Our opinion on the current state of ISBInsimbi, a diversified group, engages in manufacturing and supplying specialized products to the industrial sector. The company's operations encompass the sourcing, purchasing, packaging, and processing of ferrous and non-ferrous alloys, refractory and foundry materials, as well as plastic blow-moulding and injection moulding. Moreover, Insimbi is involved in recycling metal alloys and offers technical support to its product users.
For the six-month period ending on 31st August 2023, Insimbi reported a 4% decrease in revenue and a 6% decline in headline earnings per share (HEPS). The company acknowledged the challenging operating conditions during the first half of the fiscal year, noting that while price fluctuations in key commodities such as copper, aluminium, nickel, and steel largely offset each other, revenue slightly exceeded R3 billion, marking a 4% decrease compared to the interim period in 2022, and operating profit fell by 9%.
Looking ahead to the year ending on 29th February 2024, Insimbi anticipates that HEPS will be at least 20% lower than the corresponding period's figures. The share price trajectory of Insimbi showcased an upward trend until June 2018, after which it experienced a significant drop to 50c on 18th December 2020. The share price subsequently recovered, reaching a peak of 139c in June 2023, before entering another downward trend.
Insimbi's performance and prospects are closely tied to the health of the South African economy, positioning the company to potentially benefit from any economic recovery. However, it remains a high-risk investment, primarily due to its exposure to volatile commodity markets. The company's daily traded value averages around R25,000, suggesting limited liquidity and making it a less attractive option for private investors seeking more than marginal investments.
