En­gi­neer­ing a suc­cess

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

WHILE MANY COM­PA­NIES in ve­hi­clere­lated and cap­i­tal equip­ment in­dus­tries are burn­ing from the global re­ces­sion, bear­ings and agri­cul­tural ma­chin­ery im­porter In­victa Hold­ings seems to be tak­ing it all in its stride. In the year to March it re­ported a 36% rev­enue in­crease and 21% in profit growth on that.

In­victa’s two big­gest op­er­at­ing di­vi­sions re­ported op­er­at­ing in­come growth in ex­cess of 30%, while op­er­at­ing mar­gins im­proved to 11%. To­tal earn­ings per share of 437c trans­late to an earn­ings mul­ti­ple of 5,12 times at its cur­rent price of 2220c/ share.

Through its Bear­ings Man divi­sion, In­victa im­ports bear­ings and power trans­mis­sion prod­ucts, while its Cap­i­tal Equip­ment divi­sion im­ports large agri­cul­tural ma­chin­ery, construction and earth­mov­ing prod­ucts.

And In­victa hasn’t rested on the ac­qui­si­tions front, with two hav­ing taken place in its past fi­nan­cial year. Its R63m Goldquest In­ter­na­tional Hy­draulics pur­chase, plus that of Cri­te­rion Equip­ment (dis­trib­u­tor of the TCM fork­lift range), will al­low In­victa to en­ter the hy­draulics mar­ket while Cri­te­rion com­ple­ments its ex­ist­ing earth­mov­ing busi­ness.

In­victa says the cur­rent de­pressed mar­ket en­vi­ron­ment lends it­self to more ac­qui­si­tions and that it has put in place the nec­es­sary fund­ing to take ad­van­tage of such op­por­tu­ni­ties when they arise.

Man­age­ment has demon­strated it’s pre­pared to back those claims with action. CE Arnold Gold­stone has been a con­sis­tent buyer of its share through­out most of 2008 and early this year. That’s nor­mally a good lead for prospec­tive in­vestors to fol­low.

An­a­lysts at I-Net Bridge rate In­victa a solid buy at the 2200 level and fore­cast a slight in­crease in earn­ings to 482c/share by March next year and 489c in 2011. Div­i­dend should in­crease from the cur­rent 138c to 192c and 194,5c/share by 2011.

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