Cashbuild (CSB) financial results for year ending 30 June 2018
​​Date: 28 Aug 2018
Category: Stock Market
Price per share: R300.02

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We take a look at the financial results of construction materials supplier, Cashbuild for their year end 30 June 2018. The market they operate in must be one of the toughest markets to do business in right now, as consumers look to cut back spending due to tough economic times, which implies less money spent on renovations and building.

Background on Cashbuild (CSB)

Cashbuild is the largest retailer of building materials and associated products, selling directly to cash-paying customers through its 251 (and growing) stores in South Africa, Namibia, Lesotho, Botswana, Swaziland, Malawi and Zambia. Cashbuild which employs 4 738 people, comprises Cashbuild Limited and the operating subsidiaries registered in the abovementioned countries. Cashbuild is the first choice retailer in its chosen field in all the regions in which it operates. It achieves this by carrying a focused in-depth quality product range at the most competitive prices, to meet the needs of the local market for homebuilders, home improvers, contractors, farmers, traders and any persons wanting to purchase our quality building materials for cash.

Cashbuild shares have been listed on the JSE Securities Exchange since 1986. The graphic below shows the share price history of Cashbuild over the last 5 years.

Percent change:

As the graphic above shows, its been a though couple of months for Cashbuild. With the share reaching highs of R520 odd a share in March of this year, its currently trading at just over R300 a share.  Down almost 40% since March 2018. Short term investors in the stock cannot be happy about that.  So lets take a quick look at their financial results:
​
  • REVENUE (Rm) up 5%
  • OPERATING PROFIT (Rm) down 12%
  • HEADLINE EARNINGS (Rm) down 9%
  • NET ASSET VALUE PER SHARE (cents) up 14%
  • TOTAL DIVIDEND PER SHARE (cents) down 9%
  • SPACE GROWTH (stores) up 7%

The above is a short summary of their results published on SENS (Stock Exchange News Service) earlier today.

So looking at actual values we see the following were reported today by Cashbuild
Revenue came in at R10.2billion, up 5% from R9.73billion.
Profit for the year: R425.2million down 9% from R469.5million in 2017
Diluted earnings per share: R18.51 per share, down 10% from R20.47 per share.
PE ratio 16.2
Dividend yield: 2.8%
Cash generated per share: R34.36 per share
Cash on balance sheet per share: R42.24 (thus 14% of Cashbuild's share price is made up by cash on its balance sheet)

Valuation

Based on CSBs current financial results we value them at between R324.20 and R325.00. We therefore feel that the sell off in CSB has been overdone and we expect CSB to offer long term shareholders buying at this price superior returns to the market if they willing to hold on for the long term. A valuation of R324.20 places WHL on a PE of around 18. And yes current investors will say the PE is to expensive. At least some of that is offset by a strong cash on balance sheet position and a middle of the field dividend yield.  The advantage of CSB is their massive footprint in not only South Africa but various other countries in Africa. They are extremely cash generative and have been around for a long time so they know how to get through the good and the bad times. 

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.
chart created with amCharts | amCharts
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.

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