There’s an awful lot of effort being expended by the investment industry in hunting for unicorns. While the returns for spotting the next Tencent are clearly compelling, it can mean there’s a whole tier of perfectly decent little companies that are not getting the attention they deserve. These may not have the scalability to achieve global domination or the disruptive power to turn an established industry on its head, but if they’re sitting in a defensible niche that allows them to potter along making decent returns year after year, then all power to them.
Invicta Holdings is the sort of company that is never going to cause much of a stirring in the loins of a Sand Hill Road venture capitalist, operating in niches such as wholesaling engineering consumables, tools and equipment that are never going to rival inventing the driverless car for sheer glamour.
However, just as you can admire a Lamborghini while acknowledging that in many a situation a Hilux bakkie is going to do a better job, a company like Invicta that makes real money doing actual stuff might seem old-school — but it’s unlikely to let you down.
The group’s strategic focus is on the basics such as optimising the return on equity, simplifying its structure and concentrating on key operational areas, and with its debt:equity ratio at a record low, it is in good shape to go out and look for some new growth opportunities.
Despite some supply chain issues and product shortages, the group is resilient enough to keep on focusing on doing what it does well.
Tsogo Sun Hotels: Trouble seems never-ending
Anybody involved in the local travel industry could be forgiven for wondering what hideous transgressions they must have committed in a former life to deserve the unrelenting torrent of ordure that has been pouring down on their heads since the beginning of the pandemic.
The ink hardly had time to dry on Tsogo Sun’s statement that SA’s removal from the UK’s red list was a welcome step in the right direction when along comes the Omicron variant and it’s straight back to a 10-day stretch in the Heathrow Travelodge.
There’s wailing and gnashing of teeth aplenty from those who had been looking forward to dropping a bit of hard currency in the Cape over Christmas, but the pain of cancelling a hard-won reservation at La Colombe is nothing compared with what will be felt by all those who depend on the international tourist to make ends meet. Tsogo Sun’s results show the extreme difficulty any hospitality group has suffered in trying to keep afloat amid constant lockdowns and travel restrictions.
The group picked up the odd scrap, such as the rights to be the sole accommodation provider to the British & Irish Lions rugby tour, which contributed about R64m, and which was made possible by hotel management and staff staying in-house in the bio-secure bubble for weeks on end.
Tsogo Sun mentions similar efforts by its staff in the aftermath of the civil unrest in KwaZulu-Natal and Gauteng, remaining at their hotels for the week to ensure guests stayed safe. It’s been a mighty struggle, and it looks like the industry’s woes are far from over.
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