It is always worth revisiting your views and checking that assumptions remain valid. Below are a few of my previous articles with short updates as to how they are playing out.
On 16 May, I unpacked why I thought Santova was a great and (very much) underappreciated small cap on the JSE. Specifically, I zoomed in on the arguments against it, and hopefully did a good job of debunking them.
The group subsequently published stunning FY22 results with revenues organically growing 40% y/y, headline earnings per share (Heps) leaping 169% y/y, and basically all metrics roaring ahead.
On the back of these numbers, Santova rose from the 680 cents per share (cps) when we published, hit a high of 815cps and has now settled back down to circa 750cps levels. A mere +10% share price movement in the face of profits more than doubling.
The stock still sits on a lowly six times price-earnings (PE) ratio, and I believe my view remains valid here.
On 13 June, I briefly unpacked the demand-supply dynamics in the helium market and a newly-formed instrument whereby an investor could gain direct exposure to the commodity.
Since this article, the ArgHe token price has languished somewhat, albeit last week a fresh auction for the physically-deliverable token was held with stunning interest. If you refer to the official Twitter account of the issuer, Argonon, bids came in across a range of $0.80 to $0.875 per token (or more than double the current token price, at the time of writing).
If the auction range is anything to go by, the helium spot market is heating up.
And this cannot be a bad thing for Renergen (REN) as it progresses its Virginia Gas Project.
Master Drilling (MDI)
On 21 February, I noted how I expected stunning results out of Master Drilling Group.
Following this, in March Master Drilling released its FY21 results showing USD revenues up 40% y/y, USD Heps nearly quadrupling ( up 396% y/y) and its order book exploding.
Was that a once off? No.
Order books tend to translate into future periods’ revenues and, thus, this FY21 period has continued in H1:22 and the group recently released a strong trading update where it expects its USD Heps to grow by between 38% and +58% y/y.
The lights are still being shot out over there.
Finally, on 7 March, I shone the light on the deep value hidden in Grindrod and how this period may (finally) see it unlock for shareholders.
With Transnet’s problems, numerous exporters are pivoting into Grindrod’s Maputo port. Likewise, the group’s corporate actions continue to unlock value and see its broader operations perform well.
Therefore, is it any surprise that its share price on 7 March of 555cps has steadily risen to its current levels of above 1 000cps?
The stock remains on a 11.6 times PE and is trading under a positive business and trading update (that is not yet reflected in this valuation multiple).
Keith McLachlan is investment officer at Integral Asset Management.
* McLachlan and some of the portfolios managed by him hold shares in Santova, Master Drilling, Renergen and Grindrod.