Our opinion on the current state of ITLTILE(ITE)Italtile (ITE) is a franchisor specializing in tiles, sanitary ware, flooring, and home finishing products, which it manufactures and wholesales. The company is controlled by the Ravazotti family and operates 206 stores along with 6 online web stores. It also boasts a property portfolio of retail and industrial properties valued at approximately R4,3bn. The company has expanded its manufacturing capabilities by acquiring 95,47% of Ceramic Industries and 71,54% of Ezee Tile, further enhancing its product offerings and operational efficiency.
Italtile has been benefiting from increased sales driven by the trend of people improving their home environments while working from home. The company has plans to expand by adding 10 to 15 new stores this year. Additionally, it has repurchased about R240m worth of its own shares at lower levels, which may support its stock price.
The company faced challenges during the civil unrest in Natal, where it had to close 18 stores, and another 16 stores were closed for 10 days. Two stores at Orange Farm and Spruitview were destroyed, and there were also store closures due to COVID-19 in July 2021.
In its results for the year ending 30th June 2024, Italtile reported that turnover remained unchanged while headline earnings per share (HEPS) were down 7%. The company's net asset value (NAV) increased by 10% to 707,5c per share. Italtile stated, "While our retail operation's full-year results were slightly lower than the prior comparable year, the division recovered market share and performed better in the second half of the period than the first half."
Technically, the share moved sideways for two years before COVID-19 took it down to levels around R10. However, the share broke up through its long-term downward trendline on 28th June 2024 at a price of 1107c and has since risen to 1305c. It is likely to benefit from new building activity expected to follow the formation of the new Government of National Unity (GNU) in South Africa.
