A conversation around an accounting software firm whose sales are growing at a four per cent clip will make many investors yawn, but that would be a mistake in the case of Sage. On Wednesday the company's chief said the group was on track to deliver revenue growth of six per cent by 2015. That would be twice the average historic rate, marking an important acceleration. In parallel, the products it sells - systems that allow companies to handle accounting and payroll tasks - are critical to businesses. That gives Sage pricing power over its clients and a base of recurring revenues. Better even, the software manufacturer has a penchant for returning excess cash to shareholders. There is a new Finance Director on board, but once he gets settled in he will likely announce his intention to increase returns to shareholders. True, some analysts have quibbles about the stock's generous valuation - its shares
trade at 18 times' forward earnings - and what they describe as "incipit" growth. Yet the shares are only marginally above their long-run price-to-earnings (PE) ratio of 16 times, and cheap relative to software sector peers on 21 times. The balance sheet is strong too and the company sports a dividend cover ratio of over two. There should be more to come, so 'buy', says the Daily Telegraph's Questor column.
The start of a strike this week at Anglo Platinum's - which is 80 per cent owned by FTSE-listed Anglo American - Rustenberg mine in South Africa has led analysts to ask some hard questions, such as whether the parent ought not to simply pack things up in the country and leave. That comes as one union at the above mine in effect asked for a doubling of wages. Yet a shutdown of operations is not as easy as it sounds, it is time consuming and expensive, although it would allow for reallocating capital towards operations at Mogalakwena. The latter is Anglo American's other more efficient open pit in the country.
However, while the company has been slower than other miners to cut costs in the face of a turn in the metals boom, it is making progress. By the end of last year three mines had been shut and 7,500 staff had left. As well, scale is important in mining. Spinning-off Anglo Platinum would subtract about $8bn from the company's market capitalisation, which at $30bn is not large to begin with. Taking away Kumba Iron ore, its other South African operation, would have a similar effect. In the end, however, Mogalakwena is a good asset to have, given its low energy costs. "The production shift from Rustenberg to Mogalakwena will take time - but strikes or not, and with broader restructuring to come, Anglo American may work best as one platinum miner, not two", says the Financial Times' Lex column.
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