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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 7
Jun 30, 2021

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.

Watch ~ Rand, stronger for longer

Jun 28, 2021

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

Jun 23, 2021

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.

* I hold ungeared positions.

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.

 

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.

 

Jun 21, 2021

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

Jun 9, 2021

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.

* I hold ungeared positions.

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.
Jun 7, 2021

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

Jun 2, 2021

JSE Direct with Simon BrownSimon 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 Fini15 ~ weekly[/caption]


Upcoming events;

May 26, 2021

JSE Direct with Simon BrownSimon 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%.

* I hold ungeared positions.

Upcoming events;



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.

May 19, 2021

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.

 

  • 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).

* I hold ungeared positions.

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.



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.

May 17, 2021

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

May 12, 2021

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;


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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.

May 10, 2021

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

May 5, 2021

Simon Shares

  • Purple Group* (JSE code: PPE) now has 1million clients across all platform. A wowzer number.

 

  • 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

* I hold ungeared positions.

Upcoming events;


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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 Palladium weekly chart[/caption]

Platinum above US$1,200 (six-year high)

[caption id="attachment_26365" align="aligncenter" width="888"]Platinum weekly chart 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?

=====

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.

May 3, 2021

Offshore

/ April a green month for US indices

/ Palladium almost $3k and copper almost $10k

/ Knock out results; Microsoft, Apple, Alphabet & Amazon

/ US Q1 GDP +6.4%

/ Biden 100 days

Local

/ Resi10 the main local index green in April (midCap & Property did well)

/ Gilbertson quits Gemfields

/ Tongaat update, just misses debt reduction targets

/ Steinhoff to list Pepco in Warsaw

/ Astral update

/ AdaptIT needs another week to decide on the two offers

Apr 29, 2021

Simon Shares

  • Revego* (JSE code: RVG) was supposed to list today but has delayed their listing. I applied for allocation as I like the business model of renewable energy with guaranteed inflation-linked off-take agreements. They invest into operational renewable asset and are targeting a 8%-10% dividend yield, based off the 1000c listing price.

* I hold ungeared positions.

Upcoming events;


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JSE protections

With the Revego listing delayed the money I put into the book build last Thursday has not been seen since. The company was supposed to issue a SENS on Monday and list on Thursday, but we heard nothing until Thursday morning. It has been delayed by a few days.

What struck me was that I was not worried about the chunk of money that I had put into the book build and which I have not see or heard from in a week now. The reason for my lack of concern is the protections the JSE exchange offers.

  • Extra regulation around the companies act.
  • Stockbroker regulations.
  • Investor fund.
  • FSP insurance.

This of course does not stop crookery from executive teams nor does it stop businesses from going bust.


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.


 

Apr 21, 2021

Simon Shares

  • South African inflation was 3.2% in March 2021.
  • Pick n Pay (JSE code: PIK) results show it was all liquor and tobacco that was the pain as it was off 31%.
  • Karooooo (JSE code: KRO) has returned after exiting as Cartrack. The market seemed confused as it opened at 6500c, it is now trading R480. Still well off the adjusted highs f over R900 as everybody got all excited about the Nasdaq listing.
  • Long4Life (JSE code: L4L) hints at possible unbundling as it looks to unlock shareholder value. I'm confused, they were just consolidating by buying up businesses? I held them but sold early in the pandemic as they were so small in my portfolio and weren't doing much with their cash.
  • Absa (JSE code: ABG) loses their CEO.
  • Cell C reports R5.5billion full-year loss. Horror story and I never understood what Blue Label (JSE code: BLU) saw in the business.
  • PSG results without Capitec* (JSE code: CPI) and they're buying back their preference shares.

* I hold ungeared positions.

Upcoming events;


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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.




Apr 19, 2021

Offshore

/ Coinbase lists

/ China Q1 GDP 18.3%

/ Reports Jack Ma will divest from Ant Group

/ Gold looking strong, but miners lagging (Rand strength?)

/ Just more than half of U.S. adults have gotten at least one COVID-19 vaccine dose ~ CDC

Local

/ Rand strength

/ Karoooo lists on Wednesday

/ Capitec results

/ EOH looking better

/ Sasol goes green

/ Local CPI later this week

Apr 14, 2021

Simon Shares

  • New Global ESG ETF from Sygnia.
  • Anglo American (JSE code: AGL) to list their coal assets, Thungela Resources.
  • Comair has finally been delisting from the JSE and shareholders will receive 4.26c per share.

* I hold ungeared positions.

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Capitec and Purple Group (EasyEquities) results

Two stocks that I own; Purple Group* (JSE code: PPE) and Capitec* (JSE code: CPI). Both with really good results and I'll go into the numbers in detail.

Capitec monthly chart since listing Capitec monthly chart since listing

Purple Group monthly chart since listing Purple Group monthly chart since listing


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.


 

Apr 12, 2021

Offshore

/ New highs for S&P500 & Nasdaq

/ Yellen wants global minimum corporate tax rate

/ Semi conducter chip shortage continues to hurt production

/ China slaps Alibaba with $2.8 billion fine in anti-monopoly probe

/ Goolge pushes back on WFT, wants staff back in the office from September

Local

/ Prosus sells another 2% of Tencent

/ Purple results

/ IMF says local GDP 3.1% in 2021 and 2% in 2022

/ Anglo exits SA coal by setting up a new JSE-listed miner

/ 650c Cash offer for AdaptIT

/ Pick n Pay update

Apr 7, 2021

Simon Shares

  • Prosus (JSE code: PRX) selling another 2% of Tencent.
  • Purple* (JSE code PPE) trading update for six months ending February. HEPS of about 0.85c. They did 1.54c HEPS for full-year ending August after a loss in the first half last year. So this period showing slower growth.
  • Growthpoint (JSE code: GRT) announced that their healthcare fund tops R3.2bn with Cintocare Hospital acquisition.
  • The JSE is investigating PPC (JSE code: PPC) trades amid insider trading suspicions as the share moved ahead of the announcement last week.
  • The IMF now says SA’s economy will grow faster at 3.1% in 2021 and 2% in 2022, but it will take over two years to recover from the 7% collapse we saw last year.
  • Janet Yellen wants all countries to have a minimum corporate tax rate.

* I hold ungeared positions.

Upcoming events;


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Selling to early

This is a problem for both traders and investors.

Part of the problem is the thrill of a winner, we've made money and we want to lock in that profit so the thrill doesn't go away, and we sell - but we sell way early.

The bigger issue is what are you trying to achieve?

  • As always know your strategy and know why you entered a position.
  • Be real about taking profits, that is why we're in the market.
  • But balance that with giving winners space to win even more.

Analysis of previous winners you exited early. Why did you do exit and what could you have done to stay in longer? What about some you exited at the right profit point?


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 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

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