AFRIMAT and PPC are both companies linked closely to the infrastructure, building and construction sectors. The similarity begins and ends there.Afrimat has in place a strategy delivering robust growth off an almost ungeared balance sheet. By contrast, strategic bungles have left PPC crippled by an overwhelming debt burden."We run the business for maximum cash flow, not maximum headline earnings," says Afrimat CE Andries van Heerden. "Our cash conversion rate is 1.5 times. For every rand profit we generate R1.50 in cash."Share prices tell the story, PPC’s down by more than 70% since peaking in March 2013 and Afrimat’s up 130% over the same period. It is a diverging trend which appears to be far from over, making Afrimat the share to be long of and PPC the share to short.Central to PPC’s woes is a strategy adopted in 2010 which set a target of generating 40% of profit from non-South African operations by 2017. It triggered heavy capital expenditure, much of it continuing in the Democ...
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