Punters who like a flirtation with the minnows expect the potential of significant upside to compensate for the risks attached, and these buccaneers of the investment world could do a lot worse than to have a peep at IT services firm Capital Appreciation.
It doesn’t have a long record, but 2018 was a transformative year, and its market cap at R1.4bn is just starting to drift into that sweet spot where institutional investors might be tempted to have a nibble.
What’s really appealing, however, is that the business areas in which it deals have the potential to take off like a homesick angel. The largest division operates in payments and payment infrastructure, where it looks after payment devices for its banking and institutional clients.
Despite the inevitable lag provided by a depressed retail sector, this division has more than doubled the number of terminals managed in the year, an exceptional performance. Its Dashpay operation offers innovative payment services that will fit in well with the rapidly changing needs of the African market.
The business areas in which Capital Appreciation deals have the potential to take off like a homesick angel
— Jamie Carr
Its software and services operation offers solutions to its financial institutions client base, while piling into research and development into cutting-edge areas aimed at the next phase of the technological revolution, including machine learning, artificial intelligence, big data and blockchain.
This is clearly an area where there are plenty of elephant hunters prowling around with much deeper pockets than Capital Appreciation, but if it can hit a target or two the rewards could be mighty.
A swift glance through Mazor’s results announcement will act like a bromide in the tea of anybody inclined to festoon the streets with bunting to celebrate the brave new era we have entered, having rendered unto Nkandla the things which are Nkandla’s.
While the more excited headline writers seem to be under the impression that you’ll hardly be able to position yourself at OR Tambo arrivals without running the risk of being trampled by investors dragging gigantic chequebooks in their haste to get stuck in, Mazor points out that reality is a different story.
The company says the leadership change has come with no sign of a clear direction for government economic policy, while the firmer rand is putting renewed pressure on the economy and uncertainty is putting off investment.
Mazor is taking a cautious approach in the medium term, waiting for the return of real business confidence rather than newspaper headlines. For the time being, its performance continues to reflect the national trend of negative growth.
All three of its business units have been severely affected by the tough economic conditions, while in the Western Cape the water crisis has brought additional challenges. The company has streamlined costs and capacity to position itself for the expected levels of economic activity in the medium term, and it has had to retrench employees. This conservative approach has enabled it to minimise losses, while continuing to invest where it can to improve efficiency and develop new products.
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