Our opinion on the current state of ENXGROUP(ENX)

The enX Group is a diversified industrial company operating primarily in Southern Africa, with a portfolio that spans across several key sectors, including petrochemicals, fleet management, logistics, and industrial equipment. The company has a strategic focus on distributing branded products and services, making it integral to industrial and commercial operations in the region.

**Diverse Operations and Strategic Disposals:**
enX’s operations are quite diverse, reflecting its involvement in various facets of the industrial sector. This includes Austro, which focuses on distributing woodworking equipment and tooling, and New Way Power, known for its manufacturing, installation, and maintenance services for diesel generators. The fleet division of enX is involved in fleet management and logistics as well as vehicle tracking, whereas ENX Petrochemicals engages in the production and marketing of oil lubricants, plastics, polymers, rubber, and specialty chemicals.

The company has been actively managing its portfolio through strategic disposals, which have been key to its financial strategy and capital allocation. Notable transactions include the sale of Eqstra to Bidvest for R3.1 billion in July 2019, and the sale of its British forklift and container business for GBP 31 million in April 2021. These disposals have enabled the company to pay down debt significantly, demonstrating a proactive approach to improving its financial health.

**Special Dividends and Financial Performance:**
enX has also declared special dividends following these sales, highlighting its commitment to returning value to shareholders. This includes a special dividend of 200c per share in April 2022 following the sale of the EIE subsidiary and another special dividend of R1.50 per share in August 2022 after disposing of Impact Forktrucks and the EIE Group.

For the six months ending on 29th February 2024, enX reported a 5% increase in revenue and a substantial 110% rise in headline earnings per share (HEPS). However, the net asset value (NAV) experienced a slight decline to 1386c per share. The growth in revenue was primarily driven by increased sales volumes across its product lines—particularly polyethylene, specialty chemicals, and generators, which have been in high demand by large data-center customers. Despite an increase in toll-blending volumes, the average selling prices dipped, influenced by lower base oil pricing.

**Market Position and Investment Outlook:**
enX trades an average of R320,000 worth of shares daily, making it accessible and practical for private investors. The company's recent financial results and proactive management of its asset portfolio underscore its resilience and strategic positioning within the industrial sector. Currently, the share is on an upward trend, likely reflecting positive investor sentiment towards its operational success and strategic disposals.

Given the breadth of enX's operations and its strategic focus on core industrial services and products, the company is well-positioned to benefit from any improvements in the South African economy. Its ability to make strategic acquisitions both locally and in the UK further supports its growth trajectory, making it an attractive prospect for investors looking for exposure in the industrial sector.