Black Friday. Ho Hum. The only member of the family who got far more than they bargained for was our beloved but intellectually stunted Jack Russell/mastiff cross.
Dexter almost sealed the deal on his beach walk. That’s what will happen if you roll on a seal that isn’t actually dead but just basking quietly in the early afternoon sun.
Speaking of startling stand-offs, I noticed that agricultural services specialist KAL Group (formerly Kaap Agri) displayed strikingly similar pictures of its Agrimark retail operations next to those of venerable US farming retailer Tractor Supply Co (TSC). Should we think of KAL as the JSE’s version of TSC? I think a few KAL shareholders would like to think so, given that TSC is trading at a p:e of close to 20. Still, the comparison might be a stretch — even though I think Agrimark is a damn good operation, and quite possibly the best retail business in South Africa.
In the recently released results to end-September Agrimark was again the outstanding performer for KAL — with revenue up 4.5% to R8.1bn (notwithstanding R140m sales lost due to load-shedding). I noticed that arms and ammunition sales were up 70%, which should encourage shareholders in Astoria (a big investor in the Safari Outdoor chain). Agrimark’s profit before tax margin was an enviable 5.84%.
The jury might still be out on TFC ever delivering a high-octane performance. But KAL has retained its target of R1bn in profit before tax by 2025 — though the forecast does factor in possible merger and acquisition activity
The problem for KAL, at this juncture, is that its large investment in fuel retailing via The Fuel Co (TFC), is still dragging on performance. TFC — with recently acquired PEG adding considerable extra bulk — generated about R13bn in sales, but only R201m in profit before tax. The margin is a sliver at 1.54% and it might be some time before the forecourt retail, restaurant and fast-food offering can fatten the margin to more acceptable levels.
KAL CEO Sean Walsh stressed that TFC outperformed the sector and that further opportunities for synergy and optimisation were being explored. The jury might still be out on TFC ever delivering a high-octane performance. But I note that KAL has retained its target of R1bn in profit before tax by 2025 — though the forecast does factor in possible merger and acquisition activity.
Reunert revs up
I must confess that six months ago, I didn’t think there would be an opportunity to buy Reunert stock for less than R63 when the technology conglomerate’s results for the year to end-September rolled around. I was wrong. This is a tough market to please — though not too many South Africa Inc shares can break though the p:e of 10 ceiling.
I must confess that six months ago I didn’t think there would be an opportunity to buy Reunert stock for less than R63 when the technology conglomerate’s year to end-September results rolled around. I was wrong
Reunert, though, looks capable of sparking earnings growth again in financial 2024. The traditional electrical engineering segment — charged by the performances from the power cable and circuit breakers businesses — saw revenue up 14% to R7.16bn, while operating profit was up 27% to R552m. The group’s applied electronics hub also tapped a sweet spot with revenue from the defence division shooting to a multiyear high and demand for renewable energy products ticking along nicely as Eskom still flounders in its bid for sustainable power supply.
Revenue, for the record, was up more than 50% to R3.56bn, with reinforced margins sending operating profit up 163% to R432m. The ICT segment was relatively disappointing as its SME customer base came under pressure. Revenue was up 18% to R3.1bn, but the operating profit gain was restricted to just 2% to R660m.
I wonder if Reunert, which has just bedded down the recent acquisition of IQ into the tech segment, will look at acquisitions in this sector. Presumably competitors are straining and Reunert — with the benefit of consistent renewable energy and cabling demand plus prospects of a large defence order in the second half of 2024 — might see this as an opportune time to bulk up the tech segment. I’ve mentioned EOH before, and continue to wonder if certain bits of that technology group might slot nicely into Reunert.
I noticed — much to my surprise — that there appears to be an effort to revamp Go Life, presumably into a financial services counter, under its new guise of Numeral
I also wonder how many readers still look at Go Life International, which was teed up as a specialist health play some years back. Things have gone awfully awry — which is reflected in a share price that trades between 1c and 2c. I noticed, much to my surprise, that there appears to be an effort to revamp Go Life, presumably into a financial services counter, under its new guise of Numeral.
Even more surprising is that Dave van Niekerk — once the prime mover at microlending enterprises Blue Financial Services and MyBucks — is now listed as CEO of Go Life/Numeral. The FD is Neville Graham, a former head of lending at TymeBank and chief credit officer at MyBucks.
Van Niekerk and Graham are listed as directors of Numeral, which is looking to create, acquire or partner with businesses in the financial, investment, banking or asset management space that have a technology and platform opportunity. Whatever they create or acquire, hopefully it will have more enduring appeal than Blue or MyBucks.
The group’s website has some seriously far-out stuff about the founding of Numeral, but most of that went over my head — much like the silent gong motivational talk given by the shaman at the last kelp immersion festival I was forced to attend.
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