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:
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- 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:
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- 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.