Because IM is a monthly publication, timing can be everything when writing for it.
Investment holding company Sabvest Capital (Sabcap) released interim results to end-June 2025 on August 20 — and since then the share has rallied hard to R118.
Over the past five years Sabcap is up 240%. Every recommendation IM has made on this counter has been met and exceeded. At the time of writing, Sabcap is trading at R110, a 21% discount to NAV. The interim results highlight the ability of its astute investment team to back the right type of company across various market segments — technology, industrial holdings, digital consumer and business services and fast-moving consumer goods.
The most important contributor to the first-half performance was Apex Partners, which kicked in most of the NAV uplift and offset weaker performances from smaller assets such as manufacturing business Amicus (-26%) and beverage business Halewood (-25%). The Apex diversified industrials portfolio saw a 37.4% rise in NAV to R834m despite the lethargic domestic economy. Its listed comparatives would be Hudaco or Invicta, though they would both kill for earnings and NAV growth like Apex’s.
Another strong period is anticipated as the deal benefits of the DRA Global transaction and its integration into the existing ELB operations leverage cost savings and efficiency gains. Apex is now the third-largest asset within Sabcap, or 15% of the portfolio, behind SA Bias (R1.29bn) and DNI/4-PL (R974m). The latter two saw flat NAV in the period with the fourth-largest asset, global apparel labelling and identification company ITL, reporting a 3.1% uplift in NAV to R745m.
The top four assets have a combined NAV of R3.84bn, or 70% of the Sabcap portfolio. In H2 the benefits will start to accrue from management changes at DNI/4-PL and ITL and revaluation of both should tick higher than in H1.
The Trump tariffs and softness in the UK market will weigh on SA Bias, where only modest growth is envisaged. In the mid-tier space, NAV uplift in BEE investment holding company Masimong (value R555m) should continue in the mid-single digits.
Electrical stock ARB Holdings (R379m) had a flat year due to weak solar and cable demand but is debt free, cash generative and well positioned. Investment to expand pet-requisites business Valemount (value R79m) is under way to bulk the business up on strong demand trends.
Sabcap management have seemingly conceded that the acquisition in June 2022 of Halewood has been a disappointment. A rare upset. Changes in consumption patterns alongside tightening consumer spending have given Sabcap a hangover. With NAV peaking in financial 2022 at R166m, Halewood is now valued at R88m, and IM wagers Sabcap will dispose of it in due course.
The only two listed assets within Sabcap are a holding in Metrofile (R63m), currently under cautionary with a bid approach, and London-listed security and cybertech stock Corero Network Security (R200m). Corero had a bumper financial 2024 NAV period but crashed to earth in H1 2025 on a weak performance.
The Sabcap share price of R118 is a record high and the discount has narrowed to 21%. IM believes there is further upside
The Sabcap share price of R118 is a record high and the discount has narrowed to 21%. IM believes there is further upside as the 17.8% uplift in interim NAV to R138.82 a share continues the stronger valuation trends seen in the past 18 months.
Underlying valuation metrics have remained relatively stable but inherent prospects in many assets have improved, lowering risk, aiding profitability and boosting asset values. IM sees the full-year NAV rising 17.3% from the comparative R132.13 a share to R155 with further gains towards R180 a share to mid-2026.
With the balance sheet again nearing debt-free status by year-end, there is sufficient headroom to continue investment. To move the Sabcap needle, assets in the range between R300m and R500m need to be considered. IM believes some new business silos are being investigated.
Despite the year-to-date gains of 20%, IM maintains its long-standing recommendation of Sabcap and targets a R140 share price within 12 months.
The writer holds shares in Sabcap
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