The Finance Ghost: Invicta, Hudaco and Trellidor — A busy week in industrials

Daily Maverick

a day ago

The industrial melting pot serves up some good news for Trellidor, while Invicta and Hudaco deliver contrasting narratives in their updates.
The industrial sector on the JSE is the polony of the local market, as stocks that don't fit somewhere else tend to get lumped in here. If you buy an exchange traded fund tracking the FTSE/JSE Capped 25 Industrial index, you end up with Naspers and MTN as the two largest holdings – not exactly the angle grinders and heavy machinery that you may have pictured. Shoprite and Clicks are in there too, by the way, as the JSE doesn't have a retail index that is widely tracked.
Moving on from the frustrating realities of our local market, there are of course many companies on the local market that are exactly what you imagine when you think of the word 'industrial' – bearings, machinery, manufacturing and automotive components, to name just a few verticals. This week, we saw earnings updates from Invicta and Hudaco in this sector, as well as news of a non-core asset disposal at Trellidor.
Invicta vs Hudaco: Peers, or are they?
It may come as a surprise to you that Hudaco's market cap is nearly double that of Invicta, as the latter tends to get more attention in the local market owing to its position as part of the broader Christo Wiese stable. Another surprise comes from drawing a 10-year share price chart, with Invicta having shed half its value and Hudaco having gained around 50% over that period – still a tepid compound annual growth rate over that period, but at least in the green.
A year-to-date chart reveals that Invicta has enjoyed more positive recent momentum, with the share price up 5% this year, while Hudaco is 5% in the red. The narrative in the latest earnings announcements from each company would support that trend, as Invicta has a more bullish tone at the moment than Hudaco.
Not least of all because of the Wiese influence, Invicta has pursued a more global strategy than Hudaco. This hasn't exactly led to a smooth journey, as evidenced by earnings per share only recently exceeding the levels seen a decade ago. Hudaco has been on less of a rollercoaster ride at least, but the generally weak levels of growth in South Africa have predictably led to an uninspiring growth story.
This difference in geographical approach also explains some of the performance differential over 10 years. The starting point of that period saw Invicta trading at a premium multiple during the Lost Decade, when investors were desperate to escape the South African economic story, while Hudaco could offer no such protection to investors. In other words, a 10-year chart is a tough basis for comparison for Invicta. Still, the reality is that Hudaco is trading at a higher price/earnings (P/E) multiple than Invicta these days, with the market now appreciating the South African-focused strategy. It's just a pity that Hudaco's latest report paints such a bearish picture of local operating conditions – and one that is at odds with the improved investor sentiment around South Africa.
Hudaco's earnings for the six months to May 2025 saw a 2.4% decrease in revenue and a 1.5% decrease in operating profit. This means that the operating margin was up (10.8% vs 10.4%), giving investors something to feel better about in the context of weak overall demand. Although headline earnings per share (HEPS) was 19.6% higher at 938 cents, it includes a fair value adjustment that shouldn't be considered part of maintainable earnings. It's safer to look at comparable earnings per share of 833 cents, which increased by 6.1% – still a respectable outcome based on the revenue pressure.
Invicta's numbers covered the year ended March 2025, so we are dealing with very different periods here, even though both results came out in the same week. It has a more positive story to tell, with revenue up 6% and operating profit up 13%, reflecting significant margin expansion. There are a number of nuances to the numbers that make it difficult to know exactly where to focus from a HEPS perspective, but sustainable HEPS from continuing operations is probably the safest metric to use – it's up 22%.
An interesting point to bear in mind in this Hudaco vs Invicta debate is that Hudaco's business includes a consumer-focused segment that generates around 45% of group profits. Yes, the underlying products may have more of an industrial flavour than most consumer businesses, but selling tools and gas braais to retail customers isn't nearly the same thing as selling bearings and heavy machinery to mines and heavy manufacturing customers. The latter has more of a moat, sure, but does tend to be more cyclical. Invicta is far more exposed to a B2B model in the industrials space, with customers in particularly cyclical industries such as mining and agriculture as well. This helps explain why Invicta's earnings profile is more cyclical than that of Hudaco.
Both companies may be part of the broader industrial sector and seen as peers, yet they offer vastly different underlying exposure in both geography and business model. Although Hudaco has been the strong outperformer over most time periods, the tide seems to be turning – and with Invicta trading at a lower multiple than Hudaco while telling a more positive overall story, this will be an interesting one to watch going forwards.
Trellidor finally catches a break
Trellidor was up 22% in the past week. This means it has finally recovered to levels last seen in mid-2023, before things started to go extremely badly for the company. It has had a tough time, ranging from expensive labour disputes to questionable demand for the core products in a mature market such as South Africa, where an increasing number of consumers are choosing to live in complexes rather than standalone houses with security on every window.
Security is the group's DNA though, and that's where it is focusing, with a decision to sell Taylor Blinds and NMC South Africa. These are 'pretty' products that aren't a good fit with the rest of the group. But more than that, with expected proceeds of up to R90-million, it has managed to achieve a great price for the business. In fact, based on recent interim profits, it looks like it achieved a higher P/E multiple for this disposal than the entire listed group was trading on. And of course, it certainly helps to use these proceeds to reduce debt.
Trellidor was due a break, having had more than its fair share of bad luck in recent times. The question now is whether it can unlock growth engines in places such as the UK market. Even after the latest rally, it is still only trading on a P/E of 5.5x, so the market is still taking a cautious approach to this one. DM