Fix the cash
CONSTRUCTION SERVICES and personnel supplier Top Fix Holdings may have missed its forecast earnings target for the at its current price of 34c the share would make a solid foundation in any aggressive growth portfolio. The R15,8m net profit at its year-end translated to 8,2c/share – a fourfold increase on the previous year but 36% off target.
Top Fix blamed “difficult trading conditions” as well as “disputed debtors’ balances” for the situation. Had the dispute not arisen its earnings would have been R21,7m (11,3c/share). Top Fix says its scaffolding division was the star performer for the year, with operating profit of R16,9m and personnel outsourcing division chipping in R7,5m.
It’s still busy with the audit of its interim accounts to December 2008 and hasn’t issued any trading update as yet. However, investors have plenty of clues to gauge its upcoming results. Group CE Benjamin Marais has been a consistent buyer of the share over the past year, his most recent transaction being 150 000 shares at 65c in December. None of the company’s directors have sold any of their shares. In fact, most have been buying all the way from 174c/ share (including chairman Bulelani Ngcuka) since February 2008.
Another crystal cut clue on the future prospects of Top Fix came from the highly regarded PSG Capital: it bought more than 2m shares at the 38c mark in November 2008. PSG Capital acts as a designated adviser to Top Fix.
The 53,7m capital investment (mainly on scaffolding equipment) during financial 2008 should also show some results. That resulted in a negative cash position of R15m (R9,8m previously). That’s one major concern about Top Fix, especially in a market as gloomy as the current one. Due to the prevailing economic climate building activity might slow but investors who come in at these levels (around 34c) can reap double the benefit foreseen by Marais and other Top Fix top guns if the cash position is fixed.