Nu-World: At least something from 1987 still looks good
Investors would be hard pressed to find a truly dreadful year in group’s more than three decades on the JSE
Consumer goods manufacturer and distributor Nu-World Holdings remains one of the star graduates from the wild and woolly listings class of 1987. Investors would be hard pressed to find a truly dreadful year in the group’s tenure of more than three decades on the JSE.
The most successful listings from the late 1980s listings boom – which include Spur Corporation, Combined Motor Holdings, Bowler Metcalf and Italtile – had a handful of things in common: conservative (and stable) managers, a singular focus on operations, an austere corporate culture, and a reluctance to chase acquisitions that might strain the balance sheet or stretch management.
Nu-World’s lean and mean operational style is clearly evident in the latest interim results to end-February, where a 2% increase in turnover was transformed into an 11% after-tax profit gain.Of course (as is the case with small cap companies these days), the commendable operating performances have largely gone unnoticed by the market. Nu-World trades on a desultory earnings multiple of less than five times with a yield of close on 8%.In the interim period, the quality of the group’s earnings was highlighted with the 435c/share headline earnings backed by some reassuring cash conversion.
At a strategic level it was encouraging to see Nu-World grow its offshore components to R432m (previously R395m) without sacrificing margins to gain a bigger foothold in Australia, India, Pakistan, Sri Lanka, the Middle East and Brazil. The offshore margin of about 8% is now markedly higher than the 4.5% eked out locally.