A prettier shade
I’VE TAKEN quite a lot of flak over the past 12 months for my insistence that packaging firm Beige Holdings is in fact a decent enough addition to a small cap portfolio. The problem many have – rightly so – is there are so many shares in issue (a shade over 1,5bn) it’s difficult to ever really see an investment return unless there’s a massive turnaround in its underlying business.
Beige’s most recent full-year results would indicate things may finally be turning the corner and for the first time since the turnaround began in the mid-Nineties shareholders even got rewarded with 0,15c/share dividend for their patience. You can buy Beige at 6c, with its net asset value being around 14c/share and tangible net asset value coming in at just more than 8,6c/share. So that would suggest if you can pick it up for 6c you might be scoring a bargain.
With almost R600m in revenue, Beige is becoming a big business and as it gradually tidies up its balance sheet investors might start seeing some real kickers coming through on its cash flow line. Its debt and borrowing levels have begun to drop and at operating level the group is now cash flow positive.
Beige has also managed to restructure some of its property assets and use some of the cash generated to tackle some of its debt. That should improve cash flow by at least R9,5m in its new financial year.
Baby steps perhaps, but with the threat of rising interest rates in the coming new year hanging over companies with overburdened balance sheets, this might just be one more step in the right direction. We wouldn’t bet granny’s pension on Beige but if you’re interested in a small cap where there’s some potential to double your money then this might be worth looking at a bit more closely.