­other fac­tor may be that head­line earn­ings per share more than halved in the year to June 2003 and only in 2006 got back above 2002 lev­els.

The in­terim re­port to De­cem­ber 2006 showed a mod­est im­prove­ment on the pre­vi­ous year, with rev­enue up 6% to R621m and sim­i­lar gains down the line, higher fi­nance costs be­ing can­celled out by a lower tax charge, giv­ing HEPS of 20,8c (19,7c) for the six months and a rolling 12-month 42,2c.

An am­bi­tion to di­ver­sify in­ter­na­tion­ally has been no great shakes, though a turn­around in Euro­pean op­er­a­tions, where op­er­at­ing profit rose from R1m a year ago to R4,7m, con­trib­uted most of the past six months’ growth. Still, con­tri­bu­tions of just 7% to both rev­enue and op­er­at­ing profit leave Europe as an in­signif­i­cant part of the group.

The plus fac­tor is that there’s been heavy cap­i­tal ex­pen­di­ture, which pushed prop­erty, plant and equip­ment up from R103m a year ago to R265m “to cre­ate a new and larger plat­form for lo­cal and in­ter­na­tional growth and to fur­ther en­hance mar­gins”. Ac­cord­ingly, AGI is op­ti­mistic con­cern­ing prospects in all busi­ness ar­eas.

Ini­tial re­ac­tion to the in­terim was un­favourable, push­ing the price down from 600c to 500c be­fore a rally to 520c/ share. That’s still a good ad­vance on the 360c of last Oc­to­ber and gives a his­toric price:earn­ings of 25 – de­mand­ing, but if earn­ings are about to show strong growth there could be good scope for medium-term cap­i­tal ap­pre­ci­a­tion.

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