CASE STUDY: Canaf Investments (CAF.V / CAFZF)

Two light bulbs are lit up in the dark.

April 6, 2025

Canaf Investments is a South African focused public company with four divisions:

Southern Coal – South Africa Southern Coal produces calcined anthracite, which is primarily sold as a substitute to coke in sintering processes.  Southern Coal supplies world leading steel and ferromanganese producers in South Africa.

Canaf Estate Holdings – South Africa Canaf Estate Holdings is a property investment company focused on acquiring, redeveloping and renting properties primarily within the suburbs of the old Johannesburg.

Canaf Agri – South Africa Canaf Agri is exploring investment opportunities in the agriculture sector in South Africa.

Canaf Capital – South Africa Canaf Capital is an investment company focused on providing capital for short-term financing to businesses and entrepreneurs in South Africa.

Of these four divisions, Sout Africa Southern Coal is by far the largest.

Canaf Investments is a tiny company engaged in boring businesses, thus the stock is completely overlooked by most investors.  But the stock is super cheap.

The market cap is $10.01 million while enterprise value is $3.16 million.

Here are the metrics of cheapness:

    • EV/EBITDA = 1.11
    • P/E = 6.26
    • P/B = 1.52
    • P/CF = 2.37
    • P/S = 0.47

Canaf’s metrics of cheapness are exceptionally low.

Insider ownership is 17.6%, which is good.  ROE (return on equity) is 23.3%, which is excellent.

Cash is $8.5 million while debt is zero.  And TL/TA is 20.3%, low indeed.

Intrinsic value scenarios:

    • Low case: If there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.
    • Mid case: The current P/E is 6.26 but should be at least 12. That would mean the stock is worth $0.42, which is over 90% higher than today’s $0.22.
    • High case: Current EV/EBITDA is 1.11 but should be at least 7.  That would mean the stock is worth $0.59, which is 168% higher than today’s $0.22.

 

RISKS

  • As noted, if there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.

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