Grindrod

Well another trashing on the markets yesterday - there is no shelter for anybody at the moment. Gold price at US$732 and Platinum price at US$792.... A race for $650?

Before I get onto my fundamental play that I wanted to throw out into the world, I have to touch on a phone call I received yesterday. One of my mates is the MD of the South African arm of a multi-national leisure business. In line with the rest of the company's international operations, he yesterday had to break the news to his staff that there would be no 13th cheques or bonuses this year. He said it was heartbreaking to see people's faces because a number of them are hugely dependant on it to either fund Christmas or to just try and keep their debt under control.

As soon as the meeting was over he had staff asking to setup meetings around company loans which had also been dismissed by the head office. Like I said in a previous post - bad news is here and you would do well to focus hard on cutting costs and saving wherever possible.

Very quickly, lets just assume that 50% of his staff are the primary breadwinners and those bonuses would have provided them cash flow for December so they weren't servicing debt. That buffer is now gone. The recession / slow down has hit SA and there is no two ways about it...

Having now spoilt your breakfast, I would like to move onto something that I believe could provide a nice fundamental story which piqued my interest while skimming the JSE SENS announcements yesterday.

The announcement read:
Shareholders are advised that Grindrod Bank Limited:
- has disposed of its minority interest in Exchange Sponsors (Pty) Limited;
- has been approved by the JSE Limited as Designated Advisors; and
- will be assuming the role of the company`s Designated Advisor with effect
from 1 November 2008.

This announcement was made for two firms (FinBond and Imuniti) and I suspect that this will be repeated with a few other firms.

As most of you know, Grindrod (JSE: GND) is a shipping company. Currently its trading on a PE of around 3.26 times earnings. Attached to that, there is a small Grindrod bank arm which has been steadily developing. If Grindrod is starting to position itself as a diversified group that handles both industrial and finance arms, then this could be very interesting. The company has great cash flow which means it could pick up some very nice assets cheaply.

Would put it in a very good position to diversify its business - lets remember it was double its current price not so long ago and that only put it on a PE of 6... diversified portfolio of investments could make it very attractive.

Dunno - it was just something that stood out for me. Will look at it some more and see if I pick out any other angles that stand out.