Not a company that is talked about much. The share price gained 41percent in the past 12 months, and the price/earnings ratio is still at only 5.9times.
Its history dates back to 1946 when the company began manufacturing electrical wiring accessories. By 1952 manufacturing of small electrical appliances commenced, and in 1980 Nu-World began importing and distributing small electrical appliances. Nu-World Holdings Limited listed on the Johannesburg Stock Exchange in 1987. It is one of Southern Africa’s leading players in the supply of “Branded Consumer Durables” to the retail sector.
Nu-World is one of the largest importers of consumer electronics in Southern Africa, with their international brands of JVC and Telefunken and in-house brand of NU-TEC. It is the leading importer and exporter of small electrical appliances in South Africa. In addition to consumer electronics, Nu-World also imports and distributes large appliances for cooking, laundry and refrigeration, air-conditioning, a range of furniture as well as the Casio range of watches and consumer electronics.
Brand Names
Conti; Ideal; JVC; Palsonic; Prima One&Only; Telefunken; Fenici; GoldAir: Ideas by Nu-World; Magic Line; Nu-Tec; Sunbeam; Vegas.
Despite the relatively slow economic growth and weakening consumer demand in the local economy, the South African operations showed strong positive growth in both sales and profitability. Sales growth was achieved in all divisions.
They delivered strong results for the half-year to February 2017 with top-line growth of 14percent, and their balance sheet remains strong with a debt:equity ratio of 6.5percent. The group’s exclusive local and international brands continue to expand with new ranges, designs, modifications, specifications and styles. Nu-World continues to invest in the development of new models and designs, to ensure that their customers and consumers are afforded the latest designs at affordable prices.
Additional models and categories were added in the consumer electronics range during the last year and new affordable retail price points were achieved. In the liquor division, international agencies were secured for additional brands of whisky, gin and vodkas. They experienced increased sales and profitability due to better stocking and planning. In the small domestic appliances business, they added additional ranges in most categories.
Offshore operations
Turnover outside SA accounts for approximately 30percent of turnover and international expansion and diversification continues to provide exciting avenues of growth.
In Australia sales were marginally down in the last reporting period, but the operating costs were reduced, affording stronger operating profits. They invested in new technologies and solutions which were required specifically for the Australian and New Zealand markets.
Nu-World managed to show growth in Africa, the Middle East and Brazil, despite conditions remaining tough, especially in the oil producing economies. Uruguay continues to be a strong presence in Latin America. India, Pakistan and Sri Lanka are new territories entered in January 2017. The huge population in excess of 1.5billion people offer new markets and lots of opportunities. They have appointed sub-distributors and initial orders were received.
According to the 2016 annual report, improvements in strategic and operational plans are the focus of management to grow market share in the consumer electronics and branded consumer durables sectors, both locally and offshore.
This, coupled with the expanded offshore territories that the group trades in, should increase the contribution from these businesses in future years. Corrective action has been taken in the Australian operations to ensure the return to profitability. The group continues to focus its target market on recognised international brands for consumer electronics and consumer durables, both locally and offshore.
It doesn’t make sense that Nu-World trades at such low valuation levels - even in the current economic environment.
Amelia Morgenrood is PSG Wealth regional director.