BROKERS’ NOTES: Buy Afrimat, Sell Omnia

Mike Gresty, fund manager: Anchor Capital

BUY: Afrimat

Afrimat transitioned into a mining company a couple of years ago, and even though the set of results it is about to report for the financial year to end-February may not shoot the lights out, the company is set to benefit from several acquisitions. I believe that in the current 2024  fiscal year there will be an upward inflection in earnings — especially given that Afrimat’s Komatipoort anthracite mine will start delivering results this year. The company’s Glenover phosphate and vermiculite acquisition will probably start delivering earnings in the next financial year. All in all, Afrimat has a strong balance sheet, sits in a net cash position and has an excellent management team.

SELL: Omnia

Omnia, which relies heavily on fertiliser sales, has a good couple of crop seasons behind it and its current fiscal year may still reflect this. But weather forecasts are that the southern hemisphere is entering a mild El Niño cycle after four years of La Niña. South African fuel prices remain high, and the country’s maize farmers — who have reported bumper prices and crops lately — are facing softer prices for their produce, as maize futures have dropped recently. Also, fertiliser prices have come off their relentless highs. Omnia’s results may seem more muted than in the past couple of years.