The latest Trading Update states that SUL will beat its forecast EPS of 2.48c by 38% to 42%. This of course translates into an EPS of 3.42 (=2.48 x 1.38)...in the worst case scenario. As SUL closed at 35c (26/04/07) the results to come out will put it at a PE ratio of 10.23 (= 35/3.42) and a dividend yield of about 3.3% (=35/(3.42/3)). The WHK Group is a successful company listed on the Australian stock exchange, whose business model Mr. Bashier Adams (the CEO of SUL) has built--and is building--SAB&T UBuntu around. WHK Group's present market stats put its PE and DY at 21.6 and 4.1% respectively. It does have a higher dividend payout ratio than SUL, which is typical of a matured firm in a first world country (cashflows are more stable and reinvestment of profits not so necessary). As the dividend payout ratio is differs from SUL's 30% yardstick, the DY is not really comparable. The PE ratio's, though, are very comparable... Well...the WHK Group is based in a first world country with a more developed and stable economy. It's systematic risk will be lower, which always boosts the whole market's PE ratio. Thus I feel that a good 30% discount on the PE ratio is in order. This discount places SUL's mature growth PE ratio at 15.12 (=21.6x0.7). This is about 50% above it's present PE ratio, despite SUL actually being in the growth & acquisition phase of its investment cycle.
http://www.smallcaps.co.za/
