|
Grindrod (GND) financial results for 6months ending 30 June 2018
Date: 29 Aug 2018 Category: Stock Market Price per share: R8.40 |
Related Topics |
|
We take a quick look at the interim financial results for Grindrod for the the 6 months ended June 2018. And it shows that the bulk of its revenue comes from its Marine fuel and agricultural logistics division. But the majority of their profits comes from their financial services and ports and terminals operations.
|
|
Background on GrindRod (GND)
Grindrod Limited is the holding company of a dynamic organisation listed on the JSE securities exchange with more than 100 years experience in South Africa’s freight movement and related industries. Grindrod's business is all about moving cargo by road, rail, sea and air, providing integrated logistical and specialised services en route. It is a global business represented in more than 30 countries and is uniquely positioned to service Africa trade flows. The two pie charts below focus on the revenue earned and operating profit earned by GrindRod's various divisions which are:
- Port and terminals
- Logistics
- Financial services
- Marine fuel and agricultural logistics
The bulk of Grindrod's revenue (over 80% of it) comes from marine fuel and agricultural logistics. With logistics coming in a distant 2nd place with 11% of revenue and then their financial services and port terminals bringing in 2.12% and 3.74% of revenue. However when one looks at profit attributable to shareholders, we find that the division that brings in the bulk of revenue brings in the smallest amount of profit, showing its the division with the lowest profit margins. Conversely, financial services brings in a mere 2.12% of revenue, yet contributed 27.8% of total profits attributable to shareholders. Clearly showing very fat margins in this division. A similar story can be told by port and terminals division that brings in 3.74% of revenue, yet brings in 24.46% of profit attributable to shareholders.
So perhaps its time that Grindrod focuses more on their financial services business as it looks like this is where there is true value added for the company and shareholders.
So looking at actual values we see the following were reported today by Grindrod
Revenue came in at R11.05 billion
Profit for the year: R351 million up 24% from R342 million in 2017
Diluted headline earnings per share: 37.8c per share, up 22.7% from 30.8c per share.
PE ratio 11.11
Dividend yield: 0% as no interim dividend was declared
Cash generated per share: R2.02 per share
Cash on balance sheet per share: R14.40 per share. Grindrod is sitting with R10.8billion of cash and equivalents on their balance sheet, yet their market capital is sitting at R6.8billion
- Revenue inclusive of joint ventures up 5% to R11 051.7 million (H1 2017: R10 515.9 million)
- EBITDA inclusive of joint ventures up 21% to R531.2 million (H1 2017: R437.5 million)
- Headline earnings per share 37.8 cents (H1 2017: 30.8 cents)
So looking at actual values we see the following were reported today by Grindrod
Revenue came in at R11.05 billion
Profit for the year: R351 million up 24% from R342 million in 2017
Diluted headline earnings per share: 37.8c per share, up 22.7% from 30.8c per share.
PE ratio 11.11
Dividend yield: 0% as no interim dividend was declared
Cash generated per share: R2.02 per share
Cash on balance sheet per share: R14.40 per share. Grindrod is sitting with R10.8billion of cash and equivalents on their balance sheet, yet their market capital is sitting at R6.8billion
Valuation
Based on GNDs current financial results we value them at between R13.20 and R13.40 a share. A far cry from the R8.40 odd it is trading at right now. Even at our valuation price, it means that Grindrod's total market capital is less than the cash and equivalents they have on their balance sheet. They are extremely cash generative with exceptionally high barriers to entry in the industry they operate it, especially the shipping and finance divisions are hard sectors to gain traction in. We therefore feel GND is protected to a large extent from new competition.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.