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Industrials | MTA, MPT, SPG, HDC, GSH, GND | Earnings Update_Small to Medium Cap Industrials

During Q1'19, SA Industrials index declined by 3.9% yoy and were among the worst performing sectors on the Johannesburg Stock Exchange (JSE). The poor performance is an extension of last year's 17.5% yoy decline. The lack of growth opportunities has prompted companies to divest non-core or poor performing assets to strengthen balance sheets, realise shareholder value through divestures (e.g. enX) and resume an ordinary dividend (e.g. GND). In this note, we update our target price and recommendations for SPG, HDC, MPT, MTA, GND, GSH and ENX.
Underlyings
Grindrod Ltd.

Grindrod is a shipping and freight logistics company. Co. operates three segments shipping, Freight Services, and Financial Services. Co.'s Freight Services segment provides freight logistics services. The division integrates Co.'s infrastructure and logistics and freight-agency services to move dry- and liquid-bulk commodities, vehicles and containers along import/export corridors. Co.'s shipping division operates a diversified fleet of 35.5 owned, chartered and joint-venture dry-bulk, liquid-bulk, container and bunker vessels across the world. Co.'s financial services segment provides investment, asset management, property finance and retail services.

Grindrod Shipping Holdings

Hudaco Industries Ltd.

Hudaco Industries is engaged the import and distribution of engineering consumables, power tools and security, automotive and professional mobile radio communication products. The engineering consumables segment supplies engineering products such as bearings, hydraulics, pneumatics, filtration products, electrical cables, conveyor belting, pulleys, drives, and electric motors. The consumer-related products segment supplies automotive replacement parts; distributes imported maintenance free batteries, electronic security equipment, industrial power tools, marine engines, survey equipment and nuclear gauges; and provides telecommunications infrastructure and two-way radios applications.

Metair Investments Ltd.

Metair Investments Limited is a South Africa-based company, which manages an international portfolio of companies that manufacture and supply automotive components, and energy storage solutions for local and export automotive and industrial markets. It operates through two segments: energy storage and automotive components. The energy storage segment manufactures batteries for use in the automotive, telecoms, utility, mining, retail and materials/ products handling sectors. The automotive components include original equipment (OE) components used in the assembly of new vehicles by original equipment manufacturers (OEMs), as well as spare parts and other products used in the automotive aftermarket. Its manufacturing locations include South Africa, Romania and Turkey and it exports products directly from these locations into Africa, Middle East, Russia and Europe.

Mpact Ltd

Mpact is engaged in the paper and plastics pakaging businesses in Southern Africa. Co. has the market position in southern Africa in recovered paper collection, corrugated packaging, recycled-based cartonboard and containerboard, Polyethylene terephthalate (PET) preforms, styrene trays, and plastic jumbo bins. The Paper business consists of three divisions: Recycling, paper manufacturing and corrugated. The Plastics business: Manufacturing a range of plastic packaging products for the food, beverage, personal care, homecare, pharmaceutical, agricultural and retail markets, primarily in South Africa.

Super Group Ltd.

Super Group is a holding company engaged in the supply chain management business. Co.'s divisions include: supply chain, which is comprised of transportation, international and local customized supply chain technologies, customer brokerage and forwarding, African logistics, and warehousing and distribution; fleet solutions, which is comprised of SG fleet, a fleet services provider in Australia with operations in New Zealand and the U.K., and Fleet Africa, which is engaged in fleet solutions within southern Africa; and dealerships, which is comprised of: SA dealerships, which consists of 45 franchised dealerships, and U.K. dealerships, which consist of GWM distribution, and ALEN FORD (U.K.).

Provider
Avior Capital Markets
Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

Analysts
Mpho Mokotso

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