THE BOTTOM LINE
Montauk is cooking with gas and prospects are looking hot
HCI spinoff generates electricity and gas from waste landfill sites across the US, and shares are running hard
So many punters dismissed Montauk Holdings – which generates electricity and gas from waste landfill sites across the US – when it was spun out of empowerment giant Hosken Consolidated Investments (HCI) in late 2014.
In the months after the separate listing, Montauk’s shares drifted to around 200c, giving the company a market capitalisation of around R270-million.Then a few astute punters started grasping the merits of green energy production in the US, and Montauk found some traction. Today Montauk’s market capitalisation of over R13-billion is roughly the same as HCI’s – an astounding bit of value creation.
Trade union Sactwu, the largest shareholder in HCI, must be a tad miffed at developments. Sactwu relinquished its shares in Montauk, preferring to concentrate on HCI’s local investments. But a number of HCI executives – notably CEO Johnny Copelyn, Andre van der Veer and Kevin Govender – held onto their haul in Montauk. Their returns – using a base price of 400c/share – are eye-popping.
Of course, there will be the question around whether Montauk – now over R100 on the JSE – has run too hard.
On an earnings multiple basis, Montauk looks on a rating reserved for high growth game changers like Naspers and Curro Holdings. But mid-term growth prospects appear compelling with sizeable new landfill contracts set to come on stream.
Then there are the persistent murmurings around Montauk seeking a listing in the US – where investors are far more familiar with such complicated and technical ventures.