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Finweek English Edition - - INVESTMENT -

MY SMALL- and mid-cap port­fo­lio has been rather unin­spir­ing over the last year and a bit. I think there are some good sto­ries in there, though, in­clud­ing Build­max, Oando, Pur­ple Cap­i­tal, Afrocen­tric In­vest­ment Cor­po­ra­tion, RE:CM & Cal­i­bre and ISA Hold­ings.

While the sto­ries are good, the shares have gone nowhere and are ty­ing up cap­i­tal. How­ever, when you see Build­max jump 45% in a day, it re­minds you why you want to have some cheeky bids in the mar­ket in com­pa­nies that pri­mar­ily by the growth in global ve­hi­cle sales. How­ever, fu­ture pri­mary sup­ply growth will re­main con­strained, which will re­sult in tighter mar­ket con­di­tions lead­ing to higher prices for our met­als.”

To counter this, the com­pany is in­vest­ing in re­place­ment projects to restore its pro­duc­tion pro­file.

Costs per plat­inum ounce have also in­creased to R16 570 from R13 450 due to strike-re­lated losses.

You can ex­pect more of this as the plat­inum sec­tor pre­pares for its strike sea­son as well and if the cur­rent on­go­ing gold strike is any­thing to go by, there might be fur­ther pain.

TANDISIZWE MAHLUTSHANA lurk­ing as the au­to­mo­tive in­dus­try starts its wage ne­go­ti­a­tion process (this is ev­ery three years) and any strike ac­tion could fur­ther hurt them.

How­ever, Metair re­mains a leader in orig­i­nal equip­ment and af­ter-mar­ket au­to­mo­tive prod­ucts, most notably bat­ter­ies, with about 10% of rev­enue from non-au­to­mo­tive. Their ma­jor new prod­uct has been the start/stop bat­tery that it pro­duces in the Ro­ma­nian fac­tory and which has great prospects, and, dur­ing the first half of this year, the com­pany got a sec­ond con­tract to sup­ply th­ese orig­i­nal equip­ment prod­ucts start­ing next year.

SI­MON BROWN you be­lieve in. If the busi­nesses are good, then the mar­ket even­tu­ally re­alises this.

I’ve tipped Vividend In­come Fund for the last year as my pre­ferred en­try point into the prop­erty sec­tor, and while the share price is suf­fer­ing some over­hang from var­i­ous cap­i­tal rais­ings, the fun­da­men­tals still look sound, es­pe­cially when the share dips be­neath R5/ share. At the mo­ment R4.90/share buys you a growth busi­ness on an earn­ings mul­ti­ple of around 9 and a div­i­dend yield of above 11%.

If you can get shares un­der R5 then you de­serve all of that fan­tas­tic in­vest­ment yield.


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