Wednesday, 03 October 2012 - 20:00
Cashbuild - Building Value
Cashbuild, one of the leading building material retailers in South African, has recently released its annual results for the financial year ending 30 June 2012. Cashbuild employs more than 4,000 people in 191 stores across South Africa, Namibia, Lesotho, Botswana, Swaziland, and Malawi. The company was listed on the JSE in 1986 and has a current market capitalization of just below R 4bn.
The results were excellent compared to last year, but management highlighted the fact that the June 2011 results covered only 52 trading weeks and also included the effects of last year’s BEE transaction to incentivise management members.
Net Asset Value per share increased by 25%, revenue increased by 11%, and total dividends were up 92% year on year. Operating profit increased by 67% at first glance but, excluding the 53rd trading week and BEE transaction, came to a more comparable 26%. In the same way, headline earnings per share increased by 88% for the year, but come to 26% on a comparable basis.
Cashbuild has managed to increase its gross profit margin slightly by 0.8% to 23.3%, despite a competitive environment in which many of its competitors are struggling. Operational expenses were well controlled by management, increasing by 9% largely due to the people cost component for new stores. Stock levels were in line with management’s expectations with an overall stockholding of 63 days, compared to 72 days reported in 2011.
Cashbuild aims to offer quality products at the most competitive prices, and use their substantial buying power to control prices from their suppliers. The company enjoys a very strong customer base in the rural areas, amongst previously disadvantaged home improvers, and small scale building contractors. Cashbuild has managed to position their stores optimally to meet the ever growing demand in the mining provinces, a significant competitive advantage that might extend even more as the resource sector picks up. Cashbuild stores carry a focused range of products and services, which is tailored to the specific needs of each community in which that store operates.
The number of Cashbuild stores has remained at 191 since last year’s results, with thirteen stores being refurbished and three relocated. Four new stores were opened, and four stores that were in close proximity to other Cashbuild stores had to be closed down. The company will be continuing its store expansion, relocation and refurbishment strategy, with management hoping to open up to five new stores in the first six months of the new financial year.
Demand for building materials is expected to rise in the next twelve months, as housing delivery normally increases in the run-up to elections. With wage increases and social grants ever increasing, Cashbuild expects their target customer base to be able to spend more on refurbishment and expansion of their homes going forward.
Cashbuild shares have performed exceptionally well over the past five years, with the share price increasing by 139% from R 66 to R 158. Over the last twelve months the share is up 53%, after a slight drop from its recent high of R 168.
Cashbuild shares currently trade at a PE of 12.6 times and a dividend yield of 3.6%, which compares favourably with the JSE’s respective metrics of 13.9 and 3.0%, and are by no means expensive.
Given the recent run it is up to investors to decide if the growth in share price can be continued, and whether Cashbuild’s competitive advantages will be eroded or built up over time.
Cor van Deventer
021 914 4966
Wed, 03 Oct 2012
Gold edged up on Wednesday,
defying a crude oil tumble as encouraging U.S. employment and
service-sector data bolstered bullion's investment appeal as an
The metal held onto slim gains even though crude oil plunged
3 percent as disappointing economic reports from Europe and
South African stocks ended slightly lower on Wednesday, falling for a second day, with Kumba Iron Ore tumbling nearly 5 percent as wildcat strikes plaguing the mining industry spread to one of its mines.
Gold traded nearly flat on
Tuesday as the market consolidated gains a day after hitting a
2012 high and ahead of the all-important September U.S. nonfarm
payrolls data due later this week.
Palladium rose 1.5 percent while platinum was little changed
as the largest U.S. automaker General Motors Co posted a
small gain in September U.S. sales and total U.S. auto sales
increased 12 percent.
The bullion market took a breather after the metal rose to
its highest level this year on Monday afte. . .
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Latest Consensus Changes**
|IPL||IMPERIAL HOLDINGS LTD||HOLD||30/09/2012|
|BIL||BHP BILLITON PLC||HOLD||30/09/2012|
|TRU||TRUWORTHS INTERNATIONAL L...||SELL||30/09/2012|
|AMS||ANGLO AMERICAN PLATINUM C...||HOLD||30/09/2012|
|ANG||ANGLOGOLD ASHANTI LIMITED||HOLD||30/09/2012||
|Expected||Company Name||Fin. Date|
|04/10/2012||SALLIES-C||December 2011 (Interim)|
|05/10/2012||DON||June 2012 (Final)|
|05/10/2012||INSIMBI||August 2012 (Interim)|
|05/10/2012||SACMH||June 2012 (Interim)|
|08/10/2012||PSG||August 2012 (Interim)|
|MMI HLDGS||11/09/2012||28/09/2012||08/10/2012||R 0.6900|
|MMI HLDGS||11/09/2012||28/09/2012||08/10/2012||R 0.6500|
|ABK||African Brick Centre Ltd||03/10/2012||Unconfirmed|
|VMK||Verimark Holdings Ltd.||04/10/2012||Confirmed|
|RBX||Raubex Group Ltd.||05/10/2012||Confirmed|
|BFS||Blue Financial Services Ltd.||10/10/2012||Confirmed|
|BEGP||Beige Holdings Ltd.||10/10/2012||Confirmed||
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