Macadams: will head back to the JSE

Cape Town / ZA. (jse) Cape-based Macadams Baking Systems will head back to the JSE (Johannesburg Stock Exchange) as part of the listing of Universal Industries next week. Macadams, first listed in 1987, was one of the most popular small cap stocks on the JSE during the nineties before it was delisted in late 2000 under controversial circumstances by a consortium led by CorpCapital.

Macadams was a prolific exporter, breaking into numerous world markets. Universal´s abridged prospectus shows that Macadams holds markets in 65 countries and that export sales contributed 25 percent to turnover in the ten months ending June 30 this year.

Besides Macadams, Universal Industries also owns Insulated Services and Colcab, which are refrigeration businesses specialising storing in perishable foods for major supermarket chains and convenience stores. Universal looks a heady mix of «hot and cold» operations with the prospectus forecasting after tax profits of 74 million ZAR for the year to end December 2008. That would equate to earnings of roughly 0,154 ZAR per share.

The group is also undertaking a sizeable private offer of 80 million shares pitched at 1,50 ZAR per share to raise 120 million ZAR. The private offer closes this Friday. On listing 480 million ZAR shares will be in issue, giving Universal – at the placement price – a market capitalisation of 720 million ZAR. The private offer share pitch carries a forward price:earnings multiple of around ten times, which – for a company with well established operating entities – seems reasonably priced.