Avior Capital Markets - Invicta Holdings Ltd. (108T) IVT | Invicta Holdings | Growth catalyst required

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Avior Capital Markets

IVT | Invicta Holdings | Growth catalyst required

Please find our analysis on Invicta's (IVT) H1 '18 results in this note. A weak and competitive SA business environment weighed more heavily on Engineering Solutions Group (ESG) than the Capital Equipment Group (CEG) which proved more resilient. Operating profit from Kian Ann increased on an SGD and ZAR basis. The BSG division was sold for a profit. We expect management to use the proceeds to pay down debt to improve acquisition capacity. We expect IVT to realise some benefits from the cost rationalisation strategies in FY â€˜19.

06/12/2017 18 EN

Underlying

Invicta Holdings Ltd.

Invicta Holdings is an investment holding and management company. Through its subsidiaries, Co. is engaged as a distributor of bearings, seals, power transmission components, drives, belting, fasteners, filtration and hydraulics; distributor of a range of agricultural machinery, implements and related spares; wholesale and retail distributor of earthmoving machinery, turf-grooming machinery, golf cars, utility vehicles and related spares; importer and distributor of materials handling equipment and related spares; and wholesale supplier of sanitary ware, brass ware, taps, plumbing fixtures, plastic piping and related products.

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ZAE000029773 Johannesburg Stock Exchange South Africa

Provider

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.

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Invicta Holdings | Brace for impact

Invicta released a disappointing set of H1' 19 results. dHEPS and DPS declined by 99% h/h and 38% h/h respectively. c.82% of the dHEPS decline is due to an additional R200m tax charge from the BEE tax fine. IVT has settled with SARS for R750m, in line with our estimate of R740m. The settlement amount exceeds provision raised as at March 2018 by R200m. As IVT prepares for a hard earnings landing, it will have to monitor cash flows as it pays the fine and interest over the next four years, while working to improve cash flow generation against the backdrop of weak demand.

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IVT | Invicta Holdings | Growth catalyst required

1 director sold

Invicta Holdings | Brace for impact

Invicta Holdings | SARS Overhang

Tiger Brands | ESG | Pressed to execute

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

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