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Spotlight on six JSE-listed small caps

Insights into their strategies and prospects.
The exchange has been facilitating the exchange of information. Image: Waldo Swiegers, Bloomberg

The JSE hosted a ‘Small-Cap Growth & Opportunity Showcase’ webinar for the public on Wednesday (watch the replay here).

This follows on from its also-public stock picks sessions as reported on by Moneyweb.

Read:

In the latest showcase, a range of different JSE-listed small caps briefly unpacked their businesses and strategies, and answered some questions from the public (including from me!).

Firstly, I want to commend the JSE for these sorts of initiatives. These are win-win-win events providing great platforms for companies, investors and, indeed, the exchange to all benefit from the free exchange of information and engagement.

I felt it worth touching on some of the latest event’s company highlights.

Trellidor

Trellidor expressed a strong view that its share price is undervalued. This matches the group’s previously reported share buyback programme. The group’s quality manufacturing core and far-reaching franchise base (even reaching into the UK) has been used to drive product and product-range expansion (such as adding blinds, shutters and mouldings). Interestingly, a lot of the group’s security products should become particularly relevant in the post-riot rebuild of retailing space following the recent unrest in KwaZulu-Natal and Gauteng.

Trematon

Listed investments company Trematon took participants through its portfolio. It was interesting to see how its traditional value-orientated property focus is shifting into growth-orientated education with its Generation Education schooling business. The latter is significant given its large weighting in Trematon’s underlying net asset value (NAV).

Stadio

Tertiary education has also been through a tumultuous period, but pure-play tertiary provider, Stadio explained its hybrid-model approach to education (80% of its students are now remote) while putting out in the public domain some bold targets – management wants to achieve 56 000 students (it currently has 34 494), generating a profit after tax of R500 million by its 2026 financial year.

Read: ADvTech’s update highlights quality

Master Drilling

Master Drilling used the space to emphasise its investments into cutting-edge mine drilling while diversifying across geographies (it recently entered Russia), commodities and currencies. This while expanding the group’s focus on mining-technology. I particularly liked the slide they showed that revealed where the range of its drilling services fit into a mine and a mine’s lifecycle.

Read: Where are the juniors?

Afrimat

One of the best-performing shares on the JSE in recent memory, Afrimat, also showed a clear focus on intelligent diversification. Originally focusing on aggregates and building materials, the group has branched out into specialised and bulk commodities with fantastic results, while keeping cash generation and disciplined capital allocation central to its decision-making. While coming off a high base, Afrimat went further to unpack its current growth projects as its iron ore and anthracite projects ramp up and its manganese acquisition gets closer to conclusion.

Balwin Properties

Last but not least, mid- to high-end housing developer Balwin Properties touched on the group’s sheer scale and unique green positioning. It has a monstrous 68 288-unit pipeline that it wants to build (and sell) over the next 15 years, across 28 different projects. The group has a risk-based operational approach utilising phases to ring-fence risks within individual projects. It has also spent a lot of time and effort ‘greening’ projects, offering energy efficient housing – among other things – and thus homebuyers can potentially utilise green bonds for the financing of units in Balwin’s estates.

Overall, a range of wonderful, differentiated businesses, strategies and prospects in off-the-radar companies.

Keith McLachlan is investment officer at Integral Asset Management.

McLachlan has an investment in Trellidor and Master Drilling.

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