Just can’t get going
WE HAVE PUT a sell on this stock before and almost immediately afterwards Cashbuild launched its American Depositary Receipt programme (ADR), which enables trading of its shares in the US. This saw the stock rally but has given back most of that post-ADR excitement gain.
The recent trading update was bleak and things will only get bleaker from here on. The consumer remains under pressure and interest rate increases will hurt, albeit at the lower end few have traditional debt and are already paying at the higher usury rate. However, transport costs are rising (the weaker rand being the driver here), inflation is edging higher and the net result is a consumer with less and less disposable income. Added to this is increased competition in the space for home builders, and things look very tough for Cashbuild.
The only possible glimmer of light would be a serious increase in social grants in the Budget later this month and while an election year makes this possible, Treasury simply doesn’t have the money.