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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: February, 2024
Feb 28, 2024
Nikkei 225 reached a new all-time high after 35 years
  • Historical context: peaked in December 1989, 82% drawdown by March 2009.
  • Factors contributing to the 80s crash: Yen protection, low rates, speculative bubble.
  • Current challenges: aging population, economic complexities, recent inflation.
  • Investment options: Sygnia JP (SYGJP) - JSE-traded, and Investec's structured product.
Warren Buffett's Annual Letter
City Lodge Results
  • City Lodge results: Revenue up 10%, dividend up 20%, HEPS up 10%.
  • Occupancy at 61%, pricing power at 65%.
  • Challenges in margins due to increased focus on food and beverage.
  • Comparison with other hospitality stocks: Sun International, Southern Sun.
MultiChoice Canal+ Offer
  • Canal+ acquires 35.01% of MultiChoice voting rights, triggering a mandatory offer.
  • Takeover Regulation Panel ruling.
  • Speculation on Canal+ offer price, potential sweetening of the deal.
Bitcoin and Bitcoin Halving
  • Bitcoin trading around $59,884, near all-time highs.
  • Upcoming Bitcoin halving in April and its potential impact.
  • Local perspective on Bitcoin and its role in the market.
  • Bitcoin in ZAR trading over a million, emphasising its volatility.
  • Discussion on Bitcoin's market cap compared to traditional stocks.
Pick n Pay* Update
  • Pick n Pay's disappointing update: debt doubled, sales going backward.
  • Market's negative reaction reflected in the stock price.
  • Potential exit strategy if weekly close falls below 2022.

* Simon holds ungeared positions.

 

Feb 22, 2024

Budget 2024 panel.

For the last many years AJM Tax has done a post budget panel which includes Simon Brown and this year was no different. Hosted in Cape Town the panel was;

  • Karyn Maughan, senior legal journalist at News24
  • Dr Albertus Marias, Director AJM Tax
  • Azhar Varachhia, Managing director Alpha plus Capital
  • Simon Brown, Just one Lap and MonewebNOW

Below is the AJM Tax one pager of budget highlights.AJM Tax budget 2024 

Feb 14, 2024
Pick n Pay* Chart Analysis
  • Resistance zone around 26, potential to touch 26.70
  • Higher highs, higher lows, horizontal resistance
  • Target: 30 bucks to fill the gap
  • Comments on Pick n Pay's potential under Sean Summers
  • No need for a rights issue, potential market spook if it happens
  • Simon's position: Started building, considering more
  • Current status: Down 1.7%, trading at 25.30

Pick n Pay close 13Feb24 (daily) Pick n Pay close 13Feb24 (daily)

Transaction Capital and WeBuyCars
  • Transaction Capital planning to list WeBuyCars
  • Unbundling process expected in March
  • Valuation: 7.5 billion rand
  • Key information: Founders' put option on Transaction Capital is off the table
  • WeBuyCar's strong performance in January with a record 14,000 cars sold
  • Market Cap of Transaction Capital: R6.5 billion
  • Opportunities and challenges in SA Taxi business
  • Overall assessment: Looking not too bad
  • Current stock level: 850c
  • Expectation of pro rata shares for Transaction Capital holders
  • Timing details expected in the circular
Gold Price Movement
  • Gold weaker despite US and UK inflation data
  • Current gold price and chart analysis
  • Simon's position in Anglogold Ashanti*
  • Observations on unexpected weakness in gold price after inflation data

Gold daily chart 14Feb24 Gold daily chart 14Feb24

Canal+ Offer for MultiChoice
  • MultiChoice facing a 105 rand Canal+ offer
  • Market sentiment: Canal+ likely to come back with a better offer
  • Current stock price: 104.63
  • Speculation on possible offer prices: 120, 135, or even 160
  • Market confidence in Canal+ making a mandatory offer

Global Market Trends and Dollar Strength

  • Dollar strength in global markets
  • DXY trading at 104.87
  • Money flowing into the US due to fear and concerns
  • Impact on Rand: Trading at 19.07
  • Market skepticism about inflation concerns

DXY (US$ index) 14Feb24 (daily chart) DXY (US$ index) 14Feb24 (daily chart)

Inflation Analysis
  • Recent US and UK inflation data
  • Market reaction to inflation numbers
  • Central bank concerns about reaching inflation targets
  • Jerome Powell's cautious approach and potential rate cuts
  • Local inflation expectations and potential rate cuts in South Africa
  • The challenge of getting back to the inflation target

* I hold ungeared positions.

Feb 7, 2024
Disney results:

Last week's big story was about tech, starting with Disney, a stock recommended here back in September at Β±$80.

  • Key financials: Linear networks revenue up 9%, Direct-to-consumer up 12%, Parks up 16%
  • Direct-to-consumer still incurred a loss of $400 million
  • Consumer products, content sales licensing, and ESPN performance discussed
  • Overall, not a knockout result but not terrible; I remain a satisfied shareholder

 

Meta (formerly Facebook) Earnings:
  • Advertising revenue up 24% year on year to 38.7 billion
  • Other segments discussed, including Reality Labs (MetaQuest)
  • Net profit $14 billion, up 35%; stock surged 20%
  • Mark Zuckerberg's dividend income from the declared 50-cent dividend discussed
  • Positive sentiments about Meta's performance, particularly in comparison to other tech giants
Canal+ Offer for MultiChoice:
  • Canal+ made an offer for MultiChoice at 105 Rand per share
  • Market reaction, initial excitement, and stock movement
  • Simon's caution about potential risks and timing of the deal
  • MultiChoice's response: Board concluded the offer significantly undervalues the group
  • Canal+ continued to buy MultiChoice shares, now owning 35.1%
  • Discussion on the mandatory offer threshold and potential scenarios
  • Regulatory considerations: Foreign ownership rules and competition commissions
    • The price of the mandatory offer must be equal to;
      (i) identical to, or where appropriate, similar to the highest consideration paid by the bidder for those acquisitions and
      (ii) accompanied by a cash consideration, at not less than the highest cash consideration paid if the shares that carry 5% or more of the voting rights were acquired for cash.
  • Simon's conclusion: Canal+ likely to succeed, potential challenges, and market dynamics

Simon Brown

Feb 1, 2024
Breaking News: Canal+ Offer for MultiChoice:
  • Canal+, French TV business, offers 105 rand per share for MultiChoice minorities.
  • Synergies between the two businesses.
  • Legal considerations regarding foreign media ownership.
  • MultiChoice closed at 75 rand; market likely to respond positively.
Market Updates:
  • Hyprop reports positive festive trading for its tenants.
  • Transaction Capital plans to list WeBuyCars in March; potential value unlock.
  • Evergrande declared bankrupt with over 300 billion dollars in debt.
  • Hong Kong economy expanded 3.2% in 2023.
  • China overtakes Japan as the world's top car exporter.
Cristal Challenge Stock Picks:

Richemont*: Luxury brand with potential in a recovering economy.

[caption id="attachment_41062" align="aligncenter" width="849"]Richemont weekly chart close 31Jan24 Richemont weekly chart close 31Jan24[/caption]

Calgro M3*: Debt under control, potential dividend, well-managed company.

[caption id="attachment_41063" align="aligncenter" width="849"]Calgro M3 weekly chart close 31Jan24 Calgro M3 weekly chart close 31Jan24[/caption]

AngloGold Ashanti*: Gold as insurance; geopolitical concerns.

[caption id="attachment_41061" align="aligncenter" width="849"]Anglogold Ashanti weekly chart close 31Jan24 Anglogold Ashanti weekly chart close 31Jan24[/caption]

Zeda: New listing, unbundling, potential growth.

[caption id="attachment_41065" align="aligncenter" width="849"]Zeda weekly chart close 31Jan24 Zeda weekly chart close 31Jan24[/caption]

Mr. Price*: Positioned well in the retail sector, positive trading update.

[caption id="attachment_41064" align="aligncenter" width="849"]Mr Price weekly chart close 31Jan24 Mr Price weekly chart close 31Jan24[/caption]

Closing Remarks:

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Host: Simon Brown

* Simon holds ungeared positions.

Host: Simon Brown
Date: 1 February 2024

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