Africa is the reason I want to buy it.
Africa is wildly undervalued and under-developed. It has huge undeveloped energy, mineral and agricultural resources, a large population needing and wanting modernity, and huge potential domestic and offshore markets.
I could buy shares in Anglo-American but it doesn't have the ghost of Tiny Rowland blessing it. Anglo is established and it's only a mining company; Lonrho Plc is a development company and is only 6 years old in it's present incarnation. Lonrho's operators are experienced in the area and as far as I can see, are flexible and audacious. Their basic idea is to provide support for development and the move to modernity and unlike a mining company they can see revenues quickly
The risk in Africa is political and these guys seem to have spread that out over lots of countries under the reasoned assumption that it can't all go boom at once - of course it could, as we've seen along the Mediterranean periphery, but that seems less likely in sub-Saharan area. Lonrho has also diminished politcal risk by diversifying: infrastructure, distribution, agriculture, transportation, services, but they don't own mines or oil wells which require huge capital expenditure and physical structure, and immobility - a magnet for kleptocrats.
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Political risk is everywhere. In Europe and NA it happens in slow motion and is sort of hidden - it's sneaky. In Africa it's in your face and fast.
It may seem odd to you but I can see similarities between Lonrho and neat Canadian companies that developed the Canadian West. What really tickled me is that they have John Deer distributorships for Mozambique and Angola.
Call me a silly romantic, but you know, the stock is beaten up and revenues seem to growing at a considerable rate. |
