Fan­ning up strong trad­ing

Finweek English Edition - - COMPANIES & MARKETS -

HOW­DEN LOOKS well po­si­tioned in the in­dus­tries it ser­vices, which is just about ev­ery­body who needs a spe­cialised fan or com­pres­sor, par­tic­u­larly the petro­chem­i­cal and min­ing in­dus­tries. An up­beat vol­un­tary chair­man’s state­ment at its AGM a month ago noted or­der book lev­els were well ahead of the po­si­tion at its De­cem­ber 2010 year-end.

Parts of South Africa’s min­ing in­dus­try are bat­tling a bit, so it was en­cour­ag­ing to read in the state­ment that “the de­mand for min­ing fans in min­eral-rich coun­tries to the north of SA has in­creased or­ders on hand in this sec­tor”. How­den serves mostly the lo­cal mar­ket, so it makes sense to gain a larger pres­ence in other parts of Africa.

Last fi­nan­cial re­sults saw a down­turn in turnover and earn­ings. But what was worth not­ing was both cash gen­er­a­tion and cash flow from op­er­a­tions were up. If a com­pany can keep cash flow go­ing through tough times it’s a good sign.

How­den also re­cently made what looks like a use­ful ac­qui­si­tion: Nether­lands-based Thomassen Com­pres­sion Sys­tems. It says it will ex­pand its com­pres­sor range, as Thomassen spe­cialises in high power ap­pli­ca­tions used pri­mar­ily in the oil re­fin­ing and petro­chem­i­cal in­dus­tries. How­den says the ac­qui­si­tion will en­hance earn­ings per share in its cur­rent fi­nan­cial year and is ex­pected to cover its cost of cap­i­tal in 2012, the first full year of own­er­ship.

Like so much else, How­den will need a re­vival in eco­nomic ac­tiv­ity to gain the full ben­e­fit of the spe­cial­ist prod­ucts it pro­vides. But it seems it’s head­ing for a good fi­nan­cial year, with or­ders up while the econ­omy is low. Its share price hasn’t done badly over the past year, up around 11%. But it’s likely to ac­cel­er­ate in its cur­rent year, based on di­vi­sions that trade strongly and have mar­ket-lead­ing po­si­tions.

How­den also pays a de­cent div­i­dend, even through dif­fi­cult fi­nan­cial years such

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