culture. The company is doing so well it cautioned last week its profits for the six months to 30 September were about 270% more than last year.
After looking a bit more closely at Omnia’s results, it seems it could earn as much as R12/share for the year to 31 March 2009 and that a dividend of R4/share could be declared from that.
In fact, Omnia has lots of cash, because farmers bought fertiliser earlier this year and paid for it because they expected prices would rise further. It looks as if the company’s return on equity – farmers, take careful note – will be around 30% for the year to 31 March 2009.
Its shares are currently trading at R62. That’s an earnings multiple of just over five times. That’s cheap. For those who don’t understand PEs, it’s a profit return of just under 20%/ year. The possible dividend of R4/share ensures a cash return of 6,5% for investors.
I’m just wondering whether, if the tractor doesn’t want to start next week after still more rain, it might not be a good idea to leave everything just as it is. Use part of the production credit to take up a short maize/ long soya position on Safex. Buy Omnia shares with the balance, take a holiday at Ballito and save on harvesting costs. De Klerk doesn’t own a tractor but does hold shares in Omnia and a position on Safex.