In recent years I’ve lost my passion for rugby. Perhaps it was swapping DStv for Netflix. Perhaps it was because most professional-era players are so bland. More likely, it was the horrible demise of my beloved Eastern Province — in my youth I would watch the fearless Dennis (the Menace) Campher hurtle headfirst into petrified opponents and the criminally underrated Gavin Cowley dictate the game with aplomb.
That said, Sunday night’s brutal quarterfinal between the Springboks and France might have been the best game of rugby I have seen since Eastern Province beat Western Province at Newlands in the early 1990s. I got seriously animated and, in fact, nearly lurched headfirst into Bossie’s big screen television when I thought Manie Libbok needed a close-up reminder that hoisting a 50/50 ball in your own 25 might not be too prudent against a rampaging French side.
As an investor, I would pay a serious premium to back an executive who had the passion, muscle and unrelenting work rate of Bongi Mbonambi. His performance will be etched into the annals of greatest-ever Bok triumphs. I’ll be very surprised and deeply disappointed if the boys buckle against England this weekend.
Talking of unexpected blows, shareholders in security barriers group Trellidor must be feeling a little jittery after a serious rattling in the second half to end-June
Talking of unexpected blows, shareholders in security barriers group Trellidor must be feeling a little jittery after a serious rattling in the second half to end-June. The way I see it, Trellidor traded deep in the red in the period.
Interim headline earnings came in at 25.5c a share, but bottom line for the full year was just 4.2c a share. That infers an H2 loss of close to 22c a share. Put another way, Trellidor posted interim operating profits of R38m but finished the full year on R22m.
It’s funny. On paper, Trellidor should be a great small-cap business with sustained demand for its products. The group taps one of the few sweet spots in the economy — which unfortunately stems from high crime levels and rising incidents of civil unrest.
Homes and businesses need to be secured. But our wonderful country can spring a surprise even on the security sector — it seems load-shedding has persuaded South Africans that securing an alternative energy supply takes spending priority now. No doubt it won’t be long before households and factories will need to make plans for their own water supply as well. Security spend could dry up further in the months ahead.
Stagnant sales might be problematic for Trellidor, which now sits with a slightly compromised balance sheet. Interest-bearing debt is more than R120m — sizeable in comparison with its market value of R190m and representing an uncomfortable acid-test ratio.
Total current liabilities top R225m with current assets at R192m — a big difference from financial 2022 when liabilities of R139m were comfortably covered by assets of R197m.
Not surprisingly, Trellidor is in breach of debt covenants, and lenders will hardly be placated by the H2 performance. The group is now paying attention to product positioning and price reviews, driving additional business in the roller-shutter business in the UK and keeping a tight lid on overheads.
More significantly, “the board has mandated the executive team to investigate opportunities to materially reduce the debt levels by the end of financial 2025”. Could we see a rights issue in the interim?
The board has mandated the executive team to investigate opportunities to materially reduce the debt levels by the end of financial 2025
Trellidor’s share price sits at 200c — which is higher than NAV of about 182c a share (71c a share tangible NAV) but well off the 600c a share private placement price ahead of listing late in 2015.
The group paid almost R150m to buy Taylor Blinds in mid-2016. Selling Taylor Blinds would certainly “materially reduce” debt levels — though the more pertinent question would be whether this asset would fetch anything close to R150m in this economic climate.
And who would be a buyer? Argent Industrial owns Xpanda (and fairly recently acquired American Shutters) — but CEO Treve Hendry has made no bones about his disdain for new investments in a fractured South African economy. Would Remgro-controlled Wispeco branch out into specialised security barrier brands? Unlikely, I’d think.
Still, developments at Trellidor will be fascinating over the next six months — especially if spending remains locked up. The uneasy feeling, of course, is that management might reckon it’s better to bash Trellidor back into shape away from prying public eyes. So a(nother) buyout pitch to an ailing small cap does seem almost inevitable. Sigh… I hope I am wrong.
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