Our opinion on the current state of ART

Argent (ART) is a manufacturer and beneficiator of steel and aluminium products supplying a wide range of businesses in South Africa. It also has operations in the US and the UK. Many of Argent's products are well-known in South Africa such as Xpanda and Jetmaster. It also supplies bulk steel products and beneficiates to suit specific needs. For example, it sells tube, sheet coil and plate steel. It modifies these products with bending, slitting, and cutting to length. It is the largest distributor for Hulamin and offers a full range of aluminium products. It manufactures ladders, castors, and storage bins. It also produces paint and a range of steel cupboards, desks, filing cabinets and other office furniture. It manufactures and markets a variety of steel fencing and gates. Most of these businesses are directly impacted by the state of the South African economy so the current conditions have forced the company to restructure substantially. In its results for the six months to 30th September 2023 the company reported revenue up 8,6% and headline earnings per share (HEPS) up 22,9%. The company's net asset value (NAV) increased 18,1% to 2879,2c per share. The company said, " The higher interest rates, together with the inflationary environment has had more of an impact on the spending patterns of the consumer, and a lesser effect on Business-to-Business trading. The result is that the latter, which makes up most of the group’s trading, pushed growth during the Current Period". The average daily value traded in this share is about R920 000 which means that it is viable for private investors. This company is trading on a very low multiple of 3,64 - which we think makes it good value. The company's share buy-back program has seen its issued share capital drop by more than one third since 2016. The share has been rising since its low of 1416c on 8th May 2023. We regard this as a good investment at current levels. Obviously, it will benefit directly from any improvement in the economy.