GREAT BUY, BUT HOLDING OFF
Grindrod continues to drift lower, trading at 12-month lows and well below its stated net asset value (NAV) a share of some R22.27. About a quarter of that NAV are “ships, property, terminals, vehicles and equipment”, meaning that the stock is trading at around NAV excluding those assets, so you get them for free when buying Grindrod right now. Yet another quarter of the NAV is pretty much cash. So on the surface the stock looks like a buy, but I am not and here’s why: Grindrod is pretty much a commodity play and if one is bearish on commodity prices (as I am), then there really is no compelling reason to buy the stock. Sure, it is cheap on almost every metric, but the question is, when will the stock start to rerate higher? We may well see a bounce as we did last year, but it faded fairly quickly and a longer-term recovery is still some way off as we wait for the upward move in the commodity cycle.