Italtile: In a good position to perform after lockdown
Italtile has for some time been IM’s preferred company in the JSE’s brittle building materials sector
Italtile has for some time been IM’s preferred company in the JSE’s brittle building materials sector.In September 2019 we recommended a long Italtile, short Cashbuild play. It was a profitable trade, as Cashbuild subsequently heavily underperformed. In February we reiterated Italtile was the stock to follow in the sector, and being long on it remained profitable.Then Covid-19 swept SA and the JSE succumbed to a bloodbath of selling. Hardly anything was immune. Both Italtile and Cashbuild were hit; the latter was savaged. But they have recovered from their late-March lows. The performance in the year to date is: Italtile -22.4% and Cashbuild -30.3%.Each counter has its strength and each is a leader in its market segment. Each has a strong balance sheet and sits on acres of cash, which will protect it after the lockdown.IM continues to prefer Italtile for the post Covid-19 environment. Its product range is predominantly in the refurbishment and upgrade segment. House-building post th...
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