The South African electric cable company whose share price increased by over 70% in 2024

South Ocean Holdings achieved over 70% share price growth in 2024, making it one of the best-performing companies on the JSE.

South Ocean Holdings is a South African manufacturer and distributor of low-voltage electric cables and related products.

The company is a preferred supplier in the local market, servicing the building and construction industries.

It has a strong investment case, including being a key player in the market sectors in which it operates with an experienced management team.

It has a large and established customer base in the building and construction industries and strong relationships with key suppliers.

South Ocean Holdings has two main operating segments: South Ocean Electric Wire Company (SOEW) and Anchor Park Investments.

• South Ocean Electric Wire Company manufactures and distributes a range of low-voltage electrical cables and wires for household and industrial uses.

• Anchor Park Investments hold the group’s property assets.

The group saw very strong share price performance in the year to date, growing by over 70%.

This share price growth resulted from strong revenue increases since 2023. The company reported its strongest revenue result in history, at R2.4 billion in H1 2024.

Since 2020, South Ocean has also reported strong profitability. This was a welcome change after reporting losses from 2015 to 2019.

The group reported record profitability at the end of its 2023 financial year, with a net profit of R89 million.

The improved financial performance from the group also triggered the company to re-implement its dividend payments in 2021.

Before reinstating its dividend payments three years ago, South Ocean last paid dividends in 2010.

Over the past four years, South Ocean delivered an increasing dividend per share that reflected its better profitability.

The group maintained a dividend payout ratio between 23% and 27% of its net profit per share, meaning investors receive 27% of the company’s net profit as a dividend.

The strong profitability performance and reinstated dividends are key drivers of the stock’s performance.

Despite the strong share price rally in 2024, South Ocean Holdings is still trading at a price-to-earnings ratio of 3.7 times earnings.

This is significantly lower than many other top-performing companies, suggesting that there may be more upside for investors should the company’s good performance continue.