Roll on digital TV
AS THINGS currently stand, with the introduction of digital terrestrial television (DTT) every television owner in Johannesburg and Pretoria will need to buy a new aerial, and that’s the game of TV reception and related electrical products manufacturer and importer Ellies, an AltX company with a 32-year history.
That’s according to Ellies CEO Wayne Samson and it will be one growth kicker in its 2009 calendar year. "It’s an exciting prospect for us."
And despite consumers being under pressure, they’re still buying satellite dishes, Samson says. The low end of the market has particularly driven that. When times are tough, people stay at home and watch TV.
That trend has been borne out by media predictions of international consultancy Deloitte for 2009. One of its 10 predictions was that TV would rediscover its self-belief. In the latter half of 2008 Deloitte reported: "Average viewing hours were already rising in some major markets as consumers increasingly entertained themselves at home."
Despite the current tough economic climate, Ellies reported good interim results and maintained a relatively positive outlook. Samson said Christmas trading had been good, with product sell-out in stores. None of its items were big ticket ones that would challenge consumers’ bleeding pockets too significantly.
Ellies reported revenues of R544m for the six months to October 2008, which represents growth of 65% on the comparable pro forma period (Ellies changed its year-end to April on listing). It made R82,5m in earnings before interest, tax, depreciation and amortisation profits on that, giving it a margin of just more than 15%. At the headline earnings level Ellies reported 18,93c, putting it on an annualised, forward earnings multiple of just 3,5 times.
From a listing price of 200c Ellies was trading at 134c/share at the time of writing. However, Samson says unlike some of its AltX counterparts Ellies has no intention of delisting. "Yes, I do get upset looking at the share price," he admits. "But we didn’t list with a view to exiting. We’re in it for the long term to grow the company."
Sasfin’s David Shapiro says he liked Ellies and its owners very much. "They’re good traders, they know their businesses well, Eli (Elliott Salkow, chairman and founder) keeps it tight." However, Shapiro says the one risk was what happened to the economy. The results under review only showed Ellies’ performance until end-October, which wasn’t the period the market was particularly concerned about.
But although Ellies conceded the economic climate could "test" it over the short term, it remained optimistic, driven by its diversity of products and customer base, export growth and the launch of DTT this year.
Finweek
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