The JSE’s small-cap sector is showing encouraging signs of life. Aside from some noteworthy profit performances by resilient stalwarts — which, in many cases, the market still seems to discount — there are finally strident bouts of corporate action. These moves, more than just a handful in recent weeks, hopefully underline the rich value proposition that has been snubbed or heavily discounted for years.
Strikingly, companies that local investors have long shied away from — due to various “hitches” or lingering controversy — have been at the centre of the action. Junior miner Jubilee Metals secured a R1.6bn bid for its platinum group metals and chrome operations, a price tag that represented a serious chunk of the group’s market value before the deal was tabled. Tin miner Alphamin — whose operations have been disrupted by political unrest in the Democratic Republic of Congo — is now subject of a C$503m change of control bid by International Resources Holdings.
Controversial helium producer Renergen — which at one stage looked priced for disaster — is now in the crosshairs of ASP Isotopes (soon to be listed on the JSE), while Eastern Europe property specialist MAS PLC — previously weighed down by structural issues — now finds itself in the middle of a bidding war.
With a surfeit of small- to mid-cap counters now boasting stout(er) balance sheets, more action could follow in the second half of the year. Target companies are a dime a dozen, from copper mines to copper cables. More intriguing, though, are those on the prowl — possibly looking to reinforce areas of strength, such as Altron, IOCO, Novus, Reunert, Super Group, Frontier Transport and Premier.
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