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INSIMBI INDUSTRIAL HOLDINGS LIMITED

ISB JSE Listed
Market Cap
~R255 Million

Investment Analysis: Insimbi Industrial Holdings Limited (JSE: ISB)

Date: 14 January 2026 Analyst Role: Senior Equity Analyst, JSE Subject: Comprehensive Review of Insimbi Industrial Holdings

Step 1: Data Gathering & Source Verification

I have accessed the primary financial disclosures and regulatory announcements to establish the baseline for this analysis.

  • Reporting Period 1 (Interim): Unaudited Condensed Consolidated Results for the six months ended 31 August 2025 (Released 17 October 2025).

  • Source File: Insimbi HY2026 Interim Results SENS

  • Reporting Period 2 (Annual): Audited Annual Financial Statements for the year ended 28 February 2025 (Released 30 May 2025).

  • Source File: Insimbi FY2025 Annual Results

  • Key SENS Announcements (L12M):

  • Director Dealings: Disclosure of acquisition of securities (31 Oct 2025) – Directors buying shares, signaling confidence.
  • Segment Classification: Reclassified to the "General Segment" of the JSE Main Board (1 Dec 2025), which offers slightly more flexible listing requirements.
  • Dividend: No dividend declared for FY2025 or HY2026.

Step 2: Metric Extraction

Currency Note: Metrics calculated using the closing share price of R0.71 (14 Jan 2026).

  • Market Cap: ~R255 Million

  • Context: Micro-cap industrial stock.

  • Dividend Yield (L12M): 0.0%

  • Status: N/A. The group suspended dividends in FY2024/25 to preserve cash amid operational losses and high debt levels.

  • Liquidity Check: FAIL (High Risk)

  • Metric: Average daily value traded is negligible. Many trading days show zero volume.

  • Risk: Extreme. This stock is effectively illiquid. It is nearly impossible to exit a large position without crashing the price.

  • P/E Ratio: N/A (Loss Making)

  • Calculation: The company reported a basic loss per share of 2.69 cents for the interim period and a significant loss for FY2025.

  • Net Asset Value (NAV): ~152 cents per share (Based on R547m Equity)

  • Price-to-Book: 0.47x (Trading at a 53% Discount to NAV).
  • Signal: The market is pricing the company at liquidation value, reflecting deep skepticism about the future profitability of the local steel/scrap recycling industry.

Step 3: Operational & Strategic Analysis

Business Overview Insimbi is a recycler and processor of ferrous and non-ferrous metals. It supplies the steel, aluminium, and foundry industries.

  • Revenue Streams: Primary revenue comes from the sourcing and supply of steel scrap, aluminium, and alloys. It essentially acts as a critical link in the circular economy, moving recycled metal from collectors to smelters.

Performance Trend (Interim Aug 2025 vs Aug 2024)

  • Revenue: Stable (+2%). Revenue held up at R2.75 billion despite a tough economic environment, driven by higher export volumes which offset weak local demand.
  • Profitability: Recovering but Negative. While the company made a net loss (-2.69 cps), EBITDA increased by 19% to R37 million. This suggests that cost-cutting measures (saving R40m in admin costs) are starting to work, but debt service costs (interest) are eating all the operating profit.
  • Cash Flow: Concerning. Cash flow from operations swung to a negative R31 million (burn) due to working capital trapped in debtors and stock. Debt-to-Equity rose to 104%, which is dangerously high for a cyclical business.

Sector Context

  • Macro Factor (Steel Sector Crisis & Ban): The South African steel industry is in distress (ArcelorMittal SA struggles). Furthermore, the Scrap Metal Export Regulations (pricing preference system) continue to squeeze margins for recyclers like Insimbi, forcing them to sell locally at lower prices rather than exporting at global rates.

Step 4: The Verdict

Bull Case: The "Turnaround" Option You are buying R1.52 of tangible assets for 71 cents. The 19% improvement in EBITDA and recent director buying (insiders putting their own money in) suggests the bottom might be in. If the local manufacturing sector recovers or interest rates drop (reducing their heavy debt bill), the stock could easily double to match its NAV.

Bear Case: The Debt Spiral Insimbi is walking a tightrope. With Debt-to-Equity at 104% and negative cash flow, they are highly vulnerable. If the steel price drops or a major client defaults, they may breach banking covenants. The lack of liquidity means you cannot sell if the news turns bad.

Fair Value Estimate R0.90 – R1.00

  • Methodology: Applying a conservative 30-40% discount to NAV to account for the liquidity risk and debt burden. The current 53% discount is excessive given the operational stabilization.

Final Rating: SPECULATIVE BUY

  • Rationale: This is a classic "deep value" cigar butt. It is too risky for a core portfolio (due to debt and illiquidity), but for a high-risk account, the asymmetry (price vs. asset value) is attractive. Monitor the cash flow in the next results; if it turns positive, the thesis is confirmed.
AI Generated Analysis Last Updated: 2026-01-14