Still money in homes

The tim­ber just got harder

Finweek English Edition - - Companies & Markets - SHAUN HAR­RIS

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.

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