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Finweek English Edition - - Marketplace Simon Says -

EOH re­sults saw rev­enue up 21% while head­line earn­ings per share (HEPS) and the div­i­dend in­creased only 16%, which is the wrong way around as HEPS and div­i­dends should in­crease faster than rev­enue. This is es­pe­cially strange as op­er­at­ing mar­gins in­creased. But a few small hits hurt, such as cur­rency moves go­ing from a R36m profit to a R44m loss. Over­all the re­sults are solid, but growth by ac­qui­si­tion be­comes harder as the com­pany be­comes larger. So the days of HEPS growth of 30% are likely over and the trend has been for HEPS growth to slowly shift lower, hav­ing been 25% for full year 2016, 29% in 2015, 31.7% in 2014, and so the trend con­tin­ues. That all said, at a price of just be­low R100, the his­toric price-to-earn­ings mul­ti­ple (P/E) is around 11 times and those who’ve been wait­ing for an en­try into EOH have an ex­cel­lent buy­ing price, al­though fu­ture re­turns will be more mod­est than be­fore.

EOH’s head of­fice in Jo­han­nes­burg.

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