I know exactly how it feels to be constantly underappreciated. And it’s soul-withering. I’m probably not ready to talk about my efforts in self-landscaping our front garden on the weekend … it left both my offspring slack-jawed and my wife muttering darkly. I really can’t fathom what can possibly be unappealing about a giant braai pit.
But it’s the tennis court shenanigans that really grind me. Most of my winners these days come from drop shots and lobs — where my ability to grasp the vagaries of the Fish Hoek wind helps enormously. I can send opponents scurrying to all corners of the court in what I regard as well-choreographed court craft. Yet when I win the point, there is not even the slightest cheer or light applause from those spectating.
Sometimes there’s even an exasperated gasp … as if I’ve delivered a dastardly low blow. But let one of the incorrigible youngsters brutalise a heavy top spin cross-court winner, and there’s a standing ovation and loud whoops. I suppose that’s understandable, when you have swapped the nuanced elegance of Arthur Ashe, Ilie Năstase, Stan Smith or Björn Borg for today’s muscle tennis.
Now my sympathies this week lie with innovative and well-composed small-cap Santova Logistics, the tech-savvy freight forwarding and supply chain management business. This is a class act, steeped in good capital allocation, smart management and reassuring operating cash flows. It’s also one of the few small-cap counters that has harnessed a real international aspect to its operations.
Restrained applause
But it remains, I would argue, hugely underappreciated. The group last week kicked out a stonking trading update, pencilling in interim headline earnings to end August of between 55c and 57c a share. That 55%–60% improvement over the previous interim period got nothing more than restrained applause, with the share price not even shifting 5%.
Santova’s interim results will be out near the end of this month and the detail should be fascinating. But the company’s trading update cited the inclusion of recent acquisition Seabourne, improved foreign exchange movements and stronger trading performances across several of the group’s key operations (especially the UK and the Netherlands) as the main drivers of the improved profit performance.
Santova further noted that (markedly) higher freight rates during the interim period also buoyed the trading performance. On this factor, the world container index is up sharply since the start of the year and continues to roll along at elevated levels, with trading routes still vulnerable to geopolitical disruptions. Usually, when container rates go up, Santova tends to generate more revenue, which bodes well for robust trading into the second half.
It’s worth remembering that Santova reached about 70c a share in the second half of its 2026 financial year to end-February. That performance should, from a current perspective, be more than matched this financial year, which would place Santova on a modest earnings multiple in the mid-single digits.
Admittedly, the nature of Santova’s business means that returns can vary quite markedly over the years. The group, like the great Bidvest of yore, has largely been built on acquisitions, which have worked out well. But further dealmaking always presents risk — especially in a growing small cap that will need to make bigger capital allocation decisions to move the needle.
That said, I like that the company has been buying back its own shares, though there is probably a limit to this. And heaven forbid that the main shareholders, which include US-based Barca Capital and company executives, would ever yield to the temptation to buy out minority shareholders and take Santova private. It must have been tempting at times.
It’s worth noting that Santova has, in recent presentations, compared itself to more illustrious global peers such as DSV, Deutsche Post, CH Robinson Worldwide and Kuehne+Nagel International.
All of these (much larger) competitors trade at historic earnings multiples that are many times that of little old Santova. Frankly, I don’t see Santova at an earnings multiple of 20 any time soon — not while it’s listed on the JSE and subject to the jaundiced sentiment that afflicts even our top small caps. But even a gradual rerating could push the share price through R10 and perhaps closer to R12 over the medium term.
Small-cap success
Of course, improved investor sentiment might be aided if Santova looked for a listing on a larger offshore bourse where other international boutique investment houses like Barca Capital might gaze more optimistically on prospects. Then again, perhaps we should not lose sight of the fact that Santova, on a longer-term scale, has certainly been a small-cap success story for local investors.
Older readers might remember that about 15 years ago Santova shares might have been snapped up for anything between 30c and 60c. Just over eight years ago those shares could have been bought for between 281c and 357c, and when Covid first plagued the world’s trade systems they ranged between 120c and 190c. Quite conceivably in 2035 investors will look back at a share price of 875c and despair.
