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With the market taking a bit of a tumble and the All Share index down about 3% on Thursday, the opportunity may have presented itself to secure stock at a good level. Looking back at previous dealings, shareholders may be heartened at Parkin's tenacity.
Earlier this year, Parkin snapped up 1.5 million Brikor shares at an average price of 97c. Since then the share price has nearly halved and his investment would be looking a little worse for wear.
As of close of trade on Thursday Brikor was trading at 58c, putting it on an undemanding historical multiple of 4.8 times earnings. As at its results released in June, the company had a net asset value of 6c per share. The company manufactures clay bricks, roof tiles and clay pipes at its manufacturing facilities situated in Nigel, Olifantsfontein, Vereeniging and Bronkhorstspruit.
According to the latest unit trust reports, fund managers don't share Parkin's optimism. Over the period January to March 2008, funds sold off 7.1 million shares in Brikor amounting to R23m worth of shares.
Taking its lead from the US
A big cloud hanging over the construction sector at present is short term future growth prospects.
In March and April, analysts at Stanlib and UBS released industry reports around the local construction industry. Both reports found that while infrastructural spend on power plants and sports facilities would be a positive, many residential property developments have been suspended due to power related issues.
Another area that analysts have warned on is that South Africa is taking its lead from the US, where construction in the residential sector has slowed as credit has tightened.
With many of Brikor's products aimed at the residential sector, this might count against it.
Since listing, Brikor has fallen from a 12-month high of 200c to around current levels of 58c, despite being quite active in terms of acquisitions. Either management is confident or the team is putting on a brave face.
- Fin24.com
