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SHARE WATCH: Forgotten shares that might offer value

Sep 14 2016 10:14
Kirk Swart


Company Data

INVICTA HOLDINGS LIMITED [JSE:IVT]

Last traded 7
Change 1
% Change 8
Cumulative volume 2964
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

BELL EQUIPMENT LIMITED [JSE:BEL]

Last traded 6
Change 0
% Change -2
Cumulative volume 5430
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

NAMPAK LIMITED [JSE:NPK]

Last traded 1
Change 0
% Change 24
Cumulative volume 1084517
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Cape Town - Overberg Asset Management analyst Kirk Swart looks at shares that are often cast aside, which might offer value in this week's five shares to watch.

1. Invicta [JSE:IVT]

Invicta has been in the news for all the wrong reasons lately, with some shareholders claiming that there have been some irregularities regarding company share buybacks. Invicta was quick to rectify these concerns.

The company, which is Southern Africa's leading distributor of engineering consumable products, is chaired by Christo Wiese. Wiese also has a 38% stake in the company.

Outside of engineering consumables, Invicta also operates in the capital equipment and building supply divisions, which includes the likes of Tiletoria.

Invicta's share price reached a high just shy of R130 in January 2014. Since then the share price has been hit hard by the market. Being exposed to a very cyclical industry, Invicta has shed R72 on its share price and is currently trading at around R51.

Investors might see some light at the end of the tunnel as Invicta's deputy chairperson, Arnold Goldstone, noted that they are seeing some improvements in certain market segments that they operate in with competitors leaving the market after a horrid time.

2. Bell Equipment [JSE:BEL]

Bell Equipment is South Africa's only manufacturer and distributor of heavy equipment. The group has two manufacturing plants, one in South Africa and one in Germany.

Specialising in articulated dump trucks (ADT), front-end loaders, tractors, haulage tractors, the group is exposed to the mining industry and commodity prices.

Bell equipment also supplies trucks to the construction, forestry, agriculture, roads & rehabilitation and crushing industries.

Due to the cyclical nature of its business, and the slow economic growth worldwide, Bell's share price is trading at R11. This is 45% below its NAV of R24.30.

Despite tough economic times, Bell continues to invest in R&D and are continually expanding its product range. The share is trading at a price earnings ratio of 6.

3. Pinnacle Holdings [JSE:PNC]

Pinnacle Holdings is one of Africa's largest providers of ICT products and services. It operates via its four subsidiaries namely Pinnacle, Centrafin, AxizWorkgroup and Datanet.

Pinnacle Holdings, in its recent preliminary results for the year ending June 2016, announced that revenue increased by 37% and core earnings per share by 12%. This is impressive for a company trading on a price earnings ratio of 8.

Back in 2013, Pinnacle traded at R26 per share. Pinnacle does a lot of work for the government, so when the news broke in early 2014 that one of Pinnacle's non-executive directors had been charged on suspicion of taking a bribe, the share price fell. It fell all the way down to R6.36.

Subsequently the charges have been dropped and the share price has recovered somewhat. It is currently trading on R17.20.

4. Nampak [JSE:NPK]

Nampak is Africa's largest packaging company producing packaging in metal, glass, paper and plastic. With a footprint across Africa and the UK, Nampak has a diversified geographical revenue stream. South Africa contributes around 47% to trading profit, with 47% from the rest of Africa and 3% from the UK.

Nampak's metals division is the biggest contributor to group revenue, contributing 53%. The division is responsible for the manufacturing of tin cans for beverages, foods, and general packaging across Africa.

The second largest contributor to revenue is the plastics division which contributes 31%. The plastic division produces HDPE and PET bottles, crates and various other plastic bottles used in daily household activity.

In December of 2014, Nampak traded at R44. With the slowdown in the African economy, Nampak have had to deal with low oil prices and low global growth.

Given the negative sentiment, Nampak is trading at R19 today. This is despite its half year results for 31 March 2016 showing revenue growth of 10% and trading profit growth of 17%. Nampak is trading on a price earnings ratio of 10 and on a dividend yield of 4%.

5. MTN [JSE:MTN]

MTN has seen its share price decline substantially following the Nigerian SIM card scandal in which MTN failed to register 5.2 million subscribers. MTN was fined by the Nigerian government and must pay 330 billion Naira over a three-year period.

Falling from just under R260 in September 2014, MTN is currently trading at R114. This is a drop of 56.16%. For the six months ending June 2016, MTN reported a headline loss per share of R2.71. Investors who are willing to look beyond these short term setbacks might find some value.

Do you agree with Kirk's stock picks? Send us yours and tell us why.

* Kirk Swart is an analyst at Overberg Asset Management , an Authorised Financial Services Provider (No 783) which specialises in the private management of local and global discretionary portfolios as well as pension products.

Disclaimer: The above article does not constitute financial advice and is not a recommendation. Investors must always seek the advice of professionals and trade with caution. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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