Of course a few “nexts” – albeit the distinct minority – have started to look the part and you only have to think of Capitec (the next Abil), GoldOne International (the next Harmony) or Litha (the next Aspen).
Now I wouldn’t want to tag Eastern Cape-based building supplies retailer Hardware Warehouse [JSE:HWW] with a “next” label, but any reasonable person reading through the company’s results is going to be thinking of a certain building supplies legend. But let’s forget labels. Hardware is an overlooked player on the AltX – as would be the case when the market only has eyes for market legend Cashbuild [JSE:CSB].
Hardware is a long, long way off Cashbuild. It’s small and geographically limited, but interim results to end-December 2010 showed profit from operations of R5,6m off turnover of R219m. Earnings – which included a R2,6m tax credit – came in at 8,52c. But more importantly, cash from operations was R12m and net cash generated a reassuring R7m (or 9c/share) – despite hassles with its plumbing business (which has subsequently been disposed of).
Gut feel is Hardware has come through a very tough 30 months and the benefits of careful expansion out of its traditional Eastern Cape market (into KwaZulu-Natal and Mpumalanga) will show up in its next financial year. Hopefully, its full year results for 2011 will provide further reassurance that operations – with the leaks plugged – are robust.