Form is temporary, class is permanent. One of my optimistic tennis partners is quick to remind me of this whenever he is trying to coax me into a comeback from 5-1 down against "these jammy hackers". There’s nothing better than watching a turnaround gaining traction: the fear in the opponents’ eyes; onset of the dreaded "elbow"; the gnashing of teeth as the lead slips away.
Of course, I had no such luck last week when I had the misfortune to face off against Pinelands’ Stormin’ Norman, who might have caused me physical injury with his deadly body serves were he not such a nice guy.
"Mr Dink" got well and truly dunked.
Back in the day, things would have been settled more sensibly. I recall the more pragmatic junior tennis players conspiring to forgo the strain of playing tennis in a howling PE gale by finding shelter at the local roadhouse and filling in the score sheet while sipping on tankards of root beer.
On the markets, the JSE appeared to start a creeping comeback with bombed-out SA Inc counters including Grindrod, Nampak, PPC, Tongaat Hulett, Omnia, Spur Corp, EPE Capital Partners, Novus and Reunert all trending markedly higher in the past few days. One might be tempted to assume that all the "bad vibes" from the lockdown and a moribund economy are not clanging quite as shrilly as before.
But perhaps it is more a realisation that these well-established companies do actually have the wherewithal to pull through Covid-19 and leverage their way through the lingering downturn.
And if bankers are willing to lend a sympathetic ear to big clients of long standing, even better. Some of these shares are a long way from reflecting, on their respective market ratings, anything that resembles "normal" or "historic" earnings levels.
This is probably fair, considering how much bad news could still come out of the convalescing local economy.
Then there are those shares that defiantly ask: "What bad news?" Shares in vehicle tracking and fleet management group Cartrack have jumped more than 35% in the past month or so and, at the time of writing, were at record highs. Cartrack has been one of the few companies on the JSE to confidently predict double-digit annual growth rates. Expectations, of course, were for this growth to be tempered by the Covid-19 stall, which would cause distribution difficulties, with Cartrack likely to endure limited capacity to install its in-vehicle devices.
Owner-driven culture
Yet earnings for the six months to end-August will come in around 88c — a 20%-plus improvement over last year.
Cartrack is one of the JSE’s small-cap outliers, and a wonderful example of an owner-driven corporate culture, with founder and CEO Zak Calisto having plenty of skin in the game.
The high-revving profit performance aside, I wonder what will come of Cartrack’s cautionary announcement that it has begun negotiations and is exploring options with major shareholder Karoo (Pte) Ltd. This could trigger a restructuring at Cartrack. "Restructuring" is open to interpretation. Cartrack may look to broaden its shareholder base and perhaps seek a listing on the Nasdaq (or another international bourse).
Moving to things less flash, it was interesting to see from the recent results from mining services group Unicorn Capital Partners (UCP) — in the throes of being bought out by Afrimat — that Ritchie Crane Hire continued to hoist impressive profits in the year to end-June.
Ritchie generated its highest turnover yet at R148m and edged up operating profits to almost R50m. Operating margins expanded, with crane availability averaging 87% and crane utilisation 66% (with Ritchie investing in three new mobile cranes during the first half).
A sale of this little gem would probably go a long way to covering the cost of the proposed scrip settled takeover.
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