What a wonderful business we have - Wayne Samson of Ellies.

JOHANNESBURG - "Damn, are we in a good business!" enthused Wayne Samson CEO of Ellies (JSE:ELI) at the JSE's showcase on recovery stocks two weeks ago.

"Satellite television is no longer a luxury. Information is a necessity. That's why you see satellite dishes in every informal settlement."

Ellies new slogan is: "bringing the future to your home".

Even though the SABC's digital conversion has been delayed until after the World Cup, Ellies is doing well on DStv and high definition TV installations. Its Elsat aerials and its PVR decoders are market leaders with market shares of 60-80%. DStv is no longer just for the rich. Already 3m viewers are connected.

Customers of On Digital Media/Top TV, the opposition satellite channel that launched Thursday, will also clamour for Ellies/Altech boxes and Elsat dishes.

Samson says ODM's dishes face a different direction so most households will need two: "Wonderful for business", he quipped.

Then there is the prospect of supplying a large portion of 9m set-top boxes to enable the SABC to go digital. Ellies has a joint venture with Altech which is likely to be the market leader.

In the power sector, Ellies bought Megatron and has rationalised it into ten branches nationwide. Most electrical businesses don't like to hold stock, so, for many, Megatron is a first port of call. Megatron's vendors have been happy to accept Ellies shares in lieu of cash, which is effectively a rights issue. Last year's negative cash-flow trend has been reversed. Indeed, cash flow recently improved by R30m.

Ellies sells everything from electrical sub-stations to municipalities to electric kettles and irons.

Samson is perhaps the most bullish CEO most of us have ever heard. He has been bright and cheerful ever since the company listed in 2007. That did not prevent the share diving from an all-time high of 267c to an all-time low of 87c when the company found itself overstocked with generators. Happily the share price has subsequently doubled.

Last week Moneyweb profiled five recovery companies featured at the showcase staged by Vunani (JSE:VUN) Capital  - Buildworks (JSE:BWK), Keaton Energy, Top Fix, Adcorp and SA French (JSE:SFH). Today we look at Interwaste, Wearne and Ellies. The table sums up how all eight have fared.

Interwaste is the second biggest player in the rubbish and recycling market. It has three sites in Mpumulanga and an R80m project in North West. It is looking at Harare and Mozambique but has just sold its Namibian business for R5m cash.

Said CEO Alan Willcocks: "Our own PE is just over three. Management offered us a PE of 14. We think we can use that money better elsewhere."

Profits flagged alarmingly recently thanks partly to lower volumes and the national transport strike. Willcocks said costs have been cut hard.

"We had to pat a lot of our people on the back and say we love you but not that much."

A superb deal on Mercedes Benz trucks and with Avis car hire will contain transport costs dramatically. Thanks to cost cuts, Interwaste is profitable again. It is in a closed period but Willcocks says shareholders are unlikely to be disappointed.

A recent furore on MNet's Carte Blanche TV programme over medical waste affected Interwaste's rating but Willcocks is quick to point out that his company is not in  that field: "no dismembered hands sticking out of our landfill".

But the furore will sharpen legislation and make waste management more of a national priority. Tougher environmental laws are the long-term attraction in Interwaste.

Waste management is again performing well. Profits from metals recycling are down but improving, as are those from organic products.

"We are profitable but we do have cash-flow challenges, particularly with debt collection. I would never wish anything bad on the competition but a lot of them have gone out of business. It's not as good a business as liquidation or auctioneering but we won't disappoint." Even so the company said on Friday it expects FY headline earnings per share to decrease by between 30% and 50%.

Construction materials supplier WG Wearne (JSE:WEA) delivered on great promise in the construction industry, growing at 50% pa for three years.

Lately it suffered two big setbacks. First there was a diesel hedge that went against the company to the tune of R15m and then there was an embarrassing R17m accounting mistake.

"We counted goodwill twice", John Wearne told the showcase audience sheepishly, "It hit earnings and headline earnings but not cash flow."

The company expanded as if there were no tomorrow, buying quarries and crushing plants. Suddenly construction cooled and the new assets are running at less than capacity. Meantime debt soared.

Wearne has held a R26m rights issue. The new capital, together with own cash flow, will reduce debt by R55m. The fuel hedge has been unwound at a saving of R15m a year. It has rationalised administration and cut the head count.

Wearne predicts a return to profitability this year. The ready mixed concrete market is still tough because cement producers, such as Lafarge and Afrisam, crunch their own customers, using ready mix as a loss leader to improve cement volumes. But road and infrastructure spending is expected to keep the quarries and the precast and aggregates divisions busy. Best of all, there is no great need for capex for quite some time.

Write to David Carte: davidcarte@moneyweb.co.za

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