Sit­ting on a cash pile

Finweek English Edition - - MARKETPLACE -

Richemont re­sults in­cluded lots of ac­count­ing one-offs, from both the pre­vi­ous and cur­rent pe­riod, which all im­pacted re­sults. But the short ver­sion is that it’s find­ing it tough, with the gross mar­gin down 1.8% while op­er­at­ing mar­gins fell 7% (in part due to the one-offs). I re­main a share­holder and, as men­tioned pre­vi­ously, have been buy­ing down at these lev­els. What is be­ing missed is that Richemont has al­most R100bn in net cash and this is about 20% of its mar­ket cap. This re­duces its price-toearn­ings ra­tio (P/E) to be­low 20 times and raises the is­sue of what it’ll do with the pile of cash. It’s not buy­ing back shares and the div­i­dends re­main mod­est. Most likely it will hang onto the cash pile and use it when it finds com­pelling ac­qui­si­tions.

What is be­ing missed is that Richemont has al­most R100bn in net cash 20%and this is about of its mar­ket cap. This re­duces its price-toearn­ings ra­tio (P/E) to be­low 20 times and raises the is­sue of what it’ll do with the pile of cash.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.