Tag Archives: small cap

Sabvest Capital – H1:25 Results – Apex Drives NAV Growth

Share Code: SBP – Market Cap: R3.6bn – Share Price discount to NAV: 31%

Sabvest Capital – Results Note – H1:25Download

H1:25 Results: Share buy-backs enhance growth

  • Sabvest’s Net Asset Value (NAV) grew +15% y/y versus H1:24 (or +3% versus FY 24), which, when combined with further accretive share buy-backs, saw NAV per share grow +5% to 13882cps (FY 24: 13213cps).
  • H1:25 share buybacks amounted to R69.3m (FY 24: R59.9m), or 735,000 SBP shares at a VWAP of c.9429cps (well below NAV and wonderfully accretive).
  • Importantly, valuation multiples were kept flat during the period, thus providing NAV growth of good quality.
  • Strong growth in Apex Partners and continued momentum in the recovery in ITL Holdings more than offset some disappointing performance in Amicus, Narrowtex (part of SA Bias), and Halewood SA.
  • The dividend was hiked +14% to 40cps (H1:24 – 35cps).

Thoughts: Momentum in H2:25E could rise

  • We expect continued growth from Apex (particularly as it unlocks value from DRA), and we expect ITL Holdings’ and Valemount’s respective performances to pick up momentum through the remaining year.
  • We also expect near-term recoveries in both Amicus (likely) & SA Bias’ Flowmax (likely) with a medium-term upside in Valemount (probable) & Halewood (possible).
  • Overall, though, we expect a good H2:25E performance from the Group’s businesses and their resulting investment values in Sabvest’s H2:25E NAV.

Valuation, 12m TP & Implied Return: Discounted

  • We estimate that the share is currently trading at a c.31% discount to its current 13704cps NAV and—after including a HoldCo discount against this NAV of 10% (unchanged)—we believe that the share’s fair value is around 12334cps (previously: 11798cps).
  • Rolling our post-discount fair value forward, we see the Group’s 12m TP as 14540cps (previously: 14017cps) with an implied return of +53% from these levels.
Sabvest Capital – Results Note – H1:25Download

Astoria Investments Ltd – H1:25 Results Note – Lots of Dry Powder on Hand

Share Code: ARA – Market Cap: R490m – Discount to NAV: c.28%

Astoria Investments – H1:25 – Results NoteDownload

H1:25 Results: Beyond Diamonds

  • Group NAV slipped -3.5% to $59.85 per share (FY 24: $61.99) or down -9% to 1065cps (FY 24: 1171cps) as the continued diamond bear market took the diamond investments from a c.113cps contribution to Group NAV (end of FY 24) to zero.
  • If the c.113cps diamond investments are reversed from FY 24’s NAV, the Group’s NAV would have grown slightly (+3% p/p).
  • Beyond diamonds, positive developments include a clean exit from ISA Carstens, strong performances from Leatt Corp and Goldrush, and OIH’s exit from A-Tec. Following the period, OIH repurchased some of Astoria’s shares for R105m in cash.

Commentary: Capital Allocation Options

  • Given all the realisations during (and post) the H1:25 period, the Group is currently quite cash flush, and where management allocates this capital will be pivotal in future NAV.
  • Perhaps illustrative of management’s capital allocation intentions is that one of these realisations lowered the Group’s significant exposure to OIH (i.e. dropping portfolio concentration) and another was CFD’s in Astoria’s own share.

Valuation, 12m TP & Implied Return: More than Priced In

  • We estimate that Astoria’s share is trading at c.28% discount to NAV (Previously: 36%), which includes the partial realisation of OIH, the cash receipt from ISA Carstens and Leatt Corp and Goldrush’s latest share prices (and exchange rates). Cash (& cash equivalent) now forms c.24% of the Group’s NAV.
  • With c.24% of Astoria’s NAV is net cash, the market is basically paying book value for the Group’s investments and offering investors this net cash for “free”.
  • If we take out our calculated “HoldCo discount” of c.16.3% (15.9%), we arrive at a fair value for Astoria’s shares of c.913cps (Previously: 858cps) or c.16% higher than the share price.

Rolling this fair value forward at our Cost of Equity, we arrive at a 12m TP of c.1076cps (Previously: 1020cps) that implies a potential return of c.36% from the current share price.

Astoria Investments – H1:25 – Results NoteDownload

Stor-Age Property REIT Limited – FY 25 Results – Steady Performance

Share Code: SSS – Market Cap: R7.5bn – P/B: 0.9x – DY: 7%

Stor-Age REIT – FY 25 – Results NoteDownload

FY 25 Results & Thoughts: Well Run, Well Positioned & Globally Competitive

  • Stor-Age owns a well-managed, growing self-storage property portfolio that was built out of a strong SA-base (that remains robust and growing) and is increasingly allocating capital towards the UK (offering Rand Hedge benefits) while cleverly leveraging the capital-light policy of JV funding structures to build out what will likely become a substantial portfolio.
  • FY 25 rental income growth has been strong, historically outpacing inflation; SA achieving +10.2% and the UK +6.5% in the period. FY 25 occupancies remain high in owned properties—exceeding 90% in South Africa and around 84% in the UK—while JV properties are still in their lease-up period with occupancies around 74% in SA (FY24: 65%) and 63% in the UK (FY24: 57%).
  • The Group’s Net Property Operating Income (NPOI) margin has consistently been around 74% since FY19. A 65% EBITDA margin remains strong and underpinned by solid cash flows with a history of distributing nearly all distributable earnings as dividends. The Group did recently shift its distribution policy from 100% to 90~95% of distributable income—retaining some capital for growth—thus, FY 25’s payout ratio is 90%.
  • Distributable income rose 4% in FY25 and management has indicated a 5% to 6% expected increase for FY26, which we think may prove to be slightly conservative (our forecast is fractionally above the high-end of this range).
  • Net Asset Value (NAV) per share increased by 5.6% in FY25 (c. 7% per year for the past four years). We note that the Rand/Pound exchange rate has been very stable over the past two financial years. Theoretically, the Rand should depreciate against the Pound by the annual inflation differential. Should this revert to the theory, there will be upside when and as the Pound assets and earnings are converted to Rand earnings & distributions.
  • We consider the Group’s balance sheet comfortably/lowly geared though comparable international peers do have somewhat lower average gearing.

Valuation and 12m TP: Relative Model and Dividend Discount Model Used

  • Stor-Age’s share price has not kept pace with its NAV growth, leading to a Price/Book (“PB”) ratio of 0.8-0.9x. The Group’s quality, its potential for both Rand Hedge benefits from its UK portfolio, optionality from organic and acquisitive growth informs our view that the share should (at least) track its historic 1.0x PB over time.
  • Stor-Age’s share price has not kept pace with its NAV growth, leading to a Price/Book (“PB”) ratio of 0.8~0.9x. The Group’s quality, its potential for both Rand Hedge benefits from its UK portfolio, optionality from organic and acquisitive growth informs our view that the share should (at least) track its historic 1.0x PB over time.
  • We determined the fair value for Stor-Age by using a Relative Valuation Model and a Dividend Discount Model (31 March 2025):
    • Relative Value: Our fair value is R16.71 per share,
    • Dividend Discount Model: Our fair value is R16.71 per share, &
    • Equal-weighted average valuation: R16.71 per share.
  • Rolling this fair value forward, we arrive at a 12m Target Price—factoring in dividends—of R17.80 (Previously: R17.10); we expect this to generate a 12m return of c.19% at the 30 June 2025 share price of R15.95.
Stor-Age REIT – FY 25 – Results NoteDownload

Astoria Investments Ltd – Results Note – Rough in the Diamond

Share Code: ARA – Market Cap: R418m – Discount to NAV: c.35% (c.32% assuming Diamond investments worth zero)

Astoria Investments – Q1:25 – Results NoteDownload

Q1:25 Results: Diamond Valuations Written Down

  • While Q1 and Q3 results from Astoria are often more administrative (unlisted valuations are usually only updated at Q2 and Q4 period ends), this quarter saw continued pressure on diamond prices and management have prudently written the Marine Diamond valuation to nil and impaired the Trans Hex (i.e. Land Diamond) valuation by 55% to $1.2m.
  • This resulted in the Group’s NAV dropping by -6% in USD & -9% in ZAR (the Rand also strengthened over this quarter or, more accurately, the US Dollar weakened) when compared to the prior quarter (31 December 2024).

Commentary: Gone but Not Nil

  • Despite a zero value, the Marine business continues to operate and can be considered a “nil value option” in Astoria’s NAV.
  • Consensus in the diamond market appears to expect a modest recovery in rough diamond prices (mid-single digits) around late 2025. This recovery is dependent on supply chain efficiencies, marketing effectiveness, and economic stability.
  • Likewise, consensus appears bearish on a full return to pre-pandemic due to the prevalence of lab-grown diamonds.

Idex Diamond Index – 5-year Spot Chart

Valuation, 12m TP & Implied Return: More than Priced In

  • Astoria’s share is trading at c.35% discount to NAV (Previously: 30%) once we update its NAV with current spot/listed prices. This discount is closer to c.32% if we assume that the remaining 4% of NAV in Trans Hex is worth zero.
  • If we take out our calculated “HoldCo discount” of c.15.9% (unchanged), we arrive at a fair value for Astoria’s shares of c.858cps (Previously: 966cps) or c.27% higher than the current share price – but, this fair value is including the diamond valuations as is (i.e. Marine at nil & Land halved) and note our comment about “nil value options” above. Any recovery in the diamond market would translate into upside here.
  • Rolling this fair value forward at our Cost of Equity, we arrive at a 12m TP of c.1020cps (Previously: 1150cps) that implies a potential return of c.51% from the current share price.
Astoria Investments – Q1:25 – Results NoteDownload

Astoria Investments Ltd – Results Note – Marine Diamond Operations Take a Hit

Share Code: ARA – Market Cap: R496m – Discount to NAV: c.30%

Astoria Investments – FY 24 – Results NoteDownload

FY 24 Results: Disappointing Diamond Market

  • Astoria’s NAV per share decreased to 61.99 USD cents (R11.71) as at 31 December 2024, compared to 79.47 USD cents (R14.54) at the end of the previous financial year, representing a decrease of 22% in USD and 19.5% in ZAR.
  • The primary drivers for the decrease in NAV were the decline in the value of Trans Hex Marine operations and the market prices of the listed assets, Goldrush and Leatt. OIH performed well during the period.
  • OIH’s is exiting A-Tec (sold at approximately the original capital value) and Astoria has accepted a signed sales agreement for its 49% shareholding in ISA Carstens for R66.8m and the outstanding loan from Astoria Treasury for R4.2m.

Commentary: Upcoming Capital Allocation Decisions

  • It is worth noting that both A-Tec (held in OIH) and ISA Carstens exits are at-or-above what Astoria’s NAV was valuing these investments at, which lends comforting evidence as to the tangibility of the Group’s NAV.
  • Furthermore, both exits free up cash that can be deployed. We expect OIH to use most of this cash to grow while Astoria may well apply the cash freed up from ISA Carsten’s exit towards share buybacks given the discount to NAV in the share price making this action quite accretive.

Valuation, 12m TP & Implied Return: Widening of Discount

  • We estimate Astoria’s current NAV as $0.62 or 1149cps a share, implying that the current 800cps share price is at a 30% discount to its NAV.
  • If we take out our calculated “HoldCo discount” of c.15.9% (Previously: 13.6%) from this NAV, we arrive at a fair value for Astoria’s shares of c.966cps (Previously: 1216cps) or c.21.% higher than the current share price.

Rolling this fair value forward at our Cost of Equity, we arrive at a 12m TP of c.1150cps (Previously: 1433cps) that implies a potential return of c.44% from the current share price.

Astoria Investments – FY 24 – Results NoteDownload

Sabvest Capital – FY 24 Results – Wonderful Performance

Share Code: SBP – Market Cap: R3.5bn – Dividend Yield: 1.1%

Sabvest Capital_Results Note_FY 24Download

FY 24 Results: Excellent Results

  • Sabvest’s Net Asset Value (NAV) increased to R5bn, up 18% from R4,3bn and, amplified by share buy-backs at below-NAV prices, the Group’s Net Asset Value per share (NAV ps) increased by 21% to 13213cps (FY 23: 10936cps).
  • Major contributors to the NAV increase include strong performance from almost all investees, particularly ITL, which experienced a material fair value gain as the labelling group (finally) recovered strongly following the draw-out apparel sector post-COVID recovery.
  • Major realizations during the period include Metrofile, Rolfes, WeBuyCars, and (a partial exit of) Sunspray.
  • Share buybacks amounted to R59.9m (2023: R11.8 million) for 850 000 SBP shares (VWAP was c.7047cps).

Thoughts: Positive Momentum Going Forward

  • Growing investee profitability, central degearing annualizing and, possibly, further opportunistic share buy-backs are all promising for per share NAV growth in the coming period.
  • Furthermore, we expect good NAV growth to be particularly driven by positive performances in Apex Partners (DRA Global’s unlock) and the ITL Holdings Group (recovery shifting to growth).
  • It is worth note that the consistent execution of profitable exits at or above book value further supports our view of the sturdiness of the Group’s NAV.

Valuation, 12m TP & Implied Return: Discounted

  • We estimate that the share is currently trading at a c.31% discount to its current 13108cps NAV and—after including a HoldCo c.10% discount against this NAV of 10% (unchanged)—we believe that the share’s fair value is around 11798cps (previously: 10754cps).
  • Rolling our post-discount fair value forward, we see the Group’s 12m TP as 14017cps (previously: 12616cps) with an implied return of +55% from these levels.
Sabvest Capital – FY 24 Results NoteDownload

Metrofile Holdings Ltd – H1:25 Results – South Africa’s Bottomline Turns

Share Code: MFL – Market Cap: R0.7bn – PE: 14x – DY: 8%

Metrofile Holdings – H1:25 – Results NoteDownload

H1:25 Results: The Good Offset by the Bad

  • Metrofile reported a disappointing H1:25 as improvements in MRM South Africa were offset by struggles in other non-digital areas. Group continuing revenue increased by 4%, driven by secure storage and cloud services, but this was impacted by declines in content services and image processing.
  • While MRM South Africa improved operating profit by 19%, MRM Rest of Africa & MRM Middle East faced challenges, and Normalised HEPS decreased by 18% to 10.7cps (H1:24 – 13cps).
  • Newly classified segment, “Cloud & Content Services”, saw revenue increased by 9% to R74m, but operating profit decreased by 10% to R10m. Metrofile Cloud (previously, IronTree) demonstrated consistent growth but (project-driven) Metrofile VYSION had a slower period.
  • Management focus remains on building a digital offering, generating free cash flow, and reducing the Group’s debt.

Our Thoughts: “Cloud & Content Services” Segment Revealed

  • The exit of Tidy Files and separating of the Group’s digital businesses into the “Cloud & Content Services” segment allow us to value this segment separately.
  • Due to this, we have added a Sum-of-the-Parts (SOTP) model focussing on EV/EBITDA relative multiples drawn from listed digital document/file storage companies.

Forecast, Valuation & Implied Return: 250~300cps fair value range

  • While we have maintained our DCF approach as a sense-check, we have changed our valuation methodology to an EV/EBITDA driven Sum-of-the-Parts (SOTP) given the different profile that the newly disclosed “Cloud & Content Services” segment has from the rest of the Group and, thus, the different multiple it could arguably demand in the market.
  • Based off this, we see Metrofile’s fair value as 297cps (previously: 347cps), implying an EV/EBITDA of 6.4x & a PE of 16.7x. Rolling our fair value forward, we arrive at a total return 12m TP of 347cps (previously: 403cps).
  • This agrees with our DCF Model’s views and, broadly, we think that the Group’s fair value range is from c.250cps to c.300cps.
Metrofile Holdings – H1:25 – Results NoteDownload

Stor-Age Property REIT Limited – H1:25 Results – Building on a Solid Foundation

Share Code: SSS – Market Cap: R7.53bn – PE: 8.8x – DY: 7.29%

Stor-Age – H1:25 – Results NoteDownload

H1 FY 24 Results: In-line to better-than-expected

  • Distributable income grew by 3.5% from H1 FY24 (61.36cps) to H1 FY25 (63.51cps). This growth lagged the growth in FFO which rose nicely by 7.0%.
  • Rental income grew 8.1%, predominantly attributable to above inflation same-store rental growth in the SA segment. In the UK, same-store rental rate increases were in line with UK inflation but a good improvement in occupancies contributed to this segment’s growth.
  • Management have guided for FY25E distributable income of 122cps~126cps (the mid-range of this guidance implies a Forward Dividend Yield of c.7.9%).

Thoughts: UK difficulty offset by SA strength

  • Competitive pressures in the UK may result in limiting Storage King’s rental growth to inflation but a solid performance in the SA segment has continued with rental rates growing above inflation whilst still maintaining target occupancies levels (c.92.0%).
  • Shurgard’s acquisition of Lok’nStore is a good proxy for implying a valuation of the Group’s UK segment – we explore this further in the body of this note.

Updated Forecast and Valuation: Valuation & TP Lifted

  • We see Stor-Age’s fair value as R16.16 per share (previously R15.50) based on a blended valuation approach (DCF & relative P/B & EV/EBITDA values).
  • Rolling forward our fair value by 12 months at our Cost of Equity (less our expected dividend) gives us a 12m TP of R16.73 per share (previously R15.97), implying a total return of c.14.1% (price return of +7% and an expected dividend return of +7.14%).
Stor-Age – H1:25 – Results NoteDownload

Metrofile Holdings – FY 24 Results – Disappointing but could be the Bottom

Share Code: MFL – Market Cap: R1.1bn – PE: 15.1x – DY: 5.6%

Metrofile Holdings – FY 24 – Results NoteDownload

FY 24 Results: Weaker than expected

  • Metrofile’s revenue rose only +1% with MRM South Africa’s revenue slipping -3% hurt the Group as delayed decisions by customers and slower product sales and revenues from digital more than offset good box pricing.
  • The MRM Middle East’s EBITDA margin fell as management had to fend off two large new entrants in the market, MRM South Africa’s scanning margins saw pressure from internal issues and continued weakness in Kenya saw management impair goodwill by R53.5m in this segment
  • Management has decided to wind up Tidy Files (successfully executed after year-end), triggering a R19.9m one-off in FY 24.
  • All these one-offs combined to negatively hit EPS by c.12.6cps with EPS coming in at 3.9cps (FY 23: 32.1cps) but—excluding the one-offs—the Group’s Normalized HEPS declined to 20.0cps (FY 23: 32.1cps).
  • Despite these troubles, the Group’s cash generation remained strong (R287m of EBITDA generated R309m of cash from operations), degearing continues (Net Debt dropped -9% to R537m) and the Group declared a full-year dividend of 14cps.

Our Thoughts: New CEO, revised forecasts

  • The Group has a new CEO with a solid background, the current CFO steps into MRM South Africa’s turnaround as MD of this major segment, & the Board will announce a new CFO shortly.
  • We have been relatively ruthless by lowering some long-term assumptions and downgrading FY 25E HEPS by c.-17% (but still see it recovering from FY 24’s trough earnings).

Forecast, Valuation & Implied Return: Lower discount rate

  • We see Metrofile’s fair value as 347cps (previously: 390cps), implying an EV/EBITDA of 7.0x & a PE of 21.1x; this compares attractive to Iron Mountain’s current multiples (see below):
  • The change in our fair value is less of a downgrade than our cut in earnings as the large drop in South Africa’s sovereign bond yields over the period has propped up our segmentally-driven DCF fair values (i.e. future cash flows are now worth somewhat more).
  • Rolling our fair value forward, we arrive at a total return 12m TP of 403cps (previously: 456cps), implying a high c.61% return (including dividends) from these levels.
Metrofile Holdings – FY 24 – Results NoteDownload

Sabvest Capital – H1:24 Results – Returning to Growth

Share Code: SBP – Market Cap: R2.9bn – Dividend Yield: 1.2%

Sabvest Capital – Results Note – H1:24Download

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%.
Sabvest Capital – Results Note – H1:24Download