Grinding it out
The King and I hardly got the royal treatment in the knockout stages of the Constantia Tennis Club champs, unseeded and cruelly pitted against two talented youngsters in the round of 16.
Neither of us was in tip-top shape at 8.30am on a crisp Saturday. Our “sensitive” condition — courtesy of an impromptu wine-tasting the previous evening — was worsened by a low sun reflecting sharply off the bowling club’s roof.
There was some childish taunting from courtside too. Things kicked off brilliantly. Every time I lined up a smash I was blinded by a blazing blur, followed by muffled cursing as the King staggered to retrieve my half-abandoned shot. We were unceremoniously smeared 6-2 in the first set, with blistering forehands fired off at every possible angle.
I expected worse in the second set and awaited the King’s traditional capitulation clause: “Just treat it as practice.” But the glare eased off, and we desperately dug in (like we old campaigners tend to do). The game soon slowed to an acceptable crawl, allowing us to start building pressure at the net and work the key points.
The youngsters started to falter, and the turning point came when we had both our opponents retreating to the baseline — a cardinal sin in doubles. From our perspective, we simply put up the wall and then shifted a few bricks. A few observers were less complimentary, one asking acerbically: “Did you have to drag those young guns into the gutter?” The “gutter twins” has an awfully shabby ring to it. But I’ve said this before, and I’ll say it again: an ugly win is still a win.
Speaking of tough grinds and ambitious volleys, technology conglomerate Altron — which has set itself the lofty target of tripling its 2021 operating profit by 2026 — is rallying around its underperforming vehicle tracking and telematics subsidiary, Netstar.
The company was hugely disappointing in the year to end-February, with operating profit down 27% to R192m. That meant Netstar, on an operating profit level, was no longer the biggest division in Altron; that honour, surprisingly, went to a vibrant fintech segment that managed to show a sprightly 21% gain to R233m.
Yet Altron CEO Werner Kapp insisted Netstar is on a path to growth. There were some positives: Netstar grew revenue 11% to R1.86bn, with subscribers growing 20% to more than 1.37-million. The division also continued to achieve a high software as a service annuity base of 83%. Kapp, though, conceded Netstar had not focused sharply enough on the customer, which meant market share was lost and margins were eroded.
Disappointingly, increased activity on tracking device prefitments yielded lower than acceptable conversion. Conversion rates were just 32% in financial 2023, but have now shifted to 47%, with a rate of 60% targeted for the short term. If this is achieved, it could be hugely helpful for Netstar
One initiative in the presentation document — but curiously not touched on in the actual presentation — is WiTaxi, which Altron reckons has the potential to reach 48,000 connected taxis. Perhaps the most intriguing aspect of Netstar is the data analysis potential, with 181-billion messages processed a month and 170,500 hours of video footage recorded. Recently appointed Netstar MD Grant Fraser, the former COO of MiX Telematics Africa, summed up this potential succinctly: “The more data we can analyse, the more accurate the models we can build to generate better solutions for our customers, generating greater return on investment for our shareholders.” Here’s hoping.
Last time I looked, Altron was not too far from its 12-month low of 725c. An improvement in operating margins is key: 12 years ago the margin was more than 30%, down to 17% five years ago. This time, margins were just 10%.
Altron is not the only company in a vice. Packaging group Nampak, after a turgid trading update, sank briefly below 60c last week. I remain morbidly fascinated.
Cheering news for a change
It’s worth noting that at 65c, Nampak carries a market value of about R488m. This is less than much smaller but perennially profitable rivals Transpaco (R898m) and Bowler Metcalf (R653m). By way of further perspective, Nampak’s last reported annual turnover was R17bn, Bowler’s was just R673m and Transpaco’s R2.3bn. The value destruction at Nampak has been epic.
Still, I found a little bit of good news for a change: it was heartening to see the latest results from industrial conglomerate eNX amplifying the alternative energy narrative enunciated by Reunert. One of eNX’s smaller divisions, New Way Power (NWP), which designs, manufactures, installs and maintains diesel generators and offers temporary and renewable power solutions through solar hybrid and grid alternatives, sparkled brightly.
In the year to end-February, NWP more than doubled revenue to R302m, and profit before tax swung R28m into the black after the previous financial year’s R20m loss. No doubt profits are still charging ahead in the first few months of the new financial year, and I have to wonder if eNX is entertaining any offers on NWP.