Fan­tas­tic but ex­pen­sive

Finweek English Edition - - MARKETPLACE -

On the sur­face, the Oceana re­sults were very mod­est with di­luted head­line earn­ings per share (HEPS) for the six months to end March up only 7% and the div­i­dend up 8%. But some dig­ging is re­quired as the com­pany suf­fered a net for­eign ex­change loss of nearly R70m, com­pared to just un­der R8m in the pre­vi­ous year. With US-based fish­meal and fish oil spe­cial­ist Day­brook Fish­eries, which Oceana ac­quired last year, now con­tribut­ing dol­lar earn­ings, this will fluc­tu­ate as the rand moves around. This is some­thing share­hold­ers are go­ing to have to get used to. The other sig­nif­i­cant is­sue was the cost of the Day­brook trans­ac­tion of R4.6bn, in­clud­ing the di­lut­ing ef­fect of the rights is­sue. Op­er­at­ing profit with­out Day­brook would have been up 13% and Day­brook’s earn­ings were only in­cluded for one of the six-month pe­ri­ods be­ing re­ported. That said, I have com­mented be­fore that the Day­brook deal is a great one for Oceana and if we strip out the ab­nor­mal events dis­cussed above, HEPS would have been bet­ter and the price-to-earn­ings ra­tio (P/E) would be in the high teens rather than the cur­rent 21 times. This is a great com­pany but it’s ex­pen­sive.

The Hen­ri­etta, a lux­ury res­i­den­tial de­vel­op­ment on the south-west cor­ner of Covent Gar­den Pi­azza in Lon­don, is owned by Capco.

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