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Nedbank Private Wealth’s 2015 Christmas stock picks

AUNT (SEP, recommended at 650 cps)

It appears that 2015 will be the year where everything will come together for Sephaku Holdings, which has been in a start-up phase over the past few years. Its recently commissioned cement plant will be up and running for a full year, the company will benefit from cost savings as a result of using its own clinker raw material and its Gauteng presence, through Métier, will be expanded to four plants. The reported numbers will become clearer from 2015 as the company moves to stable-state production, and the pending share issue as part of its payment for the Métier transaction will be something of the past. This is likely to result in a reassessment of this counter by the market and a better appreciation of its potential. Early indications are that Sephaku’s cement is well received by customers. An experienced management team, the backing of Dangote Cement (Africa’s largest cement player owned by Africa’s richest person) and a new, more efficient plant all add to the appeal of this counter. The current internal focus of its largest competitor, PPC, also plays into Sephaku’s hands for now, as Sephaku is entering new markets to sell its products. While Sephaku still faces some uncertainties as part of its ramp up, in our view the potential upside is attractive, which makes this a great gift for Aunt’s Christmas stocking.

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Full Financial Analysis


Bodibeng Trading Proprietary Limited

Founded by Mr Gaopalelwe Olebogeng from the Verdwaal Village in the North West province who is the sole managing member of Bodibeng Trading Proprietary Limited. Mr Gaopalelwe has previous experience in plant cleaning that he acquired during his tenure as a plant cleaner at another cement company in Lichtenburg. Bodibeng Trading Proprietary Limited employs 36 employees from the local community and currently has a short-term contract with SepCem which includes mentorship to ensure that it effectively provides the plant cleaning services at Aganang.


Mancamane Trading Enterprise

Mancamane is a black female-owned enterprise that started operating in 2010 as a plant cleaning, construction and mining supply company. Ms Daisy Maseko, a renowned entrepreneur, founded the enterprise in the Delmas area, Mpumalanga province and currently employs 28 permanent staff. SepCem adopted Mancamane into the enterprise development programme in 2014. The company is currently supplying plant cleaning services to the Delmas grinding plant and has demonstrated the ability to grow sustainably.


MM&JK Cleaning Projects Proprietary Limited

In 2014, SepCem contracted the cleaning services of MM&JK Cleaning Projects, an enterprise established in 2013 by Mr Sipho Mazibuko from a village called Springbokpan in the North West province. SepCem identified MM&JK Cleaning Projects as a well-managed enterprise that is appropriately suited to benefit from the programme. In the case of MM&JK, SepCem has partnered with another major industrial organisation to mentor Sipho.

The partner’s role is to assist MM&JK Cleaning Projects with inproving its cleaning skills through training, providing cleaning equipment and required detergents. SepCem’s role is to develop Sipho’s business management skills including cost management, record keeping and negotiation. SepCem is assisting MM&JK to develop a marketing strategy to increase its customer base to reduce the single-customer dependency risk and ensure that the company is sustainable. MM&JK Cleaning Projects currently has a three-year contract with SepCem for general cleaning at Aganang and employs 14 permanent staff.



Millicent’s Enterprise

Millicent’s Enterprise is 100% black female-owned and was founded by Ms Millicent Mahlabe, an entrepreneur from Delmas in the Mpumalanga province. The company was selected for the programme because it has historically demonstrated the ability to supply large contracts but lacks administration skills. Millicent’s has a good reputation and positive track record of being able to cater for large provincial government events.

SepCem secured Millicent’s catering services in 2013 for its canteen at the Delmas plant that provides meals to 150 employees. Millicent’s currently has seven permanent employees and several contract employees who are sourced as and when required.