MAR­KET CAP­I­TAL­I­SA­TION

Finweek English Edition - - COVER STORY -

MEDI­CLINIC IN­TER­NAT LTD

GOLD FIELDS LTD

MONDI PLC

DIS­COV­ERY LTD

STEIN­HOFF INT HLDGS LTD

INTU PROPERTIES PLC

IM­PE­RIAL HOLD­INGS LTD

ASSORE LTD

TRU­WORTHS INT LTD

MASS­MART HOLD­INGS LTD

AFRICAN RAIN­BOW MIN LTD

IN­VESTEC PLC

MMI HOLD­INGS LIMITED

REINET INV SOC ANON

LIFE HEALTHC GRP HLDGS

RAND MER­CHANT INS HLDGS

LIB­ERTY HOLD­INGS LTD

MR PRICE GROUP LTD

NET­CARE LIMITED

TSOGO SUN HOLD­INGS LTD

CAP­I­TAL&COUN­TIES PROP PL

THE FOS­CHINI GROUP LIMIT

HAR­MONY GM CO LTD

CAPITEC BANK HLDGS LTD

AFRICAN BANK INV LTD tion and to pay spe­cific at­ten­tion to the dif­fer­ence be­tween net as­set value per share and tan­gi­ble net as­set value to give you an idea where value may be hid­ing, specif­i­cally amongst small cap­i­tal­i­sa­tion busi­nesses.

Es­sen­tially a re­turn on to­tal as­sets mea­sures a com­pany’s earn­ings be­fore in­ter­est and taxes against its to­tal net as­sets. The ra­tio is con­sid­ered an in­di­ca­tor of how ef­fec­tively a com­pany is us­ing its as­sets to gen­er­ate earn­ings be­fore con­trac­tual obli­ga­tions must be paid.

Re­gard­ing the top 6 on this rank­ing, Fin­week would tread very cau­tiously, as many of them have op­er­a­tional or in­dus­try-spe­cific is­sues that need spe­cial­ist anal­y­sis. Ex­am­ples of busi­nesses that have “sweated” their as­sets well in the last few years are Mr Price, Woolies and Fa­mous Brands.

How­ever, the three that jump out for Fin­week are Brait, Vo­da­com (men­tioned else­where) and Spur Cor­po­ra­tion. Vo­da­com has done well to gen­er­ate a su­pe­rior re­turn on its as­sets, but the trick will now be what it does on the ac­qui­si­tion front and how good that re­turn will be.

Spur Cor­po­ra­tion has been a lag­gard and it is con­sis­tently com­pared to high­fly­ing Fa­mous Brands and up-and-com­ing player Taste Hold­ings. Man­age­ment may not like the crit­i­cism, but it has clearly been lazy about gen­er­at­ing a re­turn for share­hold­ers.

As Keith McLach­lan from Thebe Stock­broking pointed out, while the Spur num­bers looked all right in March 2013, if one strips out the 6.4m gain on Spur’s share scheme and takes out the R15m hedg­ing gain in its in­come state­ment, then sud­denly profit be­fore tax growth drops

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