Resilient leads rally in listed property sector

THE mini-rally in property shares since early this month could still have legs, given the expectation of more good news when Growthpoint Properties, Hyprop Investments, SA Corporate Real Estate Fund, Ascension Properties, Hospitality Property Fund, Texton Property Fund (formerly Vunani) and Synergy Income Fund report results over the next two weeks.

The index is already up 5% since early August. Resilient Property Income Fund leads the pack with share price growth of more than 8% over the past two weeks, no doubt on the back of the sterling 20% increase in income payouts achieved for the June reporting period. Better than expected results also saw investors climb into Emira Property Fund, Capital Property Fund, Fortress Income Fund and Romania-focused New Europe Property Investments.

Granted, the weaker rand has boosted earnings due to increased exposure to offshore property markets. But it’s not the only reason for the sector’s improved performance. Property management teams have also been hard at work selling noncore buildings, doing yield-enhancing refurbishments and finding tenants to fill empty space.

The recent rise in share prices means the SAPY index has recovered about 15% since August last year, when property share prices hit rock bottom. But the index is still 7% off its peak, reached in mid-May last year.

METAIR’s start-stop battery technology is a big market opportunity as original equipment manufacturers (OEMs) across the world race to meet tightening vehicle emissions legislation.

Kagiso Asset Management investment analyst Simon Anderssen says OEMs are looking at startstop engine management systems as a cost-effective solution to vehicle pollution, while investing in better fuel economy and lower exhaust output through engine downsizing, turbocharging and weight reduction.

Metair is one of a handful of global component manufacturers that can supply the batteries used in start-stop systems, and through recent acquisitions in Turkey and Romania it is positioning itself to supply European markets, where start-stop systems are expected to be standard in most vehicles by 2020.

Mr Anderssen says Kagiso views this as an “exciting and transformational opportunity” for Metair.

Metair benefited from its close ties to Toyota SA from the 1960s onwards. It has come through the global financial crisis, which hit Toyota SA particularly hard, with production falling 42% between 2008 and 2009.

Metair MD Theo Loock says SA’s Automotive Production and Development Programme has succeeded in encouraging new vehicle manufacture in SA. FAW, a Chinese group, has set up in the Coega Industrial Development Zone, while Hyundai of Korea has started building commercial trucks in Benoni.