ARTICLES

CA Sales

15 January 2024 By PDSNET

In recent years, the JSE has not seen many high-quality, exciting companies listing on the exchange. One of those few is CA Sales Holdings (CAA), which offered both fund managers and private investors an excellent opportunity to make a significant capital gain last year.

CAA is a company which has grown out of supplying fast-moving consumer goods (FMCG) to Botswana. It also supplies goods to Eswatini (Swaziland), Namibia, South Africa, and a smattering of other African countries. Its business consists of taking on the warehousing and distribution of specific brands on behalf of manufacturers and then getting those brands into stores and then into supermarket trolleys – mainly in Southern Africa.

Looking at its financials for the six months to 30^th June 2023, half of CAA’s revenue of R5,2bn originates in Botswana, 19,7% in Namibia, 14,5% in Eswatini and 13,7% in South Africa with 1,8% going to other nearby countries like Zambia, Zimbabwe, Mauritius, and Lesotho. Obviously, the cost of fuel is a major factor in this company since most of the products it handles are moved by truck.

In its maiden interim results for the six months to 30th June 2023 the company reported revenue up 22,5% and headline earnings per share (HEPS) up 21,5%. The growth was mostly organic, but the company has been making acquisitions. The group acquired the T&C Group which is a retail and distribution company in Namibia for R65m which resulted in a gain of R123,6m due to the increased market share in that country.

The group’s balance sheet is healthy with R590,4m in cash and non-current liabilities of only R327m with its finance income exceeding its finance costs. There is an intangible asset of R514,7m on the balance sheet which is the goodwill which has accumulated from making various acquisitions – but that is both expected and quite normal in a company like this since part of its growth comes from buying up successful retail and distribution businesses in various Southern African countries.

The company listed 475,4m shares on the JSE on 27^th June 2022. After some initial excitement and some stagging, the share price settled into a steady upward trend in the last three months of 2022. Then for the first 8 months of 2023 it was moving sideways between 650c and 750c.

The break came on 25^th August 2023 when the share broke up to 775c and it was added to the Winning Shares List (WSL) on that day. Since then, it has moved up to 1151c – a gain of 48,5% in under five months. Consider the chart:

Since October 2022, the company has been gaining acceptance among institutional fund managers as a high-quality, growing business. We expect that process to continue, and we expect the company to grow further as it expands its footprint with additional brands and a greater penetration of African markets.

Its business model has great potential given the difficulty that many FMCG companies, such as Pick n Pay, have had in establishing a presence in various African countries.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

Share this article:

PDSNET ARTICLES - OCTOBER 2018

S&P500 Earnings

Whether we like it or not, the progress of the JSE is determined to a considerable extent by what happens on Wall Street. If the New York Stock Exchange (NYSE) is in a bear trend then the high probability is that the JSE will also be heading south. So, private investors are always well-advised to keep their eye on American markets and to take a view on where they might be going. The best way to follow the NYSE is through the

Post Script - Mining

On 12 October 2018, we published an article on mining in South Africa. One of our clients very kindly corrected some of our mistakes in that article and added more value. He has agreed that we publish his contribution. Historically the economies of countries first depended on easily exploited resources on land and sea and, as technology developed on, mined minerals. South

Gambling Vs. Investing

GAMBLING

Gambling is associated with casinos and is epitomised on the roulette table. In roulette members of the public essentially bet against each other with the casino taking a small percentage for the cost of setting up and running the table. There are 37 numbers on a roulette table – three rows of twelve numbers plus the zero. If you place a R10 bet on every number you will have to outlay R370 – and then you

Speculating on Aveng

Aveng was once the largest construction company in South Africa and in August 2008 it traded for just under R70 per share. Since then it has been hammered by a host of problems beginning with the 2008 sub-prime crisis, to the dearth of construction work following the 2010 World Cup, the heavy fines imposed on the construction shares by the Competition Commission for collusion and several

Naspers Value

Naspers is something of an anomaly on the JSE because it accounts for roughly 20% of the JSE Top 40 index. This is because of an inspired decision by Koos Bekker to acquire a 33% stake for $32m in what was then a small internet/social media company called “Tencent” back in 2001. This investment has performed beyond even Bekker’s wildest expectations, exploiting the Chinese penchant for social media and gaming. On the 22^nd

Mining

It would be fair to say that the South African economy has been substantially built on mining – first diamonds, then gold and then platinum and a host of base metals and minerals. South Africa is home to two geological features which have endowed it with enormous mineral wealth. They are the Witwatersrand Basin and the Bushveld Igneous Complex. The Witwatersrand basin is an ancient sea bed which is buried under layers

Exploiting October Fear

Ever since the collapse of Wall Street in October 1929, October month has been a time of fear and nervousness for investors. That fear was compounded by the single day 23% drop in the S&P500 index in October 1987. So every October, investors, especially in America, worry about a possible melt-down in the share market. And, of course, some of them decide to sell out just in case there is such a crash. Those sell-outs tend