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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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JSE Direct with Simon Brown
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Now displaying: March, 2021
Mar 31, 2021

Simon Shares

  • PPC (JSE code: PPC) have made a deal with their DRC lenders. They potentially owed US$175million but now are only on the hook for US$16.5million. This stock was 60c in November and is now around 240c.
  • Renergen* (JSE code: REN) says helium concentration is +3%. But reference the US has the current best concentration level at 0.35%.
  • Sabvest (JSE code: SBP) results show a discount to net asset value (NAV) of some 50%. Add to this PSG (JSE code: PSG), Remgro (JSE code: REM), Naspers (JSE code; NPN) and Prosus (JSE code: PRX) discounts all in the order of 40% or more. The market is clearly hating on holding companies? Back in the day, a 30% discount was a lot, 15% about the average, and at times PSG has been at a premium to NAV.
  • Ever Given is free, but shipping rates remain elevated as they were before Ever Given got stuck.
  • MPC no change to rates, but changes to Q1 GDP and the vote.
  • Goldman analysts say go long on Russia, South Africa stocks.
  • Bank of America Securities conference on investing in SA had record offshore attendance with Clicks (JSE code: CLS) and Shoprite* (JSE code: SHP) topping the list of interest.

* I hold ungeared positions.

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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.


 

Mar 29, 2021

Offshore

/ S&P500 closes at all-time high, Nasdaq still 6% off highs

/ US Personal Spending fell 1.0% in February, slightly more than expected, but January spending was revised upward by a full percentage point to 3.4%.

/ Ever Given remains stuck in Suez Canal

/ Intel to build new silicon chip fab plants for $20bn

/ Tencent results

/ WeWork to go public, via a Spac, with $9bn valuation

Local

/ CPI 2.9% for Feb and MPC no change

/ Magda Wierzycka quits as Sygnia CEO

/ AdvTech results

/ Old Mutual results

/ Remgro results overshadowed by 40% discount to NAV

/ Goldman analysts say go long on Russia, South Africa stocks

Mar 24, 2021

Simon Shares

  • AdvTech* (JSE code: ADH) solid results in a tough market.
  • Vivo Energy (JSE code: VVO) issued an update on Moroccan industry review and seems it's back to square one.
  • Resilient (JSE code: RES) results not the horror show expected.
  • Aveng (JSE code: AEG) wants to do another rights issue, again at 1.5c and raise R100m.
  • Tencent solid results.
  • Ever Given gets stuck in the Suez Canal.
  • February local CPI at 2.9%.

* I hold ungeared positions.

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Why all the panic?

A small rise in US ten-year treasury yields and a little inflation and suddenly it is the end fo the world for markets.

Inflation is likely to move higher in the US as the stimulus money gets spent. This is different from the stimulus after 2008/9, which went to banks who hoarded it and stuck it into markets. This time money goes directly to consumers who'll send the money.

But the Federal Reserve is happy that structural inflation is not returning and a little inflation in the system isn't the end of the world.

But to listen to many experts here comes hyperinflation and the end of the world as high inflation = high rates and as such money moves into income funds rather than equity.

Further if one digs into Modern Monetary Theory (MMT) government spending is not the end of the world, certainly for the US government. Here's a fun one, to deal with inflation, raise taxes? In fact have an automatic process that removes congress, if inflation heads above say 3%, taxes go up 4%. Above 5% taxes increase 8% and so on.

But back to the panic, stop. Markets never go in a straight line and suddenly getting all bearish because of some selling is going to make sleeping ever again impossible.


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.


 

Mar 17, 2021

Simon Shares

  • Shoprite* (JSE code: SHP) delivered really strong results for the six months ending December.Shoprite daily chart Shoprite daily chart[/caption]Purple* (JSE code: PPE) is up some 20% in the last ten days. A buyer has arrived and thanks to low liquidity they're moving the price.
  • Good update from AdVTech* (JSE code: ADH) and results fro Stadio (JSE code: SDO) while Curro (JSE code: COH) was modest. Seems tertiary education was the winner and schools are under pressure but longer-term a sector I like.
  • Astral (JSE code: ARL) update.
  • TSA travel numbers are hitting their highest levels since lockdown started. Still only about half what they were before lockdown but the US is vaccinating and opening up. This while Europe looks to be starting the third wave and locally nobody will give/sell us any vaccines. So globally this re-opening is going to be very lumpy with the US and UK seemingly winners in the vaccine front (ironic after they were losers on the pandemic front). 
  • Sun International (JSE code: SUI) nothing to write home about. Lots of chatter about the re-opening trade with City Lodge (JSE code: CLH) up about a third in March. But with at least one more (and maybe even two more) Covid-19 surges and resultant lockdown restrictions I am staying cautious for now.
  • The March 16-17 FOMC statement comes out between my recording and you listening. No rate change so it's all about the language. Even in the face of a strong economy are they still prepared to do whatever it takes and leave rates low into 2023?

* I hold ungeared positions.

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Small caps for the win

MidCap index is up about 10% so far in 2021, nice and pretty much exactly what thee Top40 has done. Of course, the Resi10 has done almost 20%, but the winner, small caps up some 20%.

The property index has returned single digits in 2021 so far, but technically it is looking ready to break higher.
We also now have all the large bank results and they were okay. The index is up some 5% and looking tired. There is value here but not sure there is any need to rush.

Property index, daily chart Property index, daily chart[/caption]


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.


 

Mar 15, 2021

Offshore

/ $1.9trillion stimulus bill signed by Biden and on route

/ Tencent on notice as China cracks down on fintech players

/ The tech-heavy Nasdaq has underperformed the Dow for four straight weeks — a first since 2016

/ Friday 1,357,111 people were screened at U.S. airports, marking the highest number of travellers since the pandemic began.

/ U.S. 10 Year Treasury hits 1.625

/ Huawei listed anew as a threat to US national security

Local

/ GDP for 2020 -7%

/ SA records first annual surplus in 2020 (last was 2002)

/ Woolies sells Elizabeth Street Property

/ MTN results (dividend cancelled) and Ambition 2025

/ AfroCentric results

/ Aspen results see more debt slashed

Mar 10, 2021

Simon Shares

  • Ascendis (JSE code: ASC) lenders are flexing their muscle. Back in February L1 Health, Blantyre bought enough debt to be able to block any asset sales and with over R7billion in debt Ascendis desperately needs to sell their European crown jewels. There is now a forbearance agreement in place until the end of April by when the company needs to have sorted out their debt. A rights issue is not an option at current prices so a debt for asset swap with the lenders? This will maybe resolve the debt issue, but then what does that leave Ascendis?
  • Renergen* (JSE code: REN) find a bunch more gas they did not expect to find.

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  • Growthpoint (JSE code: GRT) office vacancies at 18%. Lots of concern about malls as we're over traded and online shopping. The latter is a very long-term issue, the former will see some die. But office is the real concern.
  • Solid AfroCentric (JSE code: ACT) results. Everybody (well many) love Discovery* (JSE code: DSY) yet here is a pure health stock with great potential, cheap valuation and they consider NHI to actually be something that would further benefit the company.
    Very good Metrofile* (JSE code: MFL) results. Debt is going faster than expected, business is solid and the anon bidder has exited the building leaving only the one stuck in Australia. They should be able to easily do 30c HEPS for the full year putting then on a forward PE of under 10x. This set of results they only paid out half of HEPS as a dividend, but this should increase from next financial year as debt becomes way smaller.
  • MTN (JSE code: MTN) finally pricing as a utility.

* I hold ungeared positions.


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.


 

Mar 8, 2021

Offshore

/ NFP added 379k jobs (large beat) and US unemployment 6.2% (at this pace it’ll take until April 2023 to get back to where we were in February 2020)

/ $1.9trillion stimulus bill approved by Senate

/ China sets 6% 2021 GDP target

/ Germany charges Steinhoff execs

/ UK taxes going up to highest in 50 years

/ Nasdaq is red year-to-date

Local

/ One year of Covid, ZAR 40c weaker, Top40 +20% (both from Jan20 levels)

/ Harmony out of Top40 and Resi10, replaced by Glencore

/ Rhodes Food update “..sales started recovering in January and February 2021…” after TigerBrands said January was poor?

/ Firstrand results

/ Spur results

/ Treasury expected to be another R30billion ahead on tax collections

Mar 3, 2021

Simon Shares

  • A great research report on Blue Gem covering Renergen (JSE code: REN). What I really like about the report is that Keith shows you all his workings so you can make your own call on his working and decide.
  • Spur (JSE code: SUR) were a horror show, no surprise it was the six months to end December with all the various lockdown levels. Two things struck me. They're positioning themselves well for the post-pandemic dining life, dark kitchens, exploring drive-through were feasible. But the biggie was how the company has changed in the last decade or so. It used to be Spur with a little pizza and sushi. But it really is now a collection of brands across different eating experiences and price points. My concern in the short term is a third and fourth wave. We can see as lockdown and alcohol bans get stricter their traffic decreases markedly and I am pretty sure that the rest of 2021 will see at least another two waves of the pandemic with the resulting harder lockdowns.
  • Two awesome points from Nerina Visser in an interview I did with her yesterday on MoneywebNOW. Firstly she comments about the saving of dividend tax within a tax-free account. I have run the numbers and over a very long-term that saving is actually more than what one saves on capital gains tax. Secondly, what if you don't have the R36k lump sum to invest? Well, do you have some discretionary ETFs? If yes, sell them, move them into your tax-free account and then continue buying the ETF outside of the tax-free every month for the rest of the year. You get the tax-free benefit from day one.

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It's a bull market

[caption id="attachment_24772" align="aligncenter" width="888"]Top40 weekly chart Top40 weekly chart[/caption]

I was chatting with some friends from around the world about markets. I say it's a bull market, especially locally. They all had a dozen different, and solid, reasons why I was wrong. But they miss one very important point - price.

The simple truth is that markets the world over are at all-time highs and heading higher. We can kick and scream all we want, but price is the truth and the price is heading higher.

Deciding that it is all crazy and heading to cash, or worse taking short positions is a fool's game.

Sure one day the market will peak and somebody will have that Tweet where they called it. But that's not because they're super smart, but because if you call something often enough eventually you'll be right.

Bull markets never feel 100% comfortable, that's the nature of the best. There is always a reason to be sceptical, that's the nature of the beast. But stop stressing and enjoy the ride, that's what bulls are for.


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.


 

Mar 1, 2021

Offshore

/ US Durable Goods Orders Surge In January To Pre-COVID Highs

/ FB to pay Australian media

/ Latest Warren Buffet letter

/ Warren Buffett's $10 billion mistake: Precision Castparts

/ House passes $1.9 trillion Covid relief bill, sends it to Senate

/ Opec+ meets on Thursday

Local

/ Budget

/ Sasol results (no rights issue)

/ TymeBank gets R1.6bn

/ Goldfields gets go-ahead to build 40MW solar plant at South Deep Mine

/ Implats results and dividend

/ Woolies results

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