Yesterday Hudaco published its annual results for the year ended November 30 2012. For some weeks the share had been trading around R117, but, following the results, the share price fell out of bed and Friday’s market closing price was R110, a loss on the day of about 6%.

Those readers who used to read Jean and my columns in Business Day will recall that part of the continuing narrative in those columns was about two (still existing) portfolios, the Private Investor and High Yield portfolios.

The Private investor portfolio initially invested R100 000 August 2007, and, with the exception of the shares in one company, the investments were made by the end of the year.

The exception was Hudaco, in which we invested just over R9 000, the proceeds of the sale of Tiger Brands, with which we were disenchanted.

There are 10 counters in this portfolio, and five of them are still suffering shell shock following the 2008 market crash. Hudaco, with a capital gain of over 50% has been the second best performer (the winner is NewGold by far). Of course, the portfolio has also enjoyed dividends from Hudaco, and this has helped to assist its internal rate of return.

The Private Investor portfolio has not been a good performer. Its capital gain over the period has been 15,3% and its internal rate of return at less than 5% annually compounded has just about countered the rate of inflation.

This takes me to the High Yield portfolio, in which a substantially larger investment was made, and in which Hudaco features again.

The investments in this portfolio were made between September 2009 and December 2011. Since Friday’s market close, the portfolio has enjoyed an internal rate of return of well over 20% a year.

The Hudaco holding was made at R66,04 just over three years ago. The internal rate of return on this investment, which takes into account the share price’s belly-flop on Friday, was 23,3% a year.

Hudaco’s performance over the year was good. It was badly affected by mining labour problems. Its woes were compounded by the rand’s volatility. When the rand is strong it gains on its price of imports. When the rand is weak it enjoys the good fortune of export-driven miners and manufacturers – provided these customers are not strike-bound. In an especially negative environment, therefore, pushing headline earnings per share by 5% to R10,71c per share and lifting total dividends per year by 6% to R4,65c was pretty good in my eyes.

Still, it remains in similar problems ahead – rand volatility, labour woes and, of course, the Eskom tariff sting. Thus: no positive or negative forecast from the directors.

From Jean’s and my perspectives, Hudaco remains a hold even if in the 2013 financial year, earnings don’t improve. At our cost price, the forward dividend yield should be 7% after withholding tax.

At the current cost of R110 per share, the forward dividend yield (based on no earnings growth) is more than 4%. If we were cash-flush, we would add some more.

Ben Temkin