To 40 more steely years

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

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.

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