Noth­ing ar­bi­trary about this one

Finweek English Edition - - COMPANIES & MARKETS -

A QUICK GLANCE at ARB’s share per­for­mance over the past 12 months and it’s hard to be­lieve its awe­some­ness has been ig­nored by so many of the big as­set man­age­ment firms. Its price in­creased from 180c to 305c/share as the min­ing in­dus­try be­gan stag­ing its come­back. And the good news keeps on com­ing: this elec­tri­cal cable sup­plier car­ries cop­per ca­bles in­ven­tory and with the cur­rent cop­per rally this usu­ally long-term buy has be­come a sweet lit­tle some­thing right now.

The rea­sons an­a­lysts like the share for the long term in­clude its solid bal­ance sheet (around 40% of its mar­ket cap is cov­ered by its net cash bal­ance) and a de­cent his­toric div­i­dend yield of 4,8%. Also, ARB’s been around for a good 30 years pol­ish­ing its in­dus­trial whole­sal­ing busi­ness model. The fact that it’s ex­posed to the con­struc­tion in­dus­try and its lumpy earn­ings cy­cles – plus the volatil­ity in the cop­per rand price – has Stan­dard Bank se­cu­ri­ties and PSG On­line punt­ing it as a long-term in­vest­ment. ARB’s sup­pli­ers are di­verse enough to have shielded it from the down­turn in the con­struc­tion sec­tor, and man­age­ment be­lieves Telkom and other Govern­ment in­fra­struc­ture spend­ing will con­tinue un­til the pri­vate sec­tor picks up again.

An­other rea­son Fin­week is su­per ex­cited about the share is its re­cent change in div­i­dend pol­icy, an­nounced in last year’s an­nual re­sults for the year to end-June. It’s hard enough find­ing a small cap stock ex­posed to the con­struc­tion sec­tor not con­tem­plat­ing rights is­sues to stay afloat,

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