Initial Buy Recommendation: 25 March 2022

Current Status: HOLD

Notes:

  • 26 August 2022

    • Results For Year Ended 30 June:

      • Revenue up 17% to R28 billion

      • Operating profit before capital items up 40% to R2.9 billion

      • Headline earnings per share up 73% to 74.4 cents

      • Cash generated from operations up 17% to R4.1 billion

      • Dividend per share up 93% to 29 cents

        • Shares trade ex-dividend - 21 September. Payment date 26 September 2022.

  • Moved to HOLD.

    • Price action has blasted away from our initial buy recommendation taking us out of prudent risk/reward territory. However, given the upside momentum, we believe buying anything under R5.70 will still reward a risk-seeking investor who is willing to hold through any potential corrective price dips.

OVERVIEW:

  • Exchange: JSE

  • Ticker: KAP

  • Sector: Industrial manufacturing, Transportation, Chemical Manufacturing

COMPANY DESCRIPTION:

KAP Industrial Holdings Limited is a diversified industrial group consisting of industrial, chemical and logistics businesses. The group's diversified industrial segment manufactures timber products; mattresses and bedding components; and automotive components and accessories.

FINANCIAL OVERVIEW:

  • Market Cap - R.19 billion

  • P/E Ratio - 9.84

  • Dividend Yield - 2.96%

  • Return-On-Equity (5 year avg %) - 2.22%

  • Interest Coverage - 0.52

  • Net Income Growth Rate (5 year avg %) - -89.32%

  • Earnings Per Share (5 year avg %) - -65.82%

  • Current Ratio - 1.15

  • Revenue Growth Rate (5 year avg %) - 9.22%

RECOMMENDATION:

  • Buy Range - R4.50 - R5.00

  • Profit Target - R7.54 (approx 76.37% ROI)

  • Stop Loss - R3.90

  • Risk:Reward - 1:5.7

CHART: