Invicta: Signs are good — but it’s hard to be sure

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The lack of news from the company ahead of the release of its results makes an accurate assessment difficult

From having been in the news consistently some years ago — mostly for all the wrong reasons — industrial counter Invicta Holdings has now become something of a recluse, as far as communication is concerned.

IM is surveying Invicta to form an opinion about the impending announcement of the company’s results for the 2023 financial period, in the light of the recent sparkling numbers from comparative business and sector competitor Hudaco. Invicta seems like a lost waif, unloved and uncommunicative. Could the forthcoming results announcement change that?

Invicta has similar industrial and engineering consumables operations to Hudaco, on top of the rand hedge benefits of its operations in China, Southeast Asia and Europe via Kian Ann and KMP. IM has also heard whispers that Invicta has been scouting in the US for an acquisition to expand its global geographical footprint; its aim is to eventually generate 50% of profits offshore.

Things could turn on the release of the 2023 results, especially given that the first-half results were healthy. In its interim results to September 2022 Invicta reported a modest 7.2% rise in revenue to R3.8bn, with the ongoing focus on costs and margin protection leading to a 16% rise in profit before tax. Headline earnings rose 42% to 268c a share. The company pays only an annual dividend.

Owing to the lack of corporate news, IM will have to take a stab in the dark about Invicta. IM is fairly confident that, like Hudaco, Invicta will have had a robust reporting period. The company is debt free and on the acquisition trail, and — since the restructuring of Kian Ann — there is the profitability of its offshore business. Then there is the effect of the acquisition of KMP in the UK, where, IM understands, profit participation and growth back to the Invicta core have been good.

Invicta also has a robust NAV of R40 a share — which places the stock on a discount of 32% to NAV. In ordinary circumstances, such a value trap and moribund share price would have private equity and activist shareholders sniffing around.

Source: News Formal (newsformal.com)

 

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