ENX Group: Value laden and at an intriguing juncture

ENX Group is trading well below its "real" value, as IM has stated previously. Of course, amid the prevailing investment despair on the JSE, "real value" is perhaps a term that should be taken with a pinch of salt. Nevertheless, ENX generates high-quality earnings backed by strong cash flows. Net cash flow for the year to end August was about R2bn, or R11 a share. No worries about servicing debt levels here. The balance sheet has also been cleverly re-engineered so that a flexible borrowings template can accommodate the group’s growth ambitions. At this point ENX’s shares — trading at an eight earnings multiple on headline earnings and 6.5 times based on adjusted earnings — appear to offer value for investors willing to look past the current economic mire. ENX is also trading only slightly above its intrinsic NAV of R11 a share, which arguably should not be the case when considering the sizeable "services" element on the group’s business. In short, IM thinks ENX is cheap … very chea...