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Nick Kunze, portfolio manager: Sanlam Private Wealth

BUY: KAP Industrial Holdings

The business was severely affected by Covid but it has planned quite high capex over the next three years and debt doesn’t seem to be a problem. For those who want small-cap SA exposure, we really like the business. It operates in the industrials, chemicals and logistics sectors and if you look at chemicals especially, prices are really strong and it’s making high margins. The stock trades at a 6.5 forward p:e and we see this being at least a 10 times p:e business, so for that reason alone the valuation is compelling.

SELL: Telkom

It’s a bit out of left field but we’ve never liked Telkom and given the possible deal with MTN, we think  the money has been made there. MTN is obviously going to take the juicier bits of the business such as the fibre division, and the only thing that might be interesting as a spin-off is its property portfolio — it could be worth a bit. But Telkom has been disappointing for shareholders, so MTN is a bit of a get out of jail free card: take the profits now and run.


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