THE best and bravest investors are not the ones who jump on bandwagons and follow the herd. They are not content when there’s merely blood on the streets, they’re looking for the moment when everything is at its bleakest, when you’re entering the Inferno and you see the sign “Lasciate ogni speranza, voi ch’entrate.”
If you’ve got large enough trousers to handle the risk, this is when you’ll find valuations at their most appealing and you’ll soon see which operators have the bottle to handle the tough stuff.
Markets at the moment may not quite be at full Inferno level, but they’re not exactly humming, and Santova’s results show the mark of an operation that is making a fine fist of extracting full value from a testing period. The logistics provider stated that growth in the industry was flat as a result of reduced trade volumes and ongoing overcapacity in ocean freight, yet it was able to post a tidy increase in headline earnings as a result of its clearly defined growth strategy and its positively Saudi Arabian ability to execute. The group’s offshore operations are now contributing 55% of profits for the year, and this is expected to rise after the acquisition of Tradeway (Shipping) in the UK.
This certainly doesn’t hurt the bottom line when you are reporting in the ever-diminishing rand, and the group continues to seek strategic and bolt-on acquisitions as well as developing grassroots operations where they can add to its geographical and product diversity. It continues to invest in technology to ensure that its client service and efficiency remain at the cutting edge.
Vital numbers on May 23 2016
|Share price (c)||415|
|Market cap (Rm)||654.03|
|Earnings yield (%)||8.33|
|Dividend yield (%)||1.33|
THE International Hotel Group has had a bit of a stuttering start since it listed on the AltX in January.
The group is still establishing its portfolio of UK hotel assets, and it dropped just shy of £1m in the six months, largely as a result of costs incurred in its unsuccessful pursuit of a portfolio of four London-based hotels.
It secured exclusivity on the portfolio but it was unable to persuade investors to back the acquisition, and had to return rather sharply to the drawing board.
Since then, however, the market for hotel assets has softened up as uncertainty over the EU referendum has resulted in investors sitting back and keeping their powder dry. This has enabled the IHG to build its portfolio, raising an additional £7m of capital to fund, among others, a Hampton by Hilton hotel at Gatwick’s North terminal, and Holiday Inn Expresses at Redditch and Southampton. It has sold its unbranded hotel in Worcester in order to concentrate on branded assets in strong locations.
These hotels may not appear on many travellers’ lists of places they dream of staying in at least once before shuffling off to the great check-in in the sky, but they should be steady earners once they’re bedded down, and the group is anticipating a move back into profit once it has achieved critical mass. It is looking at more acquisitions and a move onto the main board of the JSE, and while the implications of a possible Brexit remain a concern, at least it’s got the GBP/ZAR exchange rate to soften the blow.
Vital numbers on May 23 2016
|Share price (R)||23.00|
|Market cap (Rbn)||1.29|
|Earnings yield (%)||-10.34|
|Dividend yield (%)||—|