Show­ing steely prom­ise

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

AL­THOUGH FER­ROUS and non-fer­rous al­loys sup­plier In­simbi an­nounced in July it was “rea­son­ably cer­tain” it would achieve its pre-list­ing es­ti­mated earn­ings in the six months to Au­gust 2008, the mar­ket hasn’t been very kind to the share.

In­simbi now says its earn­ings for the cur­rent fi­nan­cial year would be up to 23% higher than those pre­dicted prior to the list­ing in March. It had fore­cast HEPS of 14,54c for Fe­bru­ary 2009, im­ply­ing a higher 17,88c/share HEPS come Fe­bru­ary 2009. At its cur­rent price of 90c/share (one of a few AltX list­ings trad­ing above its place­ment price) In­simbi has a built-in earn­ings mul­ti­ple of 5,03 times. In­vestors would get a fur­ther 7,27c/share back in div­i­dends next year, pay­ing a net 82,7c/share for an earn­ings mul­ti­ple of 4,62. Does any­thing get any cheaper than that? In­simbi has also com- mit­ted to a div­i­dend cover of two times as fu­ture pol­icy.

In­simbi says the rea­son for the higher num­bers are higher com­mod­ity prices, which are above those fore­cast in its prelist­ing state­ment. In­simbi has also done its part to fully take ad­van­tage of the higher com­mod­ity prices.

Roughly R32m of the pro­ceeds of the share place­ments was used to settle bank and share­holder loans. An­other good por­tion of the R46m raised paid for the ac­qui­si­tion of a 300t alu­minium smelter in Boks­burg, tak­ing its smelter ca­pac­ity to 900t. Fur­ther re­con­fig­u­ra­tion and stream­lin­ing of the plant (and an ex­ist­ing one in Benoni) in­creased to­tal ca­pac­ity to 1 300t.

With its cor­po­rate eye cast as far as Ukraine for growth, In­simbi says its new steel mill in Zam­bia’s Cop­per­belt will serve as a spring­board into promis­ing parts of south­ern Africa, such as the Demo­cratic Repub­lic of Congo. Founded in 1970 and with the last 16 years of un­in­ter­rupted prof­itabil­ity – the past five with com­pounded growth ex­ceed­ing 20%/year – this is a share with which to an­chor your port­fo­lio for steely long-term growth.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.