Budget 2021 with AJM Tax
I was again invited to moderate the AJM Tax post-budget panel with three excellent guests;
- Pieter Janse van Rensburg – AJM Tax
- Daniel Silke - Political Futures Consulting
- Adriaan Giessing – Seed Investments
You can download the AJM Rax budget highlight booklet here.
Upcoming events;
- Weekly, Wednesday at 5.30pm ~ Follow the Trader
- 04 March ~ Things I wish I knew: the beginner trader
JSE – The JSE is a registered trademark of the JSE Limited.
JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Offshore
/ Australia fight with Google and Facebook
/ Uber loses appeal in UK, drivers are workers not independent contractors
/ Former Bank of England Governor Carney joins board of digital payments company Stripe
/ US return to Paris Agreement
/ US jobless claims up to four-week high
/ Gold under pressure as it trades at lowest levels since June
Local
/ Sibanye Stillwater results
/ Truworths results
/ BHP results and monster dividend
/ Rand at 14.50
/ Two interesting update titbits; Tigerbrands worried about January sales and Dis-Chem sees connivance malls much better than malls, but malls returning to normal.
/ Value Group delisting
Simon Shares
Interesting titbit from TigerBrands (JSE code: TBS) update "It is too early to conclude whether the lower consumer demand levels evident in the month of January reflect an even more challenging environment than what was experienced over the past year."
Upcoming events;
- Weekly, Wednesday at 5.30pm ~ Follow the Trader
- 18 February ~ Everything ETFs and tax-free investing
- 04 March ~ Things I wish I knew: the beginner trader
BHP* (JSE code: BHP) results were good, the cash flow was excellent with the dividend up 55% and payout ratio 85%.
This is the benefit of commodity prices at higher levels but also due to low debt levels an almost zero capex requirements from most commodity miners.
This raises three questions;
Are we in a commodity supercycle?
I think not, sure prices are at best levels in about five years. But that's off a low base rather than a super cycle. sure demand has picked up and global infrastructure spend is rising in response to the pandemic. But we don't have China growing at almost 10% a year sucking in almost all of the world's commodities as we did back in the early 2000s.
Last time we ha a commodity supercycle it died the day after a global bank did a 100-page report on how it would last another decade.
Will commodity prices go higher?
They can but mostly I think they won't. Platinum could hit US$2,000 but for the rest our best bet is they stay around current levels. Oil, who knows. Will the frackers return in mass with higher prices? Demand will certainly continue to increase as we get out of the pandemic, but how long can Opec+ keep their collective foot on the production brake pedal? I think not long as they'll need the money.
How long will it last?
The elevated prices can probably last 3-5 years at best and this will see cash flows at high levels, especially as debt gets paid own. But the miners need to find new mines to mine or they run out of product to sell (as we're seeing with Pan African Resources* (JSE code: PAN) and their new mines / operations. So at some point, we'll start seeing green and brownfield capex projects coming back and that'll need some cash so dividends will start to drop.
My big fear is mega deals. These always destroy value albeit the miners look at them as an easy way to increased supply for themselves. If a stock I hold gets an offer, I'll take the money and run. If a stock I own makes an offer, I'll take the money and run.
JSE – The JSE is a registered trademark of the JSE Limited.
JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Offshore
/ Disney results all about Disney+
/ Tesla puts $1.5billion into Bitcoin
/ Janet Yellen warns of ‘explosion of risk’ from cryptocurrency markets
/ Bumble IPO with 60% gain on the first day
/ Platinum above $1,200 for first tine in six years
/ Freeze Sends Gas Soaring to $600
Local
/ More small-cap updates surprise to upside; Trellidor & Metrofile
/ Itatile results
/ ARB Holdings results, solid cash generation
/ Rand turned sixty yesterday
/ Cartrack coming back to earth after hitting 9000c
/ Steinhoff maybe resolving their legal woes
/ SARS collections ahead by R100billion
Simon Shares
- Bitcoin* hits US$48,000 as Tesla declares they put US$1.5billion into the crypto.
- Platinum finally on the move and above US$1,200 for the first time since 2015.
[caption id="attachment_24687" align="aligncenter" width="888"]
Platinum weekly chart[/caption]
- Sibanye Stillwater* (JSE code: SSW) best illustrates the boom in mining profits. In 2019 they made R62million now 2020 they expect almost R30billion and over 1000c HEPS. Could we see a 500c dividend?
- Metrofile* (JSE code: MFL) very solid update and the stock has recovered from their 2019 wobble. There is still two potential buyers, one stuck in Australia, truthfully, I would rather they remain potential and I will hold the stock.
Upcoming events;
- Weekly on Wednesday ~ Follow the Trader
- 18 February ~ Everything ETFs and tax-free investing
- 04 March ~ Things I wish I knew: the beginner trader
Should I sell the bounce?
Depends why you bought the stock.
- A long-term investment? No, then you keep it and focus on fundamentals rather than price.
- A quick trade to make a few bucks. Then absolutely sell the bounce, you won't get the top price (well maybe you'll get lucky) and as we saw with Telkom (JSE code: TKG) the bounce just keeps on bouncing. So watch and wait and sell on weakness after the bounce That may be immediate or may take a few days or a week.
Waiting for the weakness is a skill you'll learn, slowly over time.
JSE – The JSE is a registered trademark of the JSE Limited.
JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Offshore
/ Nasdaq & S&P500 close Friday at all-time highs
/ Alphabet & Amazon results
/ US unemployment drops to 6.%
/ Jeff Bezos to step up to the executive chair, no longer CEO
/ Chinese short video company Kuaishou rose nearly 200% at the open on its debut in Hong Kong.
Local
/ Ford investment of R15.8-billion into SA
/ Updates; Distell & Motus
/ Level 3 lite
/ Sibanye Stillwater update, R62million profit to almost R30billion
/ Load shedding
Simon Shares
- GameStop closed at US$90 on Tuesday.
- Jeff Bezos to step down as Amazon CEO.
- Apple knockout results.
- Ford to spend R15.8billion on local plant upgrade.
Upcoming events;
- Weekly (Wednesday at 5.30pm) ~ Follow the Trader
- 18 February ~ Everything ETFs and tax-free investing
Booming SA Inc. consumers?
We're seeing decent updates from local retailers so far this year, which is odd. Now let's be clear, decent not knock it out the park.
- Distell (JSE code: DGH) lost 41 days of sales in the second half of 2020 yet expects HEPS to be + 8.6% - +13.6%.
- Motus (JSE code: MTH) expect HEPS to be 0% - 5% higher, sent the stock up some 20% in two days.
A few possible reasons;
- Lockdown so we have money to spend
- Working from home saving on transport
- Social grants increased
36One calculate some R100bn extra from social grants but also people taking money out of pension schemes & retrenchment packages. The risk here is that this is temporary, which is certainly the 36One fear.
JSE – The JSE is a registered trademark of the JSE Limited.
JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
Offshore
/ GameStop
/ Results; Apple & Tesla
/ Tencent listing Kuaishou (TikTok competitor) this week
/ US 4th quarter GDP at 4%
/ Davos online
Local
/ IMF downgrades SA GDP 2021/2 growth forecast
/ Huge offers script to buyout AdaptIT
/ Anglo stable of updates (AGL, AMS & KIO)
/ Clicks update and closing Musica
/ Solid Sasol update
/ Johnson & Johnson vaccine, Aspen to produce 300m a year