Our opinion on the current state of COLLINS(CPP)Collins (previously Tradehold) has a portfolio of more than 140 properties with a total gross lettable area of 1.6 million square meters. Most of these properties are industrial, including major distribution centers and industrial complexes let on long-term triple-net leases to leading corporate clients. Collins also manages Tradehold’s Namibian portfolio, consisting of sought-after properties in that country’s main towns such as Windhoek, Walvis Bay, and Gobabis.
Tradehold was a real estate investment company in Southern Africa, which is 48% owned by Christo Wiese. More than 40% of its assets were in the UK, held through its 100% holding of the Moorgarth Group, which owns 23 properties in the UK that have now been sold. It owns 100% of Tradehold Africa, which owns properties in Africa outside of South Africa, and 100% of the Collins Group, which owns 153 properties inside South Africa. It has spun off its financial services business interests into a separately listed entity, Mettle, which is now listed on the Alt-X of the JSE.
The South African economy is facing difficulties with the cost of 10 years of state capture and corruption coming to light, followed by the impact of COVID-19 and now the civil unrest. In a report on the unrest, the company said, "...a total of 21 of Tradehold’s properties in KwaZulu-Natal were damaged during the recent unrest in South Africa. The estimated cost of damage is R41 million, excluding loss of rental. This represents approximately 0.5% by value of Tradehold’s property portfolio in South Africa."
In its results for the year to 29th February 2024, the company reported revenue up 6.3% and headline earnings per share (HEPS) up 149%. The company had vacancies of 3.9% and a loan-to-value (LTV) of 51%. Technically, the share has been in a downward trend since April 2016 and is now trading at a significant discount to its net asset value (NAV) per share.
In our view, this share is mostly a local property play which will probably perform better as the South African economy recovers, but we do not see it as an exciting investment prospect - mainly because of its high LTV. The company is selling off its Mozambique properties. Volumes are around R98,000 worth of shares changing hands each day, which makes it more risky for private investors.
