Interesting AltX companies

On 22 March my colleague and I had the opportunity to attend the AltX T-Sec Investor Forum, during which a number of AltX companies presented their investment case.

The companies that presented were Dialogue Holdings, IFCA, Myriad Medical Holdings, Workforce, SAB&T Ubuntu, Acc-Ross, African Dawn and OneLogix. The presentations are available on http://www.jseshowcase.co.za/.

The companies that I have found to offer superior growth potential are as follows:

• Dialogue Group: Their main business is outsourcing, in particular call centres and business processes. Call centres are a rapidly growing global industry. South Africa has the advantages of being in the same time zone as Europe, has neutral English accent, and call centres being a growth industry targeted by the government. In addition, telecommunication costs, although still very high, are falling.

Dialoue Group currently employs 1,800 people in CT, JHB and DBN. It handled 48 million calls in 2006 and has a list of blue chip companies as its clients. It listed on the JSE at R1. The 2007 HEPS forecast is 9.1 cents.

Given the growth potential of Dialogue Group, I would buy their shares at R1.50 or less.

• Myriad: Their business is the sourcing and distribution of medical devices, a segment of the health care industry that offers a lot of consolidation opportunities. It wants to grow its business through organice growth, product range expansion and regional expansion.

One thing that is particurly attractive about its business is medical devices and consumables have steady, increasing usage, as more and more people visit doctors and hospitals. The half-year HEPS to 30 November 2006 is 4.9 cents. Let's wait for the company's next set of annul results, which should be published in August.

• Acc-Ross: When they listed last year, I stayed away from this counter, as I didn't like the valuation and the way they spending millions in advertising the fact that they were listed on the AltX. I was right. The company went through quite a lot of problems, and the CEO resigned. But now under the new CEO, Wilfred Robinson, the company is on the right track: It now has a much better strategic focus, is more intelligent in how to employ its capital. It is certainly on the road to recovery. It listed at R1, then fell all the way to 13 cents. It has since recovered to 50 cents. Acc-Ross is in our 2007 model portfolio, and its share price has risen sharply from 32 cents at the beginning of the year to 50 cents.

• African Dawn: It is a provider of finance and financial services. It has the following distinct divisions: short-term secured finance (bridge finance), home improvedment finance, cellphone banking solutions, financial literacy solutions and property sales. It has a strong marketing force. Its share price has risen 1,400% from 4 cents at inception to R2.30 at time of the presentation. Its profits are growing strongly. It is a gem, a buy at R2.50 or lower.

• OneLogix: A niche player in logistics, it focuses on logistics that have high barrier to entry and high margin. It is in our 2007 model portfolio. Buy at R1.10 or less.