ABL / PSG

Seeing as my trading strategy has been booted out the window by market volatility in the last two weeks, I thought maybe it would be a chance to look at two fundamental stories which I've been looking at quite closely in the last few weeks - Abil and PSG.

Abil (ABL)
African Bank Investments Limited (Abil) has been my preferred banking sector share for the last few months.... although Standard Bank has also been catching the eye in recent weeks.

Disclosure - I'm a holder of Abil pref and ordinary shares.

African Bank released a trading update on Tuesday and it was pretty much more of the same - The banking / lending business is pumping and profitable while the Ellerines retail business is still weighing on them.

I decided to listen in on the analysts and investors conference call yesterday and walked away happy with the business.

Reading the numbers is one thing - listening to management is another thing altogether. Every time I listen to CEO Leon Kirkinis I get the impression that he's a guy in complete control of his business. He knows what he wants and he knows he has to keep his shareholders happy.

AND HE'S NOT A NUMBER CRUNCHER!

Listening to them chatting about the Ellerines business, the focus wasn't just on cutting costs but actually improving the Ellerines offering.

Some interesting comments were made about a bond book-building exercise which is due to commence on Monday and staying committed to lowering the dividend cover ratio over the next 3 years as previously guided...

I left the conference call confident that I could add more to my existing ABL positions.

PSG
Investment group PSG has been on my shopping list for a while, but some reason corporate action has bumped it up to the top of my radar screen.

This week, PSG announced it was A) Disposing of its interest in Channel Life to Sanlam for around R140m, B) It was buying the T-Sec securities business (about 10500 clients apparently) for an undisclosed sum...

Getting out of Channel Life now, shows management is prepared to rebalance the portfolio when needs be and gives PSG a few bucks in the bank for fresh acquisitions.

The T-Sec deal I reckon is sweet for them but the parties seem to be quite cagey on the transaction seeing as no figure was placed in the media and no disclosures have been made in any interviews...

Jannie Mouton has been piling into the company's shares for the last few months and he's highly regarded as being able to extract value for investors.

A business like PSG is known for its business savvy and if I remember correctly Mouton reckoned that if you had invested R1000 in PSG 10 years ago (This was at the company's last results presentation, pre the Sept / Oct crash), that investment with dividends reinvested would now be worth something like R360k which is definately better than a kick in the teeth...

I'd be a buyer at these levels...