Fix the cash

Finweek English Edition - - Companies & Markets -

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.

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