Argent hunts for UK acquisitions after profit surge
Headline earnings per share rise 63%, prompting shares to log their biggest one-day gain in about two months
Argent Industrial, which owns a portfolio of businesses that manufacture everything from DIY security products to office furniture, said on Tuesday it is on the hunt for more acquisitions in the UK.
The JSE-listed company has an established presence in the UK through the ownership of several companies, including Osar Door Parts, Fuel Proof and Cannock Gates. In June 2020, Argent acquired UK-based Partington Engineering, a major supplier of trolleys to traditional and e-commerce retail industries.
In the US, it owns New Joules Engineering, a manufacturer and distributor of railroad retarders.
The geographical diversification has shielded the company from the vagaries of the Covid-19 pandemic. Headline earnings per share, the main profit measure in SA that excludes exceptional items, surged 63% to R2.18 in the year to end-March from a year ago.
Argent benefited from the pent-up demand for steel products as the SA economy gradually opened up after the first hard lockdown, which was meant to control the spread of Covid-19.
“On the back of decent order books, high steel prices and improved market share, the group has had a good start to the new year,” CEO Treve Hendry said.
“We will focus on growing our group brands and look for acquisition opportunities in the UK as well as continue with the current share buyback programme, using the opportunity to add value to our long-term shareholders.”
The shares rose 5.22% to close at R11.71 on the JSE, logging their biggest one-day gain in about two months and giving Argent a market valuation of R705.5m. So far in 2021, the value of the shares have risen 70%, according to Infront data.
Argent was able to weather the Covid-19 storm even during its half-year results to end-September 2020, when its headline profit surged 47%.
Argent, which debuted on the JSE in 1999, spent about R26m in the year to end-March in its share buyback programme.
Anthony Clark, small-to-medium cap analyst at Smalltalkdaily Research, has a buy recommendation on the stock.
The ongoing share buyback programme and possible resumption of an ordinary dividend are likely to support the share price, he wrote in a recent research note.