AECI sits on property gems

THE value of AECI’s property portfolio could well be higher than the market currently gives it. The hidden property asset provides a solid underpin to the share price.

Speaking on Moneyweb Radio , John Biccard of Investec Asset Management said AECI is a share with considerable value.

Recently, AECI sold 61 hectares of industrial land at Milnerton for R260m.

This works out to about R4m/ha, which is a “fantastic price for a bulk sale of property”, adds Biccard.

AECI’s property arm, which is known as Heartland Properties, comprises 2 400 ha of land available for development at Modderfontein in Gauteng, Somerset West in the Western Cape and Umbogintwini in KwaZulu-Natal.

Biccard reckons the properties can easily be sold for R1m a hectare

For the year ended December 2005, the group’s properties were valued at R412m and revenue from the sale of 190 hectares was R406m.

The properties are undervalued and “the market hasn’t fully priced this in”, adds Biccard.

AECI doesn’t intend to become a property-driven company but while there is strong demand in the property market, the group will “make hay while the sun shines”, says Fulvia Putero, AECI’s communications manager.

It will continue to focus on its core business of explosive chemicals, fibres and paint, she adds.

Putero says AECI plans to sell the vast tracts of land it no longer needs over the next ten-15 years.

Source: Moneyweb - www.moneyweb.co.za

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