Caxton shows strong growth

Caxton & CTP Publishers & Printers is hardly tapping vibrant niches with its core business in printing and publishing on the one hand and packaging on the other. But these operations are profitable, churn cash flow and are lean and mean. In fact, Caxton’s share price has doubled over a year.

  • As printing and publishing opportunities crimp, Caxton will look at reinforcing and expanding its packaging niche
  • At the end of the financial year to June the printing and publishing operations generated about R2.94bn — or 66% of group revenue — while the packaging (and stationery) hub generated R2.3bn, or 44% of revenue.
  • At operating profit level (after depreciation and amortisation), printing and publishing managed R336m, the packaging segment R275m
  • These operations generated net cash flows of R568m — equivalent to more than 150c a share
  • At the end of the financial year, Caxton was sitting on nearly R2bn of free cash, equivalent to almost 540c a share
  • Nearly 70% of Caxton’s share price is cash
  • During the reporting period, Caxton made an additional R656m investment in listed packaging business Mpact, where it now has an influential 31.6% shareholding
  • Its investment in Mpact is now worth close to R1.4bn, or equivalent to 376c a share
  • Caxton’s cash pile and its investment in Mpact is alone worth over 900c a share
  • Caxton can extend its commanding position in printing and publishing as smaller operations fall by the wayside, and making decent earnings for years to come
  • The packaging niche will be reinforced, and probably supersede the printing and publishing operations as the bigger earnings contributor
  • Caxton’s smaller “sideline” investments have panned out rather well — the group banked a substantial profit on selling its stakes in Octotel and RSAWeb
  • Officially, Caxton sets its NAV at R17 a share, which means the share price now offers a discount of about 53%. That’s a hard NAV number, with only R85m accounted for as a goodwill

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My Office News Ⓒ 2017 - Designed by A Collective


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