I spent most of the past week working flat on my back, laptop perched on my chest. With barely half the keyboard in clear view, the typos flowed. As did the loud expletives, which caused pain to sear through my lower back … and more expletives.
My offspring chortled unsympathetically. I had overestimated my frame’s resolve in lugging a case of 12 fine wines roughly 450m from the village liquor emporium to the front door. It seems all these years of tedious “planking” have done nothing to reinforce my core.
The chiropractor triggered a few audible clicks, including one terrific pop when he “manipulated” my neck. I was tender for my weekend padel and tennis matches — but, funnily enough, when playing with due restraint the mistakes tend not to mount. With pain comes percentage.
But it seems no-one was playing the low-risk strategy in the political exchanges of recent days, when inane rhetoric has trumped good sense and diplomacy, so to speak. Fortunately, I sleep well with my Reinet shares tucked away, though Sasol could become one of those tiring recurring dream snippets.
Watching Sasol tumble to R73 on Monday morning certainly tested my resolve. I gingerly snaffled a few more — a difficult decision when social media throws up dastardly platitudes on the JSE’s prize energy business. For the record, my average price for Sasol — at the time of writing — was R79.16 … a long way from the 20%-plus gain I was showing a few weeks ago.
I won’t lie — and I know this is a silly aside — but I keep wondering what US President Donald Trump would say if he was informed that a true-blue South African company owned a sprawling chemicals plant in Louisiana. I know it’s not Greenland, Canada or any other vast tract of coveted land. But in an already infantile tit-for-tat political exchange between South Africa and the US, any blowhard bluster could really bludgeon fragile sentiment.
Maybe we can find a reality check in one of the JSE’s smaller small-cap stocks — the unassuming cabling group South Ocean Holdings (SOH). With the orange orator painting South Africa as a potential pariah state, you might think US investors will be shying away from even well-priced opportunities.
Well, not so, it seems, with a surprising honing-in from hicksville. SOH disclosed last week that SAF Metal Holdings had built an influential 20.19% stake in the group. SAF is a subsidiary of SOLV Holdings, an industrial investment company in Fort Wayne, Indiana. SOLV’s website notes: “We invest in companies that SOLV complex industrial problems.” Well, alrighty!
I have to wonder if SOLV/SAF have heard about Hulamin or ArcelorMittal … or about the possibility that UK-inclined Argent Industrial could be open to talking about its local operating assets
More intriguing was another statement on the website that “there are a lot of business founders looking to sell their business, but they don’t know where to start”. Is this the first tilt in a full takeover of SOH? As far as I can ascertain, SOH’s two big investors — Joseph Investments (30.56%) and Hong Tai Electric Industrial Co (27.68%) — are still in the picture. Maybe there’s more to come from SOLV’s SAF Metal Holdings in the months ahead? In the meantime, I have to wonder if SOLV/SAF have heard about Hulamin or ArcelorMittal … or about the possibility that UK-inclined Argent Industrial could be open to talking about its local operating assets.
Moving on, when it comes to a small-cap company that trumps all other small-cap companies, look no further than the redoubtable packaging group Bowler Metcalf (Bowcalf). I’ve lost touch a bit with the company in recent years, despite a long history of scribbling about its remarkably steady progress. I remember attending an AGM in the early 1990s, when the shareholders assembled in a quiet part of the factory in Ottery.
The paucity of corporate pretentiousness has, thankfully, persisted. I read the recent results and paged through the brief presentation. Got to love the unflagging enthusiasm for the business, the intense focus on customer service, the small innovations that keep the edge, the careful capital allocation and the unrelenting focus on cash flow.
Bowcalf has been listed for 38 years, has been profitable throughout and has paid dividends almost every one of those years. Clearly the trading environment is tough and likely to be tough for a while still. But slapping a p:e of seven on a business with a profit track record longer than Renergen’s route to market seems unjust and cruel. Then again, stalwart shareholders — and there are more than a few — have done well from dividend payouts, including those that flowed from Bowcalf’s sale of its stake in its soft-drink bottling venture.
Last, an interesting update from agri-services group KAL Group at its AGM — most notably the reiteration of the “big, hairy, audacious” medium-term target of R1.5bn in profit before tax (PBT). The group provided a breakdown on the target, showing the retail-focused Agrimark operations would account for R780m in PBT, The Fuel Company (TFC) would chip in R570m and new operations R150m.
A further breakdown showed that an envisaged R245m PBT gain in Agrimark would come mainly from market share gains (R140m) and improved efficiencies (R50m), with TFC’s expected R270m gain in PBT driven by the service station footprint (R200m). KAL sees gains of R40m from TFC’s quick-service restaurant segment — which, to my mind, seems a little on the light side.
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