BSI STEEL

 

DiamondA unicorn has long been regarded as a rare and precious thing. In the major markets of the world, the term has come to define the sort of company that is run by children with innovative facial hair and self-consciously casual clothing, that races within moments to a distinctly optimistic valuation reflecting the value of the industry that it is in the process of disrupting.

We’re a bit short of these on the JSE, so perhaps the term could be pinched to describe a company on the AltX that is not actively self-destructing. BSI Steel fits the bill nicely, rebounding from a tricky 2015 with a restructuring that has put the business firmly back on track.

It has concentrated on getting the basics right, slashing the monthly overhead bill by 40%, closing down all loss-making operations and cutting out unprofitable business.

Discontinued operations bunged in a loss of some R22.9m, but a concentration on its core strengths saw continuing operations make a profit of R56.2m for the year, a healthy increase from the previous year’s R8.5m despite tough trading conditions. Now that the bulk of the restructuring has been completed, the focus is on growing the core business steadily without taking undue risks.

The company points out that in the past its core operations have been consistently churning out solid returns, but have been let down by losses in peripheral businesses and markets. This should no longer be the case since it has eliminated the loss makers and retreated from markets like Mozambique where it had consistently struggled. It’s not rocket science, but it should prove effective.

Vital numbers on June 27 2016

Share price (c)47
Market cap (Rm)338.3
P:e ratio8.87
Earnings yield (%)11.28
Dividend yield (%)4.26

 

CAPITAL & COUNTIES

DogYou would have been forgiven for thinking that Capital & Counties was about as safe an investment as you could find.

A classic rand hedge with an irreplaceable portfolio of top quality property in central London and some distinctly fruity development opportunities, it had to be a banker that you could stick in the back of the portfolio and forget about, safe in the knowledge that it would keep on appreciating. Yet all of a sudden it’s taken an absolute thrashing, down some 17% in a day, and all the old certainties have disappeared.

You would expect a country to vote largely in its economic interest, but one of the great delights of democracy is that there’s nothing to stop an electorate from taking a quixotic plunge into unknown waters.

The instant reaction of the markets to the news of Brexit shows exactly what the City thinks of the decision, and the reaction of many commentators is that the victory of Brexit is a victory that will take the soon to be not United Kingdom a long time to recover from.

For Capital & Counties, there will be some direct impact, particularly if it now becomes difficult to source all the Wladeks and Woiceks who have been doing all the hard work on building sites for many years now.

But prime central London is not going to fall off the map because of this; it will remain one of the great cities of the world with property values to match, and we’ll never know how much brighter the future might have been if the vote had gone the other way.

Vital numbers on June 27 2016

Share price (R)60.30
Market cap (Rbn)50.98
P:e ratio343.67
Earnings yield (%)0.29
Dividend yield (%)0.52

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