Price: US$1.25

Market Capitalisation: £20m

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Chagala reported an 8% rise in interim pre-tax profits, on the back of lower interest costs following the debt refinancing last year and foreign exchange gains, as the local currency strengthened. Although EPS fell 8%, NAVPS was up 5% to US$3.75. Positive free cash flow reduced net debt further at the period end, so the net LTV was just 11%. As the company is on target to meet our 2017 forecasts, we have not revised our numbers. The stock remains on a wide discount to NAV and with a forecast dividend of USc2.5, the yield is 2%.

Results boosted by forex gains: Chagala reported an 8% increase in pre-tax profits to US$1.6m for the interim period. Profits were boosted by US$0.35m of foreign exchange gains and lower interest costs, following the stronger local currency and debt refinancing in 2016. A more than doubling of the tax charge depressed earnings, which fell 8% to US$1.2m and US$0.057 per share. NAV increased 5% to US$80m or US$3.75 per share, on the back of the retained earnings. Chagala paid a divided of USc2.5 in July, after the period end.

Stronger balance sheet: The balance sheet benefited from the refinancing at the end of last year, with total debt dropping below US$12m. The LTV also fell to just 14.5%. Operating cash flow was lower, but was still over US$3m in the first half, sufficient to cover investing and financing and increase the cash balance to nearly US$3m, before a US$0.5m dividend was paid.

Forecasts unchanged: We have not made any changes to our forecasts following the results. The interims leave the company ahead of our run rate for the year for cash flows and profits, so we feel more confident of Chagala meeting our numbers.

Valuations remain attractive: The stock is currently trading on a discount of 65% to NAV. With a FY18 yield of 3.8% this seems hard to reconcile, now that the  operational backdrop has stabilised and the short-term debt has been refinanced.