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A BLIP OF ROUGHLY a year - from mid-2005 to mid-2006 - interrupted the record of a steadily growing share price that Transpaco had enjoyed for many years. However, the downturn in profits in the year to June 2005 that occasioned that setback appears to have been short-lived.
There was a good recovery in its 2006 financial year, which if anything has since accelerated. In the six months to December 2006, HEPS of 52,3c were 34% higher than the 37,1c of a year earlier and not far short of the 58,8c for the full 12 months to June 2006. A recent trading update says that when preliminary 2007 figures are released at month-end August, 12-month HEPS should be up between 35% and 45%, implying a range of 80c to 86c.
Growth has been both organic and acquisition-driven after buying Sasol's recycling plastics unit and Nampak's Cape Town retail plastic bag division. However, expansion does seem to have temporarily strained cash flow, as the past six months saw a R14m cash outflow from operating activities against inflows of R7m the year before and R15m in the intervening six months. That may be why the interim dividend was raised only 25%, from 8c to 10c. Last year's total distribution was 20c.
The share has held up well in current market uncertainty, perhaps helped by the fact that it's fairly tightly held. At June 2006 there were only 483 "public" shareholders, together holding 14m of the 30,5m shares in issue. At 880c the share is only 20c off its high, offering a forward p:e multiple in single digits, while a final dividend of, say, 16c making a total of 26c, will yield 3,25%. Tangible NAV is around 465c. That must surely be good value.