Still money in homes
The timber just got harder
IN WHAT MUST have been one of the most bullish trading updates published last week, building materials and fixtures company Masonite Africa told shareholders to expect an increase in trading income between 50% and 60% for the financial year to end-December. Even better, it expected earnings per share and headline earnings per share to be 105% to 115% better than in the previous year.
That’s stirring stuff amid the hard knock so many building suppliers listed on the AltX have taken over the past year. But Masonite is more established in South Africa (since 1948) and listed on the JSE’s main board since 1952.
It’s an integrated company, making and distributing hardboard, softboard, door facings, decorative wall panellings and marketing fibre ceiling panels and metal grid systems. It also owns and develops plantations, chiefly 25 000ha of fast growing eucalyptus.
Unfortunately, MD Mike Slater couldn’t be contacted. We would have liked to hear more. But the trading update said the improvement in trading income was mainly due to improved volumes in the domestic door and packaging markets and a favourable domestic product mix. There was also a timber revaluation due to the increase in timber prices.
What’s encouraging is that amid all the doom and gloom about falling residential property prices and nervous banks making it nigh impossible to buy homes due to onerous deposit requirements, a company that supplies that (but not only residential) part of the market can still do well. It supports the cocooning theory. Times are hard, plans to buy a new home have been scuppered, so spend some of that new home money on improving the home you’re in.
The market liked the trading update, adding more than 5,5% to Masonite’s share price a few hours after it was published.
This could be an opportunity for smaller investors still confident in building suppliers. The share is pretty illiquid: 80% owned by Masonite International in the US, with Old Mutual holding around 6% of the equity. Shares are probably hard to find, but small investors could perhaps pick up small parcels.
Full-year results will be released in the second half of March, probably around 20 March. Masonite could be rewarding for punters who move quickly – and can find shares.