Starting to stretch
FINWEEK has been a big fan of Brait since it restructured its business into an investment holding company and we have been rewarded with a 61% gain over the last year. While we still believe in the long-term strategy of the business, we think the share price might be a little stretched at the moment and wouldn’t mind seeing a slightly juicier dividend policy.
At the moment the shareholders are being offered roughly 2.5% yield (going forward), which is not particularly attractive – especially if one considers where Brait has been. The counter-argument is that Brait is delivering the capital appreciation, but there is just something tangible about a dividend in the long run.
The results presentation was stacked full of big numbers – for instance Iceland Foods wants 1 000 stores in the UK – and very compelling valuations on Pepkor, Premier Foods and Iceland relative to their peers.
The headline earnings per share puts the counter on a 6 times P/ E multiple, which sounds good but NAV of the group is R26.64 and this suggests a pretty significant premium for an investment holding company.