Flame Tree Group (FTGH) is a NSE-listed company that manufactures and owns a portfolio of mass market brands including Roto Tanks, Jojo Plastics, Rino Tanks, Zoe, Cerro, Alana Skin, Siora, Happy’s and Buildmart. Their latest acquisitions include Chirag Kenya and Suzie Beauty. Unlike the likes of Home Afrika where directors disposed of their shareholding upon listing, Heril Bangera, FTGH’s CEO is the leading shareholder in the company that only floated 15% stake to the public. There is always a sense of shareholder comfort and security in owning shares in a company where the owner and founder is the CEO.
It is interesting to see how the FY2015 results have turned out impressively considering the numerous profit warnings from the other NSE-listed companies. From a distant view this company could turn out to be one of those good long term counters. A few notable pointers;
• CEO is the largest shareholder at 80%
• The company listed via a private placement (issued 162million shares = 15% of the company) to raise funds to expand and pay down debt instead of cashing out.
• Low P/E (and a high growth potential)
• The company acquires established and profitable businesses which cements its long term vision for shareholders
• The company is diversified in a wide range of products under the plastics, cosmetics and food processing lines of business. This diversification in product lines helps stabilize its revenues and reduce dependency on one industry
• The company manufactures and owns a high value portfolio of mass market brands, consequently ensuring cash-flow which takes care of liquidity concerns
• FTGH is in a resilient industry that always weathers tough times (most women will always buy beauty products even when they don’t have money for food; better go hungry than look ugly).
• The company’s PAT was Ksh. 52M in 2012, Ksh. 149M in 2013 and Ksh. 153M in 2014 (FYR2015 yet to be announced)
• FTGH’s share price has so far weathered the tough bear that descended on the NSE in February 2015 when the Nairobi 20-Share Index hit the psychological 5,370 basis point high.
FTGH closed the last trading session on 29/4/2016 at Ksh. 8.00 (+18.3% YTD) per share, buoyed by the recent announcement of good results.
I am not saying go buy it, neither am I saying don’t buy it. But it won’t kill you to check it out, will it?