Shouldn’t be ig­nored

Finweek English Edition - - INVESTMENT - MARC ASH­TON

AS IT STANDS right now, in­vest­ing in strug­gling small-caps is a rel­a­tively high-risk strat­egy. Even if the un­der­ly­ing busi­nesses are sound – and there are many which aren’t – the lim­ited ap­petite for th­ese shares means that many of them turn into “value traps”. Hav­ing said that, over the last few weeks, en­gi­neer­ing group Ansys has been pop­ping up in con­ver­sa­tion, and it might be worth a closer look.

Keith McLach­lan from Thebe Stock­broking points out that the net as­set value (NAV) is 24.5c and the tan­gi­ble NAV (TNAV) is 6c/share. If you can pick the share up at be­tween 16c and 18c/share, you might do all right for your­self. Ansys is heav­ily ex­posed to the SA rail and de­fence in­dus­tries, which are both ex­pected to see sig­nif­i­cant in­vest­ment. Both di­vi­sions were prof­itable last year and if there is some kind of re­bound in the min­ing sec­tor, this will flow through to the bot­tom line quite rapidly. The one con­cern will be the cash­flow state­ment which isn’t in­spir­ing – you don’t want to be see­ing a rights is­sue in the near fu­ture.

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