See­ing the wood for the trees

Finweek English Edition - - INVESTMENT - MARC ASH­TON

ABOUT A YEAR ago I picked York Tim­bers as one of the more in­ter­est­ing net as­set value (NAV) play­ers on the JSE. For var­i­ous rea­sons York had traded well be­low its NAV. Re­cently this wood and pulp player re­leased fi­nan­cial re­sults and, even though the share price has risen strongly in the last few months, there are still op­por­tu­ni­ties.

At the start of Septem­ber, the share was trad­ing at R3.40/share and it has sub­se­quently bounced to around R4/share. This is still a deep dis­count to the R6.92/share NAV re­port- ed with its full-year re­sults at end-Septem­ber.

The NAV is a bit skewed be­cause of an ac­count­ing treat­ment of de­ferred tax so in­vestors need to watch this num­ber care­fully, but there ap­pears to be a suf­fi­ciently deep moat to sug­gest value.

A P/E mul­ti­ple of 12 is not that cheap, but the com­pany has ag­gres­sively re­duced its ex­pen­sive debt by R25m (now R54m/year) and this should de­crease again on the back of good cash f lows.

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