Small Cap Steady growth for OneLogix

Steady growth for OneLogix

Finweek English Edition - - INSIDE - WARREN DICK

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.

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