2Conduit focuses on short-term insurance and credit recovery. It is a high-quality, cash-generative business as evidenced by its strong balance sheet and ongoing profitability. The company has a market cap of R360m, R270m cash in the bank, with a return on equity of 17%. While it’s currently retaining cash to reinvest into the business, in the 2011 financial year it paid out a dividend of 10c per share when the share was trading at 65c. We believe there is potential for further dividends in the near future.
Conduit currently trades on a price-tobook ratio of 1.3 times, and a P/E ratio of 11.1 times. Adding up the different parts of the business, we value Conduit at R491m versus the current market value of R346m. More importantly, the opportu-