Amid the car­nage

Finweek English Edition - - INVESTMENT - MARC ASH­TON *The writer owns shares in Build­max.

LO­CAL JU­NIOR MIN­ERS – specif­i­cally coal stocks – have taken a real beat­ing in the last few weeks as labour is­sues have sprung up and in­vestors steer clear of any risk. Coal of Africa has gone on record say­ing that it is now plac­ing its Mooiplaats op­er­a­tions un­der “care and main­te­nance” and look­ing at re­trench­ing over 500 work­ers. This gen­eral neg­a­tive sen­ti­ment has weighed on a lot of the min­ers and those sup­ply­ing the sec­tor, in­clud­ing Build­max. Af­ter the re­cent share con­sol­i­da­tion it was trad­ing in a range be­tween R2.25 and R2.50/share but as the news f low has turned neg­a­tive, so has the share price and it has dropped be­low the R2/share mark.

TNAV per share is R2.84, which im­plies that you are buy­ing the share at a 42% dis­count to its as­sets. Even with some creative ac­count­ing around its de­pre­ci­a­tion – as im­plied by some an­a­lysts – this is tempt­ing.

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