MONEY­mat­ters

Finweek English Edition - - Communication & Technology -

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.

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