Following the impact ofand the recent civil unrest, the hunt is on for which have the potential to rise as the South African recovers. Obviously, , which do not require significant (i.e., levels or s), tend to be more highly rated than s and . But high quality combined with a strong can sometimes make a manufacturer or retailer very attractive despite its working capital .
Italtile is both a manufacturer and retailer of tiles, “bathroom ware” and related products. Over the years thehas become “ ” which means that it either manufactures or s a large proportion of the tiles that it sells through its 203 stores. This has great advantages beyond the additional which are kept in house because it means that supply lines are always kept open. Consider the :
The company felt the effects of the Zuma years onand the economy in general. That accounts for its from 2016 to 2020 below the 1500c line. Then, of course, it was hit by the effects of the lockdowns. But the pandemic brought with it a substantial move towards “work-from-home” which has benefited this company as thousands of people upgraded their homes and equipped them as a place of work. The resistance was finally broken on 27th January this year. Since then, resistance has become as the share for a new .
The Italtile balance sheet as at the 31st of December 2020 shows(stock, debtors and ) of R3,2bn against of R1,35bn – which is an extremely strong position. This is further backed up by the fact that the company paid just R7m in in six months out of an of over R1bn. In effect this is a company which has no debt and plenty of cash.
In itsfor the year to 30th June 2021 the company says that (HEPS) are expected to rise by between 74% and 81% from the year before.
So, despite, its large stock and debtor positions (more than R1bn each) this company’s management of its working capital has been tight. Itsis 4,8 – in other words it turned its stock over 4,8 times in the six months to 31st December 2020 and its is 39 (Debtors/turnover X 365/2). These are not precise, but they give a good indication of the management of stock and debtors.
On aof 16,24 and riding a wave of home improvement, Italtile looks poised to benefit from any sustained recovery in the South African economy.
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