Is it an iron ore miner? Is it food distributor? It’s Century Global Commodities Corporation (TSE:CNT), a company that’s not afraid to diversify and turn it to success.
Not many companies can boast a cash pile bigger than their market cap. And as we all know, money provides options and the freedom to choose. Century Global has about C$30mln in cash versus a market cap of C$22mln.
In an interview last week the Toronto-listed company’s President & CEO Sandy Chim highlighted to Stocktube where the group was headed next as it offered a "very large iron ore portfolio" with "very viable projects" and "cash-generative" growing food distribution business in China.
Watch: Century Global Commodities offers "very solid value" CEO Sandy Chim says
It is also a company which has managed to cut back costs at a healthy clip. In November it reported that it cut its losses by nearly 20% in the second quarter ended Sept 30.
Read: Century Global cuts losses and updates on diversification progress
Such is the confidence of where the company is headed that Chim has himself purchased 1.8mln shares in the enterprise in October.
Read: Century Global, CEO Chim purchase 1.83mln shares
Food distribution into China is an exciting addition to the business. Last October, the company updated that growth in revenue, product range and customer base in the company's food business in Hong Kong, China was coming along very well. The company has firmly established local distribution there, covering the major supermarket chains, hotels and restaurants, as well as an international airline. The company also extended its distribution network to Macao, China.
Since logging its first sales in January 2016, the company has been steadily increasing the volume of its food business, expanding its product range and broadening the sourcing of products to Europe, as well as Australia.
But the business has also set down roots outside of Hong Kong and Macau in central China too.
Century has established an office in Wuhan, China. Its lean professional team there is sourcing quality imported food products and positioning the company to exploit the market in central China, where long-term growth is expected to outperform coastal and other mature markets in the country.
Food safety, and therefore food quality, are coveted in China by domestic consumers. For example the company has taken on importing high grade European meat products into Hong Kong.
But Century is also staying true to its original mining roots. There is also a strong prospect this will pay off as developments in the United States are set top benefit commodity miners.
Iron ore has been the backbone of the business. The company's assessment is that the global iron ore sector will experience more systemic structural adjustments over the next few years as a result of major new megaprojects in Australia and Brazil coming on stream just as the Chinese steel industry is reducing its overcapacity. Spot markets for iron ore remain volatile. The price of iron ore surged to nearly $70 (U.S.) per tonne in April, 2016, from a low of less than $40 (U.S.) per tonne at the end of 2015.
But in January the price rose to around $78.69 a tonne last Friday.
One of the major drivers for this is that after his inauguration on Friday, Donald Trump, the 45th President of the United States is expected to sign off major infrastructure projects as part of his reflationary policies and that will prop up iron ore and other industrial-quality commodity prices.
But while iron ore prices recover, Century Global has also been exploring the prospects of other mining activities, such as previous metals such as gold, and base metals, such as copper, which itself has seen prices rise sharply in the past few months.
With the share price at C$0.27 on Monday, Century Global shares are at their highest in more than six months. Expect further upside from here.