Cambria Africa’s efforts to re-shape its businesses are bearing fruit, says broker

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By Zimbabwe Investor on March 21, 2013. No Comments

Leopard Rock Hotel: One of Cambria's assets in Zimbabwe.

Leopard Rock Hotel: One of Cambria’s assets in Zimbabwe.

Cambria Africa’s efforts to re-shape its businesses are bearing fruit, according to Harare headquartered stockbrokers Invictus Securities.

In a note to clients, reflecting on Cambria’s full year results, the broker repeated its ‘speculative buy’ recommendation on the stock, which is listed on London’s AIM, and is about to list on the Zimbabwe Stock Exchange.

Last week Cambria’s results for 2012 reflected on a period of significant change.

The company said that while 2012 was a tough period of transition there are signs of significant improvement in the year to date. The positive impact of strategic initiatives introduced by the group’s management is now becoming visible, the company said.

It is also understood that Cambria is currently reviewing ‘strategic alternatives’ which could unlock the value in its businesses.

The results statement also revealed further write offs against non-core businesses, adding to the $10.8mln mark down at the half year, which took total write offs for 2012 to $19.6mln.

“Cambria took the painful but necessary medicine to clean up its balance sheet in the form of a US$19.8mln knock in the profit and loss account,” said Invictus analyst Farai Vengesai.

Though, he adds: “We believe Cambria’s focus on profitability, scale and efficiency is bearing fruit.”

“We believe the underlying performance in Cambria is tracking the route we originally forecasted. We expected EBITDA to turn positive in 2013 and we still expect this to happen,” said Vengesai.

Meanwhile in an earlier note, on March 1, UK stockbroker WH Ireland also reflected on the tough decisions Cambria had to make in 2012.

“In our opinion the decisive action taken this year combined with strong underlying performance of the core portfolio provides significant protection from further material NAV erosion,” said WH Ireland analyst Derren Nathan.

In 2013, Nathan forecasts Cambria will achieve revenue growth of 25% this year to US$15mln and he says it will turn earnings positive at divisional level.

“Cambria’s core investments are establishing solid niche positions in the Zimbabwe economy.

“With the date of the referendum for the newly agreed constitution now set for March 16th 2013, and elections anticipated shortly thereafter, 2013 stands to be an important year for Zimbabwe.”

Nathan also points out that Cambria faces no significant debt payments until next year and if it realises any elements of its core portfolio the group’s cash position could materially improve before then.