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Cashbuild Falls Most in Four Years on Sales: Johannesburg Mover

Cashbuild Ltd. fell the most in more than four years after the South African building-materials distributor said sales growth slowed in the second quarter.

The stock declined 7.9 percent, the most since June 2008, to 136.68 rand by the close in Johannesburg. It is the biggest loser on the 11-member FTSE/JSE Africa General Retailers Index. About 220,000 shares changed hands, or more than 4.5 times the daily average over the past three months.

Sales rose 1 percent year-on-year in the three months through December, compared with a 9 percent advance in the same period in 2011, the company said in a statement today. Sales from stores open for more than a year fell 1 percent.

“If you strip out inflationary effect, it’s certainly far below expectation and it shows a softening in consumer spend and in demand in the sector,” Keith McLachlan, a senior equities analyst for small- and mid-cap companies at Thebe Stockbroking in Johannesburg, said by phone.

Several South African retailers including Shoprite Holdings Ltd. and Mr Price Group Ltd. have published weaker-than-expected sales updates this month as slower economic growth and unemployment of 25.5 percent weighed on consumer spending. Cashbuild now trades at 10.9 times reported earnings, down from 11.8 times yesterday. The General Retailers index trades on 18.6 times reported earnings, down from 21 times on Jan. 7.

“We have seen this across the board in retailers, where very high market expectations, arguably driven by foreign buying over the last couple of years, have led to strong re-ratings in their share prices,” McLachlan said. “The results coming out aren’t keeping up with these high market ratings and, hence, the sell-offs in the stocks.”

Cashbuild’s 30-day historical volatility, a measure of stock swings, increased to 33.3 from 22.5 yesterday. The FTSE/JSE Africa All Share Index’s 30-day volatility gauge was at 8.74 from 8.53 previously. A higher reading means an asset price can have bigger moves.

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