To 40 more steely years
THIS FERROUS AND NON-FERROUS supplier of alloys is almost an exception to the companies listed on AltX: not only has it kept its pre-listing promises of exceptional financial returns but it has also achieved the best results in its 40-year history.
For the year ended February, Insimbi more than doubled its net profit to R54m from a previous R22m. That translates to headline earnings per share of 20,94c, a multiple of just under four times.
Insimbi rewarded its loyal shareholders with a total 9c/share dividend. Considering its 80c/share price the dividend propels Insimbi into a league of its own – beating some of the elite top companies – as there aren’t many investments that can comfortably afford to pay dividends in these stressful times.
Insimbi’s exploits come at a time when many companies in its and related industries are crying foul of the prevailing market conditions. Its diversified products have won the day. Insimbi’s steel products have almost doubled revenue while its foundry held up well, thanks to tight management of inventory and production lines.
Insimbi has established a new operation in Zambia (which will also serve the Democratic Republic of Congo) while also buying 100% of its former agent, Global Material South Africa, in the Cape. Insimbi’s previous acquisitions in Gauteng and KwaZulu-Natal have proved impressive, with production from its furnaces increasing 30% during financial 2009.
It has committed itself to a dividend cover of two times and with its tight management of costs and inventories while looking out for acquisition opportunities, there’s no reason to believe its 40 years of profitability will be broken by the current economic recession. In fact, investors buying at the 80c level can look forward to another 40 years of steely profits.