Simon Shares

• MPC raised rates by 0.5% makes prime 11.75%, highest since 2009. The aim I suspect was to protect the rand, and that totally did not work as the currency hit its worst ever levels. Where will the rand go next? Does it ever strengthen again?
• RSA Retail Bond rates reset this morning and I expect the 5-year fixed to potentially increase by a full 15% and the CPI linked also reset and I also expect an increase there.. Will have update on the website.
• Tsogo Sun Gaming (JSE code: TSG) announced in their results last week they had acquired a ±10% stake in City Lodge (JSE code: CLH). Why? Also those were good results, much cheaper than other in the space.
• Zeda (JSE code: ZDD) results were poor. I was looking for FY 400c of HEPS, that's now seems a long shot. Debt is large, no dividend and short-term vehicle rentals is only a little above a quarter of pre-pandemic levels. I was holding and have sold.
• TigerBrands (JSE code: TBS) results were a shocker but not unsurprising? Volumes flat while revenue was +16%, hello inflation. Got some debt, but totally manageable. Load shedding hurting, consumer broken and inflation all over. But the stock trades at ±1.5x book value (see chart here), last tine this happened was 1998 when prime hit 26%.
• Spar (JSE code: SPP) trading update, ouch. Is Shoprite* (JSE code: SHP) eating everybody's lunch?
• Don't forget to action your Purple Group* (JSE code: PPE) rights issue. You have until Tuesday to either sell the rights or take them up.
• Meta (Nasdaq code: META) fined Euro1.2billion by the EU, but stock rises on the day. These fines, even large ones, are just a cost of doing business for the mega large cap tech stocks?
• Nvidia (Nasdaq code: NVDA) gets all the AI hype and love to a trillion dollars.

* I hold ungeared positions.

Simon Shares

• Bond ETFs yielding ±10%. That's chunky and they can go in a tax-free account.
• New INCOME ETF from CoreShares.

Purple Group* (JSE code: PPE) rights issue.

If you held the share yesterday at close on Tuesday 23 May you will see PPEN in your account. 10.20567 for every 100 Purple shares you held.

Each PPEN (letter of allocation or LOC as some are calling it) entitles you to buy 1 new Purple share at 81c.

• You can take up that right and buy, or
• You can sell them in the market

If you do NOTHING by 6 June they disappear with ZERO value

Sanlam will take their R45m and of the R105m public offer they will take up to ±R76m of the R105m if nobody else does. Existing large shareholders have promised to take up their rights at ±R28m. So at the end of the day they will get the R105m.

Simon Brown

* I hold ungeared positions.

Simon Shares

I have been talking about a cracking (broken?) consumer for a few months now. Two recent surveys show exactly this data.

• BankservAfrica’s five-year review of Take-home Pay and Private Pensions in South Africa for February 2018 – February 2023
  • "The average nominal salary Take-home Pay Index, increased from R12,573 to R15,438, +22.8%." But CPI was 26.6% and take home pay had kept track until last year.
• Debt Busters Debt Index | Q1 2023 survey
  • "Nominal incomes were 2% higher than 2016 levels, however when cumulative inflation growth of 40% is factored in for the same seven-year period, consumers’ purchasing power diminished by 38% over this period.".

• Rand trades at worst level ever on Friday, R19.5169/US$.
• Transaction Capital (JSE code: TCP), last week I sad the worst may be behind them. Well with the ZAR collapsing equalling more inflaiton and rates and petrok increases. Maybe not for SA Taxi or WeBuyCar.

• Purple Group* (JSE code: PPE) rights issue. Full details on 18 May. It will be R105m from Purple Shareholders and R45m from Sanlam at Easy Equities level. Total R150m
• Local PGM production down 14% in Q1.
• Calgro M3 (JSE code: CGR) results saw HEPS just above 150c while the stock trades at ±300x. Value or value trap?
• Sold my Sun International (JSE code: SUI) as price go backwards and I protecting profits. Excluding dividends ±70% return since November 2021.
• OpenAI Sam Altman goes before US Congress to propose licenses for AI.
  • Pulling the ladder up behind you to stop others.
    • I have been using ChatGPT via Bing and Google Bard. For investors they mostly useless.
• Octodec (JSE code: OCT) results. Large discount to NAV and DY ±14%.
• Investing in mega trends

* I hold ungeared positions.

Simon Brown

Simon Shares

• Transaction Capital (JSE code: TCP) results where pretty much as expected. Management have essentially thrown the kitchen sink at everything. H2 will be tough but likely a little better. FY24 a clean slate. But market does not agree with me.
  • Nutun doing good
  • WeBuyCars under pressure, no surprise, consumer cracking
  • SA Taxi real ugly, but as detailed in trading update

• US unemployment 3.4%. April CPI 4.9%.

The end of the US$

Bretton Woods essentially created teh US$ as a reserve currency

Now all commodities trade in US$

The end of the US$ is as old as time, really kicked off with the advent of the Euro in 1999.

But who take over?

• China, no?
• BRICS, that’s only China.
• Euro, but they don’t want a strong Euro and the world doesn't want the Euro either.

That said, the US$ will lose influence over time. It has been and will continue to do so. One day it may well be over, but we're a very long way from that.

Simon Shares

• Implats (JSE code: IMP) trading update saw production down and costs up. That's squeezing margins and going to hurt.
• Kumba (JSE code: KIO) nice boost in production, but iron ore prices are falling. Will hurt Afrimat (JSE code: AFT) as well.
• Combined Motor Holdings* (JSE code: CMH) results sees them on a PE of under 5x and DY of ±13%. But return will be mostly from dividends, ±650c over next thirteen months = ±22%.
• Renergen* (JSE code: REN) results. Smaller loss, but no profit as they ramp up Phase 1. A deal with Timelink for LNG and contracts with Consol & Italtile most of Phase 1 LNG (±50 tons a day) is under contracted sale.
• MTN (JSE code: MTN) update from Ghana and Nigeria look good. On PE ±11x, stock is cheap, albeit not without risks (always for MTN).

• All my index trades have been stopped out.

* I hold ungeared positions.

Simon Brown