Bell Equipment is charging forward at the moment. An initial trading statement in November 2023 suggested Heps would be at least 59% higher for the year ended December 2023. A further trading statement has taken that even higher thanks to strong trading, and Heps is now expected to be up by between 65% and 73%.

Barloworld has a less enjoyable story to tell. Although we need to consider different reporting periods and different business models, Barloworld is primarily exposed to the mining industry, to which it sells major earthmoving equipment.

Revenue fell by 5.5% in the five months to February and Ebitda was down by 2.5%. Depressingly, Equipment Southern Africa suffered a revenue drop of 4.9%, mainly because of a 17.8% decrease in machine sales as demand fell. The state of South African infrastructure is doing nothing for mining confidence, and commodity pricing pressures are only making it tougher. The highlight was Barloworld Mongolia’s revenue, which was up by 24%.

Master Drilling also released numbers for the year ended December 2023. Revenue in US dollars may have been up by 7.2% to a record high, but Heps in dollars was only 2.1% higher. That’s better in rands, of course, with a Heps increase of 15.1%. It’s still nowhere near the levels Bell achieved.

This explains why Bell’s share price is up by 62% in the past year. Barloworld has dropped by 30%. Master Drilling is down by nearly 16% despite the growth in Heps.

Finding growth in the local market

If you know where to look, you can find some excellent stuff on the JSE. One example is CA Sales Holdings, up by 59% over the past year. It is a great example of the power of a simple strategy executed to a high standard.

In the year ended December 2023, revenue was up by 19.4% and operating profit grew by 40.7%. Heps came in 25.3% higher and the dividend was even better, up by 27.4%.

Through a combination of organic growth strategies and inorganic initiatives, such as a recently announced bolt-on acquisition in South Africa to achieve further market penetration, the company looks forward to another strong result in 2024.

Spar’s window of opportunity

Right now, Pick n Pay is worried about right-sizing its stores and sorting out the balance sheet. The focus is on the planned rights offer this year and the potential initial public offering of Boxer. To say it is putting out fires would be an understatement.

At the same time, Shoprite is charging ahead and trying to win as much market share as possible. It hardly seems like a fair fight, even though both retailers got exactly what they deserved. As for Spar, the group needs to take advantage of Pick n Pay’s weakness and Shoprite’s broader strategy which might leave some blind spots.

The convenience-focused grocery stores are still relevant, especially as people have returned to daily commutes in a post-Covid world. If Spar can stop scoring annoying own goals, the share price might even head in the right direction.

Aside from the obvious problems in Poland and a need to sell that business, Spar Switzerland is a structural concern, putting a real damper on Spar’s ability to grow there. At least the businesses in Ireland and southwest England are doing well, and that growth is turbocharged by rand weakness for South African investors.

The focus needs to be on the SAP implementation problems in the KwaZulu-Natal-based business that continue to negatively affect results.

Sirius buys low and sells high

Many property funds have a dodgy reputation when it comes to buying and selling properties. That may sound odd, but share prices on the JSE speak for themselves. Thankfully, there are some that understand the benefit of recycling capital at high prices and redeploying the money into cheap assets.

I can’t fault the latest deals at Sirius, with the disposal of an industrial park in Germany on a net initial yield of 5.7% and the acquisition of a multi-let business park in the UK on a net initial yield of 10.2%. Remember, a lower yield means a higher price and vice versa.

Sirius actively manages properties to improve the returns and we can see that strategy playing out in deals like these. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.