Cashbuild is an unashamedly cash retailer, reaping the rewards of staying away from risky credit offerings and selling to lower-income South Africans who are mostly unaffected by rising interest rates, higher car payments and leering credit card debt.
Admittedly, the company does have some credit business, but this is through third- party financiers such as RCS and Nedbank, and is — so they tell us — risk free.
In the six months to December 31, the company's income from financing more than doubled from R4m to R8,5m.
Its debtors' book growth is nothing to worry about, with finance income a small contributor to overall profit of R82m.
More than 6-million customer transactions occurred across the 166 stores it had open to end-December, a 12% increase on the previous year during a period in which rate hikes started being felt.
Perhaps it's not just the fact that the company sells for cash, which is, after all, king, but also its pricing policy. It claims to sell its materials “at the lowest prices”. And the lower end of the building market is apparently also growing strongly.
Let's hope Cashbuild keeps its finger on the pricing pulse. With a 101c dividend and strong earnings growth, shareholders too should be laughing all the way to the bank.
Source: Business Day
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