Share Code: SBP – Market Cap: R2.9bn – Dividend Yield: 1.2%
H1:24 Results: NAV Returns to Growth
- Sabvest’s Net Asset Value (NAV) grew +3% y/y to 11786cps (H1:23 – 11465cps), management hiked the Group’s dividend to 35cps (H1:23 – 30cps), and bought back a further R51.7m shares during the period (average price of c.6893cps versus the NAV of 11786cps and the current share price of 7450cps).
- Many of the Group’s underlying businesses recovered/grew nicely: Apex, Flexo and ITL all performed well while Corero’s share price more than doubled, and Transaction Capital unbundled We Buy Cars Holdings (JSE code: WBC).
- On a balance, the Group’s portfolio outlook is good, its valuations are proving conservative (see ‘Thoughts’ below) and management is steadily degearing as cash is realized and/or flows centrally.
Thoughts: Exits Underscore Conservative Valuations
- Sabvest has (1) agreed to exit Metrofile in two tranches at an above-market price (301cps), (2) received an initial R80.6m from its exit of Sunspray (at above-book at the time), & (3) concluded an exit from Rolfes that should be at a premium to its previous value in the Group’s NAV.
- This is c.6% of assets being realized at above-book prices (proceeds should go into degearing) and it goes to evidence Sabvest’s conservative unlisted valuations.
Valuation, 12m TP & Implied Return: Discounted
- The share is trading at a c.37% discount to NAV, which is well off from the JSE-listed peer group average discount particularly when compared based on Sabvest’s superior track record (i.e. the Line-of-Best-Fit below).
- Using our updated NAV (with the latest market prices) we arrive at a defendable (post-discount) fair value for Sabvest’s shares of 10754cps (previously: 9817cps), which still includes a HoldCo c.10% discount against this NAV (unchanged from prior period).
- Rolling our post-discount fair value forward, we see the Group’s 12m TP as 12616cps (previously: 11675cps) with an implied return of +69%.
