Super Group: Upwardly mobile
Legacies, especially value-crashing legacies, are tough to shake off.
Mobility specialist Super Group, wizened readers might remember, came to market in the mid-1990s under the leadership of one Larry Lipschitz. A race for acquisitions was soon under way. A dozen years later Super Group was creaking under a hazardous debt load. The group registered a loss of R1.35bn in financial 2009. There was R4bn in debt and tangible NAV was scorched. Bankruptcy loomed.
Cue a couple of rescue rights issues, and the timely shunting of one Peter Mountford into the driver’s seat. Mountford quickly unhitched the noncore baggage and meticulously restored the group to sustainable profits around its mobility core.
The recent divestment from Australia-based SG Fleet not only unlocked value for shareholders but also tuned Super Group’s growth engine by reinforcing its capital structure.
The market, though, still seems content to just kick the tyres. The group’s market rating — a p:e of 7.5 and a forward p:e of less than 6 — remains more Ford Fiesta than Ferrari F80. That might shift. Certainly, there is nothing “sedentary” about Super Group’s year-to-end-June performance, where a rev in headline earnings of between 33% and 40% has been pencilled in.
Most businesses performed strongly, gaining market share, and with gearing deemed modest, shareholders might expect a dividend drive. The share is up almost 30% over three months, with one notable beneficiary being the much-maligned Public Investment Corporation, which acted prudently in recently bumping its stake over 25%.
Wesizwe Platinum: Deep value ... very deep
Typically, junior mining is exciting, and then, more often than not, excruciating. Red tape, commodity swings, inexperience and capital constraints can, and inevitably will, bedevil the shifting of a mining project from planning to production.
In the words of one Thomas Hobbes — commenting on life in a bygone era — junior miners’ tenures on the JSE can be “solitary, poor, nasty, brutish, and short”. The few that do endure, and, more importantly, are tenacious in moving towards the actual mining phase, should prove rewarding … perhaps even delivering that legendary 10-bagger gain.
But frankly, scintillating junior mining ventures have been few and far between in recent decades — perhaps Ocean Diamond Mining Holdings, Kalahari Gold or Eland Platinum ... and more recently, Alphamin.
Wesizwe Platinum, which listed 20 years ago, is one long-termer that one might have hoped would have been more rewarding, especially considering the recovery in the platinum price and the group’s concerted effort to get production flowing at its Bakubung mine.
Operations that were set for a phased restart at the end of June are now stalled again as trade unions kicked against workforce trimming. This means a lot of money stays trapped underground as Wesizwe, which has a not inconsiderable loan outstanding to its Chinese controlling shareholders, is unable to cash in on robust platinum group metals prices.
For brave value diggers, spadefuls of a 44c share might be an exciting option. The more prudent might prefer the bigger (and more reliable) platinum players.
Jamie Carr, who has been travelling in deepest Africa, returns to these pages next week
