Afrimat, an open-pit mining company providing industrial minerals, commodities and construction materials is the latest company to list its shares on the start-up exchange A2X.
It will retain its primary listing on the JSE and its issued share capital will be unaffected by its secondary listing on A2X. It began trading on A2X on Thursday, November 9.
The company joins African Rainbow Capital Investments, Coronation and Peregrine Holdings, which all have secondary listings on the exchange. A2X opened its doors for business on October 6.
At the moment A2X is only accepting secondary listings. A company must be listed on the JSE or elsewhere to qualify for a listing.
“We are hoping the A2X listing will provide us with increased liquidity, improved market quality and broaden the current shareholder base,” says Mariette Swart, Afrimat company secretary and corporate financial manager. “A2X has a lower cost structure and this we think will reduce the hurdle for new potential investors.”
Currently just 5% of Afrimat shares are held by international investors. A2X could help Afrimat to diversify its shareholder base by geography.
The listing will not cost Afrimat anything and does not increase its regulatory burden. The share register will be held by Strate which will operate as the Central Securities Depository for both the JSE and A2X.
Unlike some players in the construction industry, Afrimat is small, diversified and well managed. Its portfolio has three core components. The product range is well diversified to include aggregates and concrete based products as construction materials as well as limestone, dolomite and silica as industrial minerals. The group added bulk commodities to an already diversified offering, by entering the iron ore industry.
Last week the company reported that revenue for the six months to August 31, was virtually flat at R1.2 billion; however headline earnings per share increased by 7.4% from 95.2 cents to 102.2 cents.
Cash generation was affected as the company invested in Diro, a small iron ore mine in the Northern Cape that the company acquired out of business rescue.
However it was able to announce that it would pay shareholders a 20c dividend. Afrimat has managed to consistently pay dividends since its listing in 2006. A dividend policy of 2.75 times dividend cover is in place.
The compound annual growth rate in headline earnings per share between 2013 and 2017 is 19.9%. This is closer to an IT stock than a construction stock.
Afrimat has 3 380 shareholders and of these, almost half own less than 1 000 shares. Another 40% own less than 10 000 shares. By far the largest proportion of shares – 56% – is held by the company’s founders, founder shareholders and BEE partners.
