Still holding value
SOME PUNTERS MAY FEEL the easy running has already been done at specialist construction group Mazor. The share has recovered from an annual low of 115c in February to settle at a more convincing 230c. But scanning Mazor’s year to end-February 2009 results should provide investors with enough fundamental evidence that the share still presents good value at current levels.
Perhaps a more important aspect of the results is reinforcing notions that Mazor isn’t your run-of-the-mill construction-aligned company. Indeed, the group’s cladding business (aluminium, steel and glass) seems to have successfully targeted high yielding projects, as evidenced in the group’s 37% hike in gross profits to R97m – which was earned at an enviable 33% trading margin.
The group’s bottom line profit of R67m is of good quality (backed by net cash inflows of more than R50m) and translated into earnings of 52c/share. A final dividend of 17,5c/share was declared – a hardly surprising development, with Mazor sitting on cash of R110m (equivalent to around 90c/share).
While the cash holding is reassuring in these trying economic times, there will no doubt be some fretting over Mazor’s performance in its new financial year. However, its directors have indicated the first six months should be “healthy” based on the order book in hand.
Second-half business could get a fillip from the spate of interest rate cuts, which could conceivably boost private sector spending towards year-end as new and delayed projects start rolling out around the 2010 Soccer World Cup. The group’s fast-growing glass business – which may see further acquisitions in the months ahead – should also add a kicker at bottom line.
Mazor is currently trading on an earnings multiple of less than five times, which seems a tad modest considering the group should comfortably post around 30c/share in the first half of its new financial year. Full-year earnings could well top the 70c/share mark.
Finweek reckons Mazor could be worth accumulating while the mood pervading the smaller construction-aligned listings is downbeat.