Small Cap Steady growth for OneLogix
Steady growth for OneLogix
The niche logistics provider posted encouraging results for the interim period to end November. The company makes most of its money by storing and delivering new vehicles, mostly from the facilities of motor manufacturers to ports, or vice versa. These businesses (Vehicle Delivery Services and Commercial Vehicle Delivery Services) are housed under the Specialised Transport division, which accounts for roughly 90% of the group’s R664m in revenue for the half year.
The results also incorporated the recent acquisition of United Bulk, a logistics company that specialises in transporting liquid bulk products. The balance of the company’s businesses (housed under the ‘Retail’ and ‘Other’ divisions) include ownership of PostNet, and a few logistics-related startup companies.
These all contributed to growth in revenue of 33% (to R664m). Operating profit grew by 34% to R67m while oper- ating profit margin stayed consistent at 10.1%. HEPS rose by 29% to 17.6c/share. What was particularly heartening for a business that consumes as much capital as OneLogix does, was that cash generated by operations (R63.2m) was far in excess of reported headline earnings (R39m).
This bodes well for the company’s growth aspirations. To get a picture of the funding required for growth, consider that the company spent R20.8m on replacement capex (to adequately maintain operations) in the interim period, and a further R49.2m on expansion capex (to grow). OneLogix has budgeted a further R52.3m on capex over the next six months. Adding up the total capex spend (past and future) gets us to R122m, which will be approximately equal to the company’s entire operating profit for the year. Investors won’t mind seeing a number that big, so long as it translates to continued growth. The company aims to grow at about 15% per annum over the medium to long term, or 10% in real terms.