Finweek English Edition - - INVESTMENT -

OneLogix’s key busi­ness is mov­ing ve­hi­cles around the sub­con­ti­nent, tak­ing them from port to show­rooms in the DRC, Namibia, Zimbabwe, Zam­bia, Mozam­bique, South Africa and Botswana. This busi­ness is con­ducted un­der the Ve­hi­cle De­liv­ery Ser­vices um­brella. In ad­di­tion, Com­mer­cial Ve­hi­cle De­liv­ery Ser­vices (CVDS) was es­tab­lished by OneLogix in 2007 to trans­port l arge com­mer­cial ve­hi­cles through­out South­ern Africa.

The OneLogix busi­ness foot­print ex­tends fur­ther into the re­tail and in­dus­trial are­nas, in the form of PostNet as well as OneLogix Pro­jex in lo­gis­tics and At­las Panel­beat­ers. Re­cently, the group has ac­quired United Bulk, which spe­cialises in bulk liq­uid trans­port re­quire­ments and lo­gis­tics and, in June 2012, OneLogix pur­chased QSA, a trans­port-re­lated spe­cialised ac­count­ing soft­ware so­lu­tion.

OneLogix has a his­tory of or­ganic growth sup­ple­mented by growth via ac­qui­si­tion. The com­pany has been prof­itable ev­ery year since it listed over a decade ago and it is not just an ac­count­ing profit that OneLogix shows, but ex­cep­tional cash f low, which in the last three years has man­i­fested in the form of div­i­dends re­turned to share­hold­ers. It is no­table that the aver­age ra­tio of op­er­at­ing cash f low to op­er­at­ing profit since 2003 has been 1.1 times; the trend in th­ese two met­rics can be seen above.

There are other at­trac­tive as­pects to OneLogix. Turnover has grown 15-fold in nine years, from R70m in 2004, to in ex­cess of R1bn to­day, EBIT has risen 10 times over the same pe­riod and head­line earn­ings are more than six times greater over the 10 years, at 25c per share to­day. The div­i­dend cover is 2.5 times and we are en­cour­aged by the rea­son­able div­i­dend f low, not­with­stand­ing the need to fund growth.

The group has a re­li­able, sta­ble level of prof­itabil­ity. Gross op­er­at­ing profit, which has av­er­aged 10.3% over f ive years, has f luc­tu­ated in a nar­row band from 8.9% to 12.2%, while net op­er­at­ing profit has moved in the 5% to 7% range, a healthy level. With a re­turn on eq­uity of 23% – an as­pi­ra­tional level for larger com­pa­nies – in­vestors can take com­fort from the fact that the as­set base is ef­fi­cient and prof­itable .

he group’s debt-to-eq­uity ra­tio may be el­e­vated at just over 68%, but this is not un­usual for an as­set heavy busi­ness, and OneLogix can cer­tainly ac­com­mo­date the debt, as ev­i­denced by the 7 times in­ter­est cover.

There has been only one in­ter­rup­tion to growth in the group’s top line rev­enue over the past 10 years, and that co­in­cided with the global and the South African re­ces­sion of 2008/09. The sig­nif icant as­pect of OneLogix’s growth is that it is self-fund­ing. Di­rec­tors con­trol 57.3% of the com­pany, a fac­tor that Can­non As­set Man­agers ap­pre­ci­ates in mak­ing in­vest­ment de­ci­sions: it links di­rec­tors’ for­tunes with our own and shows that they “eat their own cook­ing”.

In ad­di­tion to the at­trac­tive his­tor­i­cal val­u­a­tion, what ap­peals to us are the earn­ings driv­ers. By way of ex­am­ple, last year while the world ve­hi­cle im­port mar­ket grew by 2%, the sub-Sa­ha­ran African ve­hi­cle im­port mar­ket grew by 8% – ef­fec­tively four times global growth.

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