Offshore
/ New Zealand going into lockdown, the world is getting vaccinated but the pandemic is far from over.
/ Pfizer expected to get full FDA approval for its covid vaccine this week. A whole new business (covid jabs & mRNA possibilities).
/ Tesla wants to build an AI robot
/ Jackson Hole this week
/ China securities regulator signals willingness to work with the US on audits
Local
/ South Africa inflation lower at 4.6% in July 2021.
/ Sasol results
/ Shoprite / Massmart deal
/ ARB Holdings results
/ Metair results
Simon Shares
- JSE is broken.
- 100 MW gazetted.
- Renergen* (JSE code: REN) update.
- South Africa inflation lower at 4.6% in July 2021.
- Tencent (Hong Kong code: 700) results.
- Resource stocks ex-div. But still lots of pain. Super BHP Group* (JSE code: BHP) results.
- New Clean energy and water ETNs listed.
Upcoming events;
- 19 August ~ JSE Power Hour: BEE shares and the JSE
- 02 September ~ JSE Power Hour: Picking the next winning stock
- 14 October ~ Investment Fundamentals with Keith McLachlan
Offshore
/ US inflation comes in as expected
/ Britain's GDP grew by 4.8% in the second quarter of this year, leaving the economy just 2.2% below its pre-pandemic level
/ Google employees who work from home could lose money
/ US infrastructure bill moving forward
/ India to unveil US$1.35trillion infrastructure bill
Local
/ 100mw power generation laws gazetted
/ Naspers / Prosus swap is unconditional
/ Strong Merafe results
/ MTN results and Sanlam tie up
/ Nedbank results
/ Exxaro and Thungela results
Offshore
/ US GDP 6.5% , below expectations but the economy now larger than pre-pandemic
/ US moving forward with an infrastructure bill
/ The U.S. debt ceiling officially became operative again on Sunday after a two-year suspension
/ Amazon results see stock down 7%
/ Alphabet results & $50bn buyback
/ Microsoft results, LinkedIn does +$10bn
Local
/ Tencent woes hit JSE (but all-time closing high on Thursday)
/ Results; Anglo Platinum, Kumba Iron Ore and Anglo American
/ Liberty2Degrees results
/ ArcelorMittal South Africa results
/ Treasury considering access to retirement savings
Simon Shares
- Wild week for Naspers (JSE code: NPN), Prosus (JSE code: PRX) as Tencent (Hong Kong code: 700) got slapped down by the Chinese government.
- We're back at level 3, adjusted. Alcohol sales are allowed and Distell (JSE code: DGH) put out another great trading update. No doubt better if no alcohol bans, but the argument that your industry is under threat wears thin after such an update.
- President Ramaphosa also announced the return of the pandemic grant to the unemployed at R350 a month until March 2022. This pays to some 9.5million South African and means just over R3billion a month into the economy.
- How do we pay for it? Dividend tax on these super dividends.
- Apple $21.7billion in profits, almost doubling the previous year.
- Alphabet nearly tripled its profits to $18.5billion as advertising revenue grew 69%.
- Microsoft profits hit $19.1B, up 42% from the previous year.
- The market capitalization of Amazon, Apple, Facebook, Alphabet, and Microsoft is now over 30% of the entire S&P 500 index and over 40% for the Nasdaq100.
- Tigerbrands (JSE code: TBS) are recalling 20million tins.
- Two new ETFs coming to market. Global healthcare from Sygnia and a diverse and inclusive ETF from Satrix.
Upcoming events;
- 19 August ~ JSE Power Hour: BEE shares and the JSE
Forget super cycle, hello super dividends
- Anglo Platinum (JSE code: AMS) paid an R175.00 total dividend.
- Kumba Iron Ore (JSE code: KIO) paid a 7270c.
In both cases, this amounted to a dividend yield (DY) of around 10% at the interim stage.
No share buybacks as Anglo American (JSE code: AGL) own a significant majority of the shares and likely want the dividend back at home.
The question is will other miners be as generous or will they do some share buybacks as well?
If commodity prices stay where they are, we'll see the same again in six months and into 2022?
If prices remain the same to the end of 2022 (big if?) we'll get a 40% return from just dividends?
This is what super profits look like.
Offshore
/ New closing highs for S&P500 & Nasdaq. But Russel2000 is lagging.
/ Apple delays back to the office to October
/ Twitter and Snap - good results
/ China regulator bars Tencent from exclusive rights in online music
/ Big results due this week; Apple & Amazon. So far reported results have been very strong.
Local
/ Rioting impact, retail about 8% of store space impacted. REITs bigger concern.
/ Local inflation drops
/ Anglo Americana and BHP production updates
/ City lodge sells East African assets
/ Cashbuild update
/ Distell update
Simon Shares
- We now have updates from listed retailers as to the damage caused by last weeks rioting. Chantal Marx ran the data and says we saw almost 1,700 stores looted or closed due to the rioting and this is about 8% of the retailers' local footprint and some 5% of global footprint. This is a significant number, but considering many are open for trade again, with many opening last weekend already. The impact on earnings is likely to be very modest, if at all.
- PwC expects last weeks riots to take about 0.4% off local GDP for 2021. They already had a low expectation of under 3%, but that drop of 0.4% does illustrate how listed retailers may be okay, the real pain is in the unlisted and especially the small one-off store.
- Local CPI dropped a little in June to 4.9% (5.2% in May).
- The population of South Africa was estimated to be 60.14million at mid-year 2021, an increase of about 604,281 (1.01%) since mid-year 2020.
- Stellar production updates from Anglo American (JSE code: AGL) and BHP* (JSE code: BHP). They are both firing on all cylinders, even if there have been some issues (iron ore rail line for example). But they're largely debt-free, no massive projects or M&A activity and Greg Katzenellenbogen says the worlds top miners will make almost US$120billion profit this year, double from last year. So massive dividends?
- Sygnia did not steal your dividend.
Upcoming events;
- 22 July ~ JSE Power Hour: Power of savings
- 19 August ~ JSE Power Hour: BEE shares and the JSE
Risk is good
I got an email from a listener asking about risk free investments on the JSE. Thing is, there is no risk free on the JSE - and that's a good thing.
Without risk there would be no reward.
When I am looking for investments, I always look for the good things about the business. Margins, growth, product and the like.
But I also dig into the risks, competition, input inflation and the like.
The thing is, I like to see risk, I just want risk that I think the company can manage and ultimately maybe even turn into a benefit. For example, new product is absolutely a risk. But what if they disrupt themselves and create a new product that hits sales of their existing product, but creates an entire new category.
Apple did this with the iPhone, killing off the iPod.
When researching into long-term 'til death do us part' investments
I create a short list of the three main features I like in a stock. But I also create a list of the three main risks and I keep a close eye on both lists.
Offshore
/ US inflation, again above expectations
/ Delta airline results show travel returning
/ US bank earnings as previsions put back into the income statement
/ Netflix looking into gaming
/ QoQ China's GDP increased 1.3% in Q2, 7.9% YoY
Local
/ Rioting impacts as listed companies report details
/ South African Special Risks Insurance Association (Sasria) will cover claims
/ Standard Bank taking out Liberty Holdings
/ Very strong Richemont update
/ Tongaat results
/ Steinhoff increases settlement offer
Simon Shares
- I'm recording Wednesday afternoon and the violence of the past week seems to be abating, certainly in Gauteng. It has been a horror week for our country and most importantly; look after yourself if you can somebody else as well and above all else, be kind.
- US CPI YoY 5.4%. Core YoY 4.5%. Both ahead of expectations.
- A very strong production update from Pan African (JSE code: PAN) and their 15ha blueberry farm.
- OPEC+ seems to have reached a compromise between Saudi Arabia and UAE that should see an OPEC+ deal possible.
- US earnings season has kicked off and is expected to be the best ever - and it needs to be with S&P500 and Nasdaq100 at all-time highs.
- Gold US$1,825.
- Lost in all the rioting is another two weeks of level 4 adjusted lockdown, albeit restaurants can seat customers.
Upcoming events;
- 22 July ~ JSE Power Hour: Power of savings
- We're starting to see SENS announcements about the impact of the rioting. The worst-hit so far seems to be Cashbuild (JSE code: CSB), they have 36 stores directly impacted by rioting and looting and a further 33 stores closed as a precautionary measure.
- Ethekwini Region, according to its mayor, Mxolisi Kaunda. R1billion loss of stock has been affected & R15billion rand of damage to property and equipment.
- Fuel refinery Sapref declares force majeure and shuts the plant.
- Large parts of N3 remain closed and Durban harbour has thirteen ships waiting for entry (according to VesselFinder.com). To my memory of living in KZN and counting the ships waiting whenever I could, that's about as many as I've ever seen.
- These will resolve as the rioting quietens down, and evidence is that it peaked on Monday. Longer-term the impact is hard to tell. Certainly, thousands of small businesses are gone and with them jobs. The Rand has fallen to 14.66 after hitting 14.76 early on Wednesday after it was trading at 14.20 on Friday. The JSE is actually up some 3% so far for the week.
Riot insurance
So the answer here is fairly simple, South Africa has an SOE that covers riot insurance - South African Special Risks Insurance Association (Sasria).
They repeatedly have clean audits (financials are here).
Assets under management is a little over R8billion.
But they have reinsurance.
Pretty much any property insurance you have will include a line item for Sasria and it is very cheap.
For corporates, it is a larger cost every month and the question is are corporates 10% insured or have they done some self insuring.
Offshore
/ US ten year back at 1.36% after peaking at +1.72% in March
/ Jeff Bezos has stepped down as Amazon CEO
/ OPEC+ couldn’t reach an agreement
/ Fed minutes tell us nothing new, except inflation is higher/faster than they expected
/ US extends the economic blacklist of Chinese companies
/ China wants pre-IPO review of all new listings that have large user data
Local
/ Imperial delisting offer at 6600c
/ Sibanye Stillwater bearish on palladium, bullish on platinum & rhodium
/ MultiChoice hit with R63billion tax bill in Nigeria
/ Nedbank WFH policy, 60% in office ie: 2 days WFH each week
/ Prosus shareholders approve share swap
Markets are as quiet as the street of Jozi, so this week a list of my favourite podcasts, the focus is offshore. I'll return and look at local in a few weeks.
Upcoming events;
- 13 July ~ How to use ThinkMarkets Tools
- 22 July ~ JSE Power Hour: Power of savings
Favourite podcasts;
Offshore
/ US The unemployment rate edged up to 5.9% in June
/ US home prices rose by 14.6% in April, the largest gain in 30 year
/ S&P 500 closes green 7 days in a row, record is 8 days (US markets closed Monday)
/ RobinHood proposed listing ~ $40bn valuation
/ Didi Chuxing lists on NYSE, market cap $69bn & Chinese regulator blocks new accounts
Local
/ Modest Q2 for JSE, TOP0 -1.2% (+11% YTD), Fini15 +6.8% in Q2
/ SARB turned 100 last Wednesday
/ May saw another +R50billion trade surplus tax receipts
/ Invicta results
/ AdaptIT shareholders vote for 700c Volaris delisting offer
/ Etion results. The story is they selling LAWTrust business for R245million when the market cap of the entire company is R22million. CEO says plans to return value and delist
Simon Shares
- Level 4 lockdown. Remember the podcast of last week when I delved into the various leisure socks.
- Argent (JSE code: ART) results. Long a stock not worth covering or owning, but they've changed things up the last few years.
- Invicta (JSE code: IVT) another successful turnaround and really good results.
- JSE (JSE code: JSE) trading update, no surprise earnings under pressure.
- Nike (NYSE code: NKE) results absolutely crushed it last week. Revenue +96%.
- Anchor Capital published a note showing that the US had increased the number of US$ in circulation (M3) has gone up 33% over the course of the pandemic.
- Absa’s Q2 2021 manufacturing survey shows very positive manufacturer confidence.
- EOH (JSE code: EOH) new board suing founder Asher Bohbot for R1.6billion.
- A US judge kicks out the Federal Trade Commission's (FTC) antitrust case against Facebook. It was requesting that Facebook sell their Whatsapp and Instagram businesses. They can bring the case back again, but the bigger issue is antitrust cases against big tech in the US and EU.
- SAB Zenzele Kabili (JSE code: SZK) has been coming down, now around R120. Still, double far value.
- Thungela Resources (JSE code: TGA) trading at almost 4000c. Coal may be dirty and coal may be dead in time. But so far it's been a great investment, but this is probably fair value.
- South African Reserve Bank (SARB) turned 100 years old on Wednesday 30 June.
- Euro Zone inflation slipped to 1.9% for June.
- Popia is live from today.
SA recorded another trade surplus in May of R54.6billion. This is the 3rd month in a row that the surplus has been above R50billion.
Offshore
/ Gold a flat week after the previous weeks sell-off
/ S&P500 and Nasdaq back at all-time highs after the previous week's aggressive sell-off
/ Global shipping remains under severe pressure as Chinese port shut after a covid-19 outbreak
/ US gets an infrastructure bill, but maybe not. It’s messy
Local
/ Omnia results paid special dividend and SARS dispute
/ Growthpoint trading update
/ Old Mutual to spin off third of their Nedbank holding
/ May CPI 5.2% with core inflation at 3.1%
/ +50s can register for vaccines from Thursday
/ Absa’s Q2 2021 Manufacturing Survey shows rising manufacturer confidence
Simon Shares
- The announcement by the president that business will be able to build up to 100 megawatts of power without constraints is huge. Aside from the fact that the current limit is 1 megawatt, it will have three direct impacts;
- Estimates are that at least 4,000 megawatts can be built in 18-24 months. That is level 4 load shedding. So bye-bye load shedding.
- Tens of billions in spend aiding the construction and allied industries.
- Savings when using your own power. Goldfields (JSE Code: GFI) is building a 40 megawatt supply for South Deep that they estimate will save them R120million a year.
- Annual consumer price inflation hit a 30-month high in May, rising to 5.2% from 4.4% in April. Core inflation 3.1% and at the bottom end of the range.
- Renergen* (JSE code: REN) has spooked the market as they announce a capital raise "raising the proceeds for the completion of the Phase 2 studies of the Virginia Gas Project". Details by the end of the week, but this isn't a massive surprise. Startup miners always need more cash, even for studies never mind the actual building of the facilities.
Upcoming events;
Deep dive hospitality stocks
The third wave of the pandemic in South Africa is so are very much a Gauteng issue as it records higher daily new cases above the peaks from the first and second waves.
This is no surprise to anybody. But what was notable is that lockdown restrictions remain very relaxed (albeit rumours that we'll see tougher restrictions soon). I had expected a harder lockdown for the third wave.
Expecting a harder lockdown I was very cautious on local hospitality stocks.
The Yoco small business turnover index shows activity at 78% of the levels pre-lockdown after hitting 128% at the end of May 2021. So even without harder lockdowns, we are being more cautious but this is still well ahead of the 40% odd we saw during the end of the second waves lockdown.
We also have some Stats SA data on occupancy in tourist accommodation. Here we're back at around 30% for the end of April and that's back where we were before the second wave arrived.
Hotels in South Africa recorded an occupancy rate of 26,8% in April 2021, up from 23,2% in March and 17,9% in February.
Read more here: https://t.co/Pzft0bs8oi#StatsSA pic.twitter.com/rcjbJcUHdV
— Stats SA (@StatsSA) June 21, 2021
Airports Company SA (ACSA) data shows domestic travel picking up to around 60% of pre-pandemic levels. International is at around 15%-20% and regional around 25%-30%.
So in short this new wave is still early days and is hurting, but so far not as bad as I had feared (occupancy data is a month out of date). Certainly ahead of the third wave we were seeing improved tourist activity even if still below the pre-pandemic levels.
So what stocks to look at? I am not rushing in, but they're on a watch list for when we're past this third (and hopefully final) wave.
- Spur (JSE code: SUR). Sit down dining hurts under lockdown and restaurants are the real spreader risk. But as we pass through this third wave and assuming no significant fourth wave (vaccines rates should be moving higher by then) Spur looks good.
- Famous Brands* (JSE code: FBR) I like their takeaway as it's more resilient than sit down. But they still have debt issues that will take another two years to fix. So speculative.
- City Lodge (JSE code: CLH). Their break-even occupancy is around 35% which is a little below the Stats SA data, but that was for tourist data, City Lodge has mostly been business travel. So they need more improvements to start a profit. They also have the sale of East African assets, which if it happens will be a boost. Of course, if that is cancelled, that'll be bad news.
- Tsogo Sun Gaming (JSE code: TSG) has been running and here consumer spare cash and the third wave are a threat to that run so I'd stay away for now.
- Tsogo Sun Hotels (JSE code: TGO) has also been running and again I'm not convinced the market is totally right on this one.
- Sun International (JSE code: SUI) ran hard but then has come under pressure and looks interesting on more weakness.
Offshore
/ Markets spooked by FOMC statement
/ Gold under pressure
/ Brent crude slips but holding above $70
/ TikTok owner ByteDance reports $2.1bn loss
/ Krispy Kreme returning to market with IPO
/ Adobe results
Local
/ Rand under pressure
/ Capitec expects half-year earnings to rise 292%
/ Sephaku update and PPC results
/ Mediclinic to produce own power
/ Alexander Forbes results, retrenchments almost back to ‘normal’ levels
/ Stricter lockdown
Simon Shares
- SAB Zenzele Kabili trading at R180, at least 3x fair value?
- Local GDP for the first quarter was 1.1% QoQ. Kinda middling.
- Stor-Age* (JSE code: SSS) results.
- Thungela Resources (JSE code: TGA) lists.
- AdaptIT (JSE code: ADI) gets an improved offer from Volaris - 700c.
- Life Healthcare (JSE code: LHC) bouncing again because of the Alzheimer drug. But it a very long road.
- Sirius Real Estate (JSE code: SRE) results were excellent.
Upcoming events;
Options, futures and CFDs
Options (warrants on the JSE)
- Complicated
- Risk is only 100%.
- Right to buy or sell.
- Not much offered in SA.
- Long or short, depending on if call or put.
- Can trade on Safex, but institutional size trades only.
Futures
- Exchange-traded
- Equity, indices, commodities, currencies & agriculture.
- Long or short.
- Interest charge and dividends built into the price.
- Require a Safex broker.
- You can lose more than you started with.
Contract for Difference (CFDs)
- Over the counter (OTC) traded.
- Counterparty risk.
- Issued on anything.
- Long or short.
- Interest paid/earned daily.
- No expiry.
- You can lose more than you started with.
Offshore
/ U.S. economy added 559K jobs in May and unemployment fell to 5.8%
/ G7 nations set the minimum global corporate tax rate at 15%
/ AMC issues shares above the current share price
/ Biden expands blacklist to 59 Chinese companies
/ Apple staff back to work 3 days a week, starting September
Local
/ Volaris ups offer to AdaptIT to 700c
/ Sibayne Stillwater to buy back 5% of shares
/ SARB selling their stake in African Bank
/ Famous Brands results
/ Prosus to buy Stack Overflow of US$1.8billion
/ Mark Barnes sells up to half his Purple Group shares
Simon Shares
- Sibanye Stillwater* (JSE code: SSW) announced they'll buy back 5% of their shares.
- Shoprite* (JSE code: SHP) exits Nigeria.
- AdaptIT (JSE code: ADI) gets an upgraded offer from Huge (JSE code: HUG) but still likes the 650c cash from Volaris, even as that is below the independent board's fair value of 700c - 909c.
- Barloworld (JSE code: BAW) completes R1billion sale of motor retail unit and will also, in time, sell its Avis car rental and leasing business.
- Brent oil is above US$70 for the first time since early 2019. OPEC+ says it will maintain its policy of gradually increasing supply.
- A very strong trading update from Standard Bank (JSE code: SBK). Banks locally have risks, but look cheap, I have a position in the Satrix Fini ETF* JSE code: STXFIN).* I hold ungeared positions.
[caption id="attachment_29849" align="aligncenter" width="888"]
Fini15 ~ weekly[/caption]
Upcoming events;
Simon Shares
- Somebody buying Metrofile (JSE code: MFL). Started late on Tuesday, sending it almost 13% on the day and holding Wednesday.
- Mediclinic (JSE code: MEI) paid £432m for 29.9% of Spire Healthcare (LSE code: SPI) in 2015. They're now supporting a buyout from a third party valuing that stake at £287.8m.
- Healthcare stocks earnings remain under pressure as elective surgery remains limited.
- Afrimat (JSE code: AFT) to acquire R650m manganese mining rights.
- Gold above US$1,900 and even with Rand strength (currently 13.85) we're finally seeing gold in ZAR moving a little higher.
- No change to the repo rate at last weeks MPC meeting. All the excitement was that the next move will be up, but we knew that. Of more interest is that the govoner talks bout 4.5% rather than the 3%-6% range. He always has but it seems MPC will based rate decisions on that 4.5%.
Upcoming events;
- 27 May ~ JSE Power Hour: Manage your money like a rock star!
- 01 June ~ ThinkMarkets: Key points to investing
- 24 June ~ JSE Power Hour: Rand ~ stronger for longer
SAB Zenzele Kabili
Listing on the BEE board of the JSE on 28 May.
No IPO process ahead of that.
R40 listing price.
But trades subject to supply / demand.
I would expect it to boom initially then settle around R40.
No lock-in period, so you can buy / sell as you wish.
This is very much a long-term investment.
Will be ownership of global AB Inbev (JSE code: ANH) shares worth R5.4billion.
AB Inbev market cap is around R1.8trillion. So a small slice of the entire group of less than 1%.
- Important, you are not just getting SAB, it is the entire global group.
There is debt included, geared about 55% at 70% of prime payable over ten years.
- Another reason to view it as long-term.
- 75% of dividends will be used to settle the debt.
This is a long-term investment option and NOT a get rich quick scheme.
We have also seen some BEE schemes fail spectacularly.
Not all stockbrokers are enabling trading in the shares. SAB have a trading desk, call them on 0861 900 903.
Only BEE qualifying investors can buy the shares.
Simon Shares
- Santova (JSE code: SNV) were very solid and they are now truly a global logistics business.
- Distell (JSE code: DGH) announced that Heineken wants a 'majority' stake in the company. Details are scant with major shareholders being PIC and Remgro (JSE code: REM) both just over 31%. But does the majority mean they want the cider business or +50% of the shares which would trigger a mandatory offer to minorities? This of course after Heineken threatened to take their beer and go home last year during the alcohol ban.
hmmm, wasn't it just last year Heineken was hating on us so much they was canceling projects and threatening to take their beer and go home ..
— Simon Brown (@SimonPB) May 18, 2021
- Balwin (JSE code: BWN) & Calgro M3 (JSE code: CGR) results both showed a tough year. But I like this space. Calgro offering its units at the R500k price point (R4,000 monthly bond costs) while Balwin starts at a little under R1million to around R2million. So different markets.
- Redefine (JSE code: RDF) results saw loan-to-value (LTV) improving but what struck me is that they value properties twice a year. Most doing it over a rolling three years.
- Local CPI hit a 14-month high in April, mainly driven by rising transport and food prices. The rate was 4.4%, up from 3.2% in March.
- Thursday is the MPC rate decision, no change expected.
- Eurozone April CPI +0.6% on Month, +1.6% on Year. Core CPI +0.5% on Month; +0.7% on Year
- Crypto crashing, entire crypto market cap is off 20% today on news China is cracking down (again).
Upcoming events;
jjjjj
What's with the 'special' shares?
Special shares usually with high voting rights and often with limited or zero economic rights.
They enable insiders to retain voting control even while they may not actually control the company.
The most well known are the Naspers~N (JSE code: NPN) A shares that give control to a few parties.
Shoprite* (JSE code: SHP) has the same for Christo Wiese which he tried to sell back to the company. But they have zero economic rights and only are votable by Wiese
More recently it surprised many that while Remgro (JSE code: REM) owns a little over 31% of Distell (JSE code: DGH) they ave a pile of B shares that gives them 56% voting control.
In the older days, companies used pyramid structures, but those have long since largely left the JSE and no new ones can be listed.
The challenge is how to know about them? The annual report will detail them.
Generally, they don't matter massively, until they do. And then they matter. Wiese failed to receive the required number of votes to get back onto the Shoprite board in 2018, but then he used his special shares to basically override shareholders.
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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.
Offshore
/ US inflation
/ Disney results
/ US pipeline shut down due to ransomware attack
/ UK rejects (softly) Bidens plan for global corporate tax rate
/ Chinese industrial production and retail sales due Monday
Local
/ Naspers / Prosus share swap
/ Raubex results
/ Ascendis swaps debt for assets
/ Clicks buys Pick n Pay pharamacy business
/ Cape Town airport has best month since lockdown, still 40% down from 2019
/ Long4Life results and NAV discount
Simon Shares
- Raubex (JSE code: RBX) results saw the second half record HEPS of some 110c after a loss in the first half. The previous full-year, 2020, HEPS was only 161.7c, so the business is looking good. That said, lots of debt and the expanding order book needs to be converted into profit.
- Transaction Capital (JSE code: TCP) results see the dividend returning.
- A super-strong trading update from Lewis (JSE code: LEW) with HEPS more than doubling. At the time of their interim results, they paid a dividend of 133c when the stock was around 2400c. If they can do a 250c dividend (should be easy?) the forward dividend yield sits at around 8%.
- US inflation data spooked higher than expected, even considering the April base effect. April Consumer Prices +4.2% and Core CPI +3%, highest since 2009. Used cars (stimulus cheques?) were +10% and made up a third of the core CPI increase. Fed will do nothing.
- Ascendis (JSE code: ASC) has announced they've reached a deal with debt holders. Basically, they're swapping the crown jewels (Remedica) for their large debt pile. The debt cost was R280million for the last six month period ending December and this will improve solvency and keep Ascendis alive. But are the remaining assets attractive enough for investors?
Upcoming events;
More Naspers shuffles
Naspers (JSE code: NPN) and Prosus (JSE code: PRX) have announced another deal to try and close the discount between themselves and their holding in Tencent (Hong Kong code: 700).
Prosus will acquire up to 45.4% of Naspers shares via a share swap whereby holders of Naspers can get 2.27 new Prosus shares for every one Naspers share.
This will increase Prosus liquidity (in theory) and markedly reduce Naspers weighting in the Top40 and Swix indices. The latter argument makes sense and is likely a part of the reason for the discount that Naspers experiences. The problem is that with the weighting above 20% most funds are not allowed to hold over a certain percentage (lower than the Naspers weighting), so they can not go overweight, or even match index weight, for Naspers and this reduces potential buyers of the stock.
Will it work? Maybe.
They have tried many other tricks, unbundling Prosus and earlier MultiChoice (JSE code: MCG) and that hasn't worked. But the weighing in the indices is a real problem.
Of course, the very easy fix here is to simple unbundle the Tencent holding - but that's not going to happen any time (aside from some sales every three years as we saw recently).
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
/ US jobless claims below 500k, lowest since pandemic started. But overall employment slips to 6.1%, up from 6% in March.
/ Janet Yellen says rates will need to rise
/ ECB Official Calls for Accepting Inflation Overshoot
/ Saudi Aramco Q1 profits +30%
/ Gold +$1,800
Local
/ Moodys skips reviewing SA credit rating
/ MTN update
/ Sibanye Stillwater update
/ Kaap Agri results
/ Karooooo results
/ Anglo American gets coal demerger shareholder approval
Simon Shares
- Purple Group* (JSE code: PPE) now has 1million clients across all platform. A wowzer number.
What an incredible milestone achieved today. Across all platforms & partners we've reached 1 million registrations. @CapitecBankSA @SATRIX_SA @BidvestBankSA @EasyEquities hard to describe how grateful I am to all you #invstr legends that challenge us to rise each day. 🙏🙏🙏
— Charles H Savage (@CharlesHSavage) May 5, 2021
- Combined Motor Holdings (JSE code: CMH) full year results. Second half saw decent cash flow, back to profit and dividends.
- Metrofile* (JSE code: MFL) are cancelling 4.18628% of their treasury shares.
- MTN (JSE code: MTN) first-quarter update, good numbers with group EBITDA +21.3%. Forward PE of around 11x is decent as it's being priced as a utility, albeit was even better back at 6000c when forward PE was c8x.
- Revego (JSE code: RVG) cancelled the listing.
- Tax Tuesday: Tax obligations for global citizens
Upcoming events;
PGMs Flying, miners not so much
Palladium above US$3,000 (all-time high)
[caption id="attachment_26363" align="aligncenter" width="888"]
Palladium weekly chart[/caption]
Platinum above US$1,200 (six-year high)
[caption id="attachment_26365" align="aligncenter" width="888"]
Platinum weekly chart[/caption]
Rhodium above US$29,000 (all-time high)
PGMs are considered a 'green' metal in that they help reduce CO2 emissions.
Demand remains above supply.
- But production will increase.
- Scrap is increasing (especially with iron ore at records)
- Rand is strengthening and will likely continue to do so
But the listed miners are languishing nowhere, why?
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