Re­sults show po­ten­tial

Finweek English Edition - - HOUSE VIEW - MARC ASH­TON

I SAID RE­CENTLY that I liked RBA as a turn­around story, specif­i­cally be­cause it gave in­vestors ac­cess to the high-growth low­in­come prop­erty mar­ket. At the time I rec­om­mended wait­ing for the f inan­cial re­sults, which have now been re­leased.

The key take­away from the re­sults was that op­er­at­ing profit was down to R8m from R14.2m in the pre­vi­ous year and there was a head­line loss of 0.88c/share. For the year, the group ended with neg­a­tive cash f low but re­mem­ber that it re­payed R4.3m in direc­tors’ loans. If this item hadn’t gone through, cash f low would have been pos­i­tive. As a buyer at 11c, I f ind that the TNAV of 13.23c to be en­cour­ag­ing as it matches NAV of 13.59c very closely – you have a trans­par­ent val­u­a­tion. How­ever, much of this is un­der­pinned by a prop­erty port­fo­lio and keep in mind the old rule of fi­nance – “The value of an as­set is its cash-flow” – so the trick for RBA will be turn­ing in real cash in 2013/2014. I’m still a buyer but you would have to be pa­tient.

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