Start­ing to stretch

Finweek English Edition - - INVESTMENT - MARC ASH­TON

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.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.