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JSE Direct with Simon Brown

Weekly podcast hosted by Simon Brown covering the JSE and listed companies.
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Now displaying: Page 4
Aug 17, 2022

Simon Shares


Thungela resources (JSE code: TGA) still a buy?

R60 dividend, 40% forward DY

HEPS 6723c, forward PE 2.5x

Mis-priced at listing, unbundling often cause this to happen.

Ukraine's war gave it new legs.

Risks

  • Coal price
  • Rand strength
  • Ukraine war
  • Transnet

* I hold ungeared positions.

 

Aug 10, 2022

Simon Shares

  • Renergen* (JSE code: REN) the Central Energy Fund has successfully completed their due diligence on the R1billion, final approval is still required.
  • Mpact (JSE code: MPT) results.
  • US jobs data and unemployment continue to belie the recession talk.
  • US inflation for July was 8.5%, a good number.
  • A gallon of gas has fallen below $4 in the U.S. for the first time since March.
  • Credit Suisse has lowered its 2023 UK GDP forecast to -0.6% from 0.5%; expects the UK to enter a recession from Q4 2022 until Q3 2023.
  • Elon Musk sold $6.9-billion (R14.5-billion) of his shares in Tesla (Nasdaq code: TSLA) – his largest sale yet – saying he may need the cash if he has to buy Twitter (NYSE code: TWTR).
Embrace the risk
  • Investing is about risk
  • Without risk, there is no reward
  • Without risk, you are saving
  • But the risk needs to be reasonable and the returns realistic

* I hold ungeared positions.


 

Aug 3, 2022

Simon Shares

  • Massmart (JSE code: MSM) update, retail margins are being squeezed, the exception is clothing retail.
  • Thungela Resources (JSE code: TGA) very strong trading update.
  • JSE (JSE code: JSE) results, strong.
  • Nancy Pelosi lands in Taiwan and markets don't really care and China will complain - but this is not leading to war.
  • Uber (NYSE code: UBER) finally hits cash flow positive.
  • OPEC+ 100,000 b/d output hike, expectations (hopes?) were for 4-5x that and the second smallest increase since 1986.
  • Earn 11% with Retail Savings Bonds
What's the only thing we control in markets
  • The price we pay
  • Everything else is beyond our control
  • So use your one power carefully

 

Jul 27, 2022

Simon Shares

  • New energy rules for South Africa. Who wins?
  • Silverleaf Investments on Easy Equities. Know what you're buying.
  • Food retailer updates, Shoprite* (JSE code: SHP) winning. Pick n Pay (JSE code: PIK) bounding back and Woolies* (JSE code: WHL) struggling.
  • Cashbuild (JSE code: CSB) and Mr Price (JSE code: MRP) updates show consumers under pressure
  • IMF upgrades SA GDP growth for 2022 to 2.3% up from 1.9% they expected in April.
  • Results from Kumba Iron Ore (JSE code: KIO) and Anglo Platinum (JSE code: AMS)
  • US data Wednesday and Thursday.
  • Omnia (JSE code: OMN) was ex-div 800c on Wednesday and is now back in the longer-term channel. If you've been waiting to buy, now's your chance.

* I hold ungeared positions.


 

Jul 20, 2022

Simon Shares

  • Local June inflation, 7.4%, MPC tomorrow.
  • BHP Group* (JSE code: BHG) update, they are worried.
    ArcelorMittal South Africa (JSE code: ACL) trading update says global growth and recessions fears "present challenges for the outlook of commodities and steel demand in the next 12 to 18 months.".
  • China's holdings of U.S. debt fell below $1 trillion for the first time since 2010
  • Alviva (JSE code: AVV) delisting at 2500c.
  • Brent oil trade keeps on trucking, buy below $100 exit $113.

* I hold ungeared positions.


 

Jul 13, 2022

Simon Shares

  • US June inflation 9.1%, and core inflation was also up a 5.7%!
  • Still stage 4. Rand continues to weaken.
  • Back backs between 4 July 2022 & 8 July 2022
    • Naspers JSE code: NPN) bought 659,095 shares at an average price of R2 648.3315/share for R1.745 billion (US$104.73 million).
    • Prosus (JSE code: PRX) bought 6,240,339 PRX shares at an average price of €67.1361/share for €418.95 million (US$428.59 million).
  • SARB now considers cryptocurrencies as a financial asset and will create regulations around them. This means cryptocurrencies can be listed on SA exchange platforms but the process will take 12-18 months.

Dividends, love them but be careful.

  • But we also need to remember a few important things about dividends.
  • They can disappear as we saw in 2020. Even the most stable dividend payer can stop paying. REITs which have to pay them by law being a REIT structure) stopped paying because payment would see them fail their solvency tests.
  • They are backwards-looking. A high dividend yield is certainly attractive, but is it because the price has been falling? Could this be a warning of a dividend cut?
  • Cyclical stocks (think commodity stocks) pay massive dividends sometimes, then nothing for years.
  • Boards can change the cover ratio. This is the percentage of HEPS they pay as dividends. In tough times they can cut them. As the company matures they pay more.
  • Progressive dividends are the worst. The idea is that every year the dividend goes up a set percentage regardless of profits. A few local stocks have tried the idea, all have abandoned the idea.
  • Cash dividend vs. script dividend. I'll usually take the script.

Jul 6, 2022

Simon Shares

  • Still stage 6. Rand continues to weaken.
  • Naspers (JSE code: NPN) and Prosus (JSE code: PRX) both are holding well after the hard run the previous Monday on results and buy-back news.
  • Resources under pressure, all of them.
  • Supply chains adjusting
      • Just in time is now just in case
      • Higher inventories
      • Higher costs
      • More localisation

Upcoming events;

Jun 29, 2022

Simon Shares

  • Episode #500. Huge thanks to all, I go into some background about the show. Where and how it started, lessons learnt and more.
  • Stage 6, the Rand lost 30c.
  • Sun International* (JSE code: SUI) update for five months to 31 May 2022 shows they are nearly back at pre-pandemic revenue and this while we still had some restrictions and fewer international travellers.
  • Naspers (JSE code: NPN) / Prosus (JSE code: PRX) results. Tencent (Hong Kong code: 700) is 125% of profits. The other businesses are all loss-making and in tough markets. They plan to sell down Tencent and buy back Prosus shares, but the discount to NAV remains around 50%, even after a massive move on the announcement.
  • Grindrod (JSE code: GND) good update and share has been flying. This remains a very cyclical business and right now the cycle is paying off.
  • Invicta (JSE code: IVT) saw strong results albeit some accounting points improved them a bunch.
  • JSE (JSE code: JSE) trading update is surprisingly strong with HEPS expected +24%-32% for six months ending June.

* I hold ungeared positions.


 

Jun 22, 2022

Simon Shares

  • Thungela (JSE code: TGA). Coal prices doing great, production is good but rail is the problem but HEPS is expected at 5800c. If we double for the full year we can expect ±R116 and a dividend of ±R100?
  • Stor-Age* (JSE code: SSS) results are not exciting but steady.
  • Omnia (JSE code: OMN) results were really strong, another special dividend and good future prospects.
  • Orion Minerals (JSE code: ORN) raises money to get their Prieska up and running. Expected to take some 19 months.
  • Amazon prime coming to South Africa next year. It will seriously challenge Takealot, owned by Naspers (JSE code: NPN)).
  • City Lodge* (JSE code: CLH) trading update show them cash flow positive with occupancies back in profit.

* I hold ungeared positions.


Crypto in trouble

Not an inflation hedge nor a store of value. Just another risk asset. The problem is as QE ends and rates rise, will it still see a strong inflow of money? I think not.

It's not the end crypto, but new highs could be some way off.


 

Jun 14, 2022

Simon Shares

  • US May inflation, 8.6%. Federal Reserve announced rates last night and surely it was 0.75% for the first time in 28 years?
  • Either we have continued high inflation or a recession, maybe even both?
  • Time for a Paul Volcker and do a 1% raise?
  • It's ugly, Nasdaq and S&P500 both closed at lows for 2022 and are both are now in a bear market.Nasdaq draw down at close 13Jun22 S&P500 draw down at close 13Jun22 S&P500 draw down at close 13Jun22
  • And failing a real test or liquidity and exchanges halt withdrawals.
Jun 8, 2022

Simon Shares

* I hold ungeared positions.

Upcoming events;

[events_list limit="3"]


ddd


Are Robinhood's troubles Purple concerns?

[caption id="attachment_34522" align="aligncenter" width="761"]Robinhood since listing vs. Purple Group Robinhood since listing vs. Purple Group[/caption]

Robindhood Purple Group
(Nasdaq code: HOOD) Purple Group* (JSE code: PPE);
Listed July 2021 at $38, hit $85 and now under $10 (-75%) July 2021 145c, high since 350c and now 260c (+81%).
Makes most of their revenue from selling the deal flow and Gold accounts. Revenue is from transactions.
The majority of transactions are in options or crypto. The majority of transactions are in equity, but crypto, EC10, is growing.
Needed a quick $billion to settle meme stock trades. The balance sheet is fine.
Huge repetitional damage when they halted trade in some meme stocks.  
Value traded by clients has been falling since Q1 2021. Value traded by clients fell in the last set of results.
Not yet profitable. Profitable, PE ±50x.
Users declined in 2022. Users grew in last results to +1million active accounts.
Market cap per user = $478 (ZAR7,400) Market cap per user = ZAR3,263
Revenue per user (2021) = $80 (ZAR1,250) Revenue per user = R109
Jun 1, 2022

Simon Shares

  • The good news is the US had a green week last week, for the first time in 8 weeks
  • Goldfields (JSE code: GFI) is down on news it paying a chunky 33.8% premium to acquire Canadian Yamana Gold in an all-share deal
  • We finally got the petrol price increase and the 150c fuel levy reduction remains in force, for now.
  • German inflation hits 7.9% for May. Highest since the 1950s. EU inflation for May 8.1%, the highest ever.
  • EU agrees on a partial ban on Russian oil imports
  • Monthly dividends in a JSE equity portfolio
  • Offshore ETFs paying monthly dividends
 

Demand destruction in commodities

There comes a point at which a commodities price is simply too high and the price itself reduces demand. Depending on the commodity high prices often need to be high for protracted periods of time.

May 25, 2022

Simon Shares


Slightly better than average is enough

Investors and traders love big winners. That 10 bagger that happens in a matter of months or maybe a few years. But by consistently hunting for those big winners we're taking larger risks.

We're better off aiming for the modest winners.

Beating your benchmark by 2% a year sees you with almost 50% more after twenty years.

A recent Planet Money Podcast, Investing in mediocrity, talks about a fund manager who only ever aimed to be in the top third of all funds. After a decade of succeeding at that, they were the top fund over ten years.


 

May 18, 2022

Simon Shares

  • 10X Investments buying CoreShares.
  • MPC, 0.5% expected.
  • Balwin (JSE code: BWN) results vs. Calgro M3 (JSE code: CGR).
  • Pick n Pay (JSE code: PIK) results vs. Shoprite* (JSE code: SHP).

* I hold ungeared positions.

May 11, 2022

Simon Shares

  • US April CPI 8.3%; Core CPI 6.2% (month-on-month core was +0.6%)
  • FOMC
  • Sibanye-Stillwater* (JSE code: SSW) update the market hated.
  • Kaap Agri (JSE code: KAL) results
  • Wandile Sihlobo on agri in SA.
  • New Satrix global healthcare ETF.
  • Thungela Resources (JSE code: TGA) could pay an R100 dividend this year, putting them on a +40% DY.

US Tech selloff continues



* I hold ungeared positions.

May 4, 2022

Simon Shares

  • Combined Motor Holdings* (JSE code: CMH) results, Best ever.
  • Renergen* (JSE code: REN) cold commissioning of phase 1 going well.
  • New global healthcare ETF coming from Satrix. Currently in IPO and listing 26 May.
  • EU unveils a proposal to ban Russian oil imports within 6 months, all refined oil products by the end of the year.
    • OPEC+ Sees Production From Non-Opec Participants in OPEC+ at 18.2 mln Bpd in May, 600,000 Bpd Lower Than Last Forecast
  • Lyft (Nasdaq code: LYFT) shares fall 26% on disappointing forecast (earnings 75% below expectations) as they say they'll pay drivers more.
  • Intel says chip storage till 2024 at least.

Stagflation

"Stagflation is most commonly referred to as the simultaneous experience of three separate negative economic phenomena: rising inflation, rising unemployment, and the declining demand for goods and services."

The best defence is generally commodities.

* I hold ungeared positions.


 

Apr 27, 2022

The world's oldest exchanges starting in India all the way through to Amsterdam.

Apr 20, 2022

Staring in Kimberly in 1881 through to the present Simon details the history of stock exchanges in South Africa.

Apr 13, 2022

Simon Shares

  • US inflation 8.5%, UK 7.0%
  • Capitec* (JSE code: CPI) results and a special dividend.
  • Dave Segall asking about "Looming food and fertiliser shortages" and impact on local agriculture stocks.
  • Purple Group* (JSE code: PPE) trading update (here are my previous expectations).

* I hold ungeared positions.


 

Apr 6, 2022

Simon Shares

  • I have closed my Nasdaq long position. Still long FTSE100.
  • Purple Group* (JSE code: PPE) trading update. Looks a little better than I expected.
  • MTN (JSE code: MTN) more Nigerian woes.
  • Reports that Woolies* (JSE code: WHL) may be selling David Jones.
  • Elon Musk buys 9.2% of Twitter (NYSE code: TWTR).
  • Moodys upgrades sovereign and banks from negative to stable.
  • Deutsche Bank says: US recession in 2023 and stocks to fall 20% by summer 2023
* I hold ungeared positions.

The Rouble is almost back at pre-war levels against the US$.

20% interest rates, capital controls, no foreign selling on the Moscow Exchange, selling oil & gas in Roubles (maybe), reports of paying interest on debt with Roubles and of course traders in for a buck.

USDRUB


 

Mar 23, 2022

Simon Shares

  • Just One Lap is 11 years old :)
  • FOMC, as expected. Local MPC tomorrow.
  • Nasdaq, time to buy? Also FTSE100. Both a technical buy, not taking a view on the fundamentals.
Nasdaq, daily 

Brent almost back at US$120.

  • China opened up already, well Foxcon at least.
  • Tencent results, flat-lining.

 

  • Thungela Resources (JSE code: TGA) results and 1800c dividend.
    • "developments in terms of new thermal coal projects which have been hampered by financing opportunities, given ESG pressures on carbon fuels"

* I hold ungeared positions.

Mar 16, 2022

Simon Shares

  • Big banks now all have released results, mostly good albeit off low base.
  • Covid cases in China surge, new lockdowns.
    • Hello, more supply chain mess.
  • People asking if I updated my view on Purple Group* (JSE code: PPE). Nope, volatility likely helping the revenue, but I need new data (results) first.
  • Commodities weak, brent oil now in a technical bear market.

China makes peace with tech

Prosus (JSE code: PRX) and Naspers (JSE code: NPN) now flying (+20% n Wednesday). Discount still +50%. Reports of WeChat being hit with a massive fine for money laundering?money laundering

 

* I hold ungeared positions.


 

Mar 9, 2022

Simon Shares

  • Shoprite* (JSE code: SHP) results, it's all about innovation.
  • Strong un International* (JSE code: SUI) update.
  • War in Europe, commodities still the story. Very volatile, that's expected. But I expect more upside and I am happy to hold.

Upcoming events;


Prosus (JSE code PRX) / Naspers (JSE code: NPN) / Tencent (Hong Kong code: 700)

Tencent has been under pressure

Naspers and Prosus have been hit even harder

Live Prosus discount to net asset value (NAV) is now some 55% after hitting 60%. 

VK (old mail.ru) has been written down to zero.

Generally unlisted is worth a lot less than stated?

Buy / Sell / Hold?

  • VIE structure
  • China has not taken sides in the war, so far
  • Tax on profits if they sell Tencent
  • More Chinese crackdowns?
  • Prosus has been wasting money from the sale of 2% stake in Tencent?
  • Buying back shares
  • Buying Delivery Hero (Frankfurt code: DHER)

* I hold ungeared positions.

Mar 2, 2022

Simon Shares

  • City Lodge* (JSE code: CLH) results, fair valuation around 800c?
  • BHP Group* (JSE code: BHG) will see a significant reduction in its weighting in Top40 and Resi10 indices.
  • PSG (JSE code: PSG) exiting the JSE.
  • Wilson Bayly Holmes (JSE code: WBO) has lost investor confidence.
  • Murray & Roberts* (JSE code: MUR) results. HEPS at 29c a little light, but back in profit.

War in Europe

Inflation is the biggest economic issue.

Energy, PGMs and agriculture. Will central banks stick to their rate rising trend?

People want to buy the Russian ETF, why?

Even if peace happens today, sanctions will be in place for some time to come.

Buy Satrix Resi10 ETF* (JSE code: STXRES).

The Oil ETN (JSE code: SBOIL).

Local stocks impacted

  • Barloworld (JSE code: BAW) about 20% of revenue.
  • Mondi (JSE code: MND) about 12% of revenue.

* I hold ungeared positions.

Upcoming events;

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