Omnia trading update is excellent

Yesterday we received a trading update from an exciting business called Omnia. The update is for the full year number but I did write about the six month numbers when they came out in November last year. the piece titled Omnia six month results as expected also explains exactly what the company does and where they make their money.


Here is the update: "Shareholders are advised that the Group's basic earnings per share and headline earnings per share for the 12 months ended 31 March 2013 are expected to be between 1310 cents and 1340 cents (based on a weighted average of 66.288 million ordinary shares in issue), an increase of between 38% and 41% on the prior year's published basic earnings per share of 949.6 cents and an increase of between 36% and 40% on the prior year's published headlines earnings per share of 958.6 cents (based on a weighted average of 66.342 million ordinary shares in issue)."


Wow that is some good growth! Let's look at the fundamentals. The stock trades at R167.50 so if you take the middle of the range 1325c we get a multiple of 12.6. For a company growing that fast, this seems cheap. But the share price has been flying after going as low as R40 in March 2009. But earnings have justified this price especially after building the R1.4bn nitric acid plant which started production in March 2012. I am told that is has a lot to do with the strong growth in earnings we are seeing this year.

Nitric Acid has strong synergies with their fertilizer business and is also used in explosives for the mining sector. I feel this growth in earnings is far from over. Africa has great potential in both mining and agriculture. We have the minerals, fertile land and the climate. We also have a lot of hungry people on this continent. And Omnia stand at the forefront of this, posing to be a great gateway into the industry. We will go into more details when he results come out but I would add to this one before the market realises how cheap it actually is.