In the current environmentshould be looking for that have managed to weather the storm and emerged with strong . These companies would have had two important components before the pandemic began – a strong and highly competent . Hudaco had both.
Hudaco is a company with two primary divisions:
- The automotive aftermarket, power tool and fasteners, data networking, security and communication equipment businesses which are affected by .
- The bearings and belting, electrical power transmission, diesel engine, hydraulics and pneumatics, specialised steel, thermoplastic fittings and filtration businesses supply engineering consumables mainly to and manufacturing customers.
Theirfor the year to 30th November 2020 show that the first half was bad with the extra and made necessary by the pandemic. and were written down by R348m – which resulted in a for the period. The second half showed a remarkable recovery with rising 2,5% and (HEPS) up 4%. were reduced by 0,4% which shows a strong on efficiency and management.
Impressively, the company managed to reducelevels year-on-year by R365m – after conducting a which cost R82m. In effect a share buy-back is a and is treated as such by the . The company buys its own back in the open market and then cancels them so reducing the number of shares which it has in issue. This makes the remaining shares more valuable.
Hudaco is a traditional business with all the working capital problems. Working capital management is vital. This means keeping itsunder control, managing levels to avoid over-stocking and paying as late as possible so that they help to fund the business. In the second half of the year Hudaco managed to generate a 24% .
, the share has been in a long-term which ended on 27th January 2021 when the price decisively up through its long-term downward . Consider the :
You can see here the long-term downward trendline which has been in place since the share peaked at 16375c in March 2018. COVID-19 took the share down toaround R55 in March 2020, but it has bounced back and now trades at 9900c. At that price it is on a of 9,43 and a of 3,31 which looks like good value.
By any measure this is a solid business that will benefit directly as the South Africanimproves.
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