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Absa showing downside to come to R120 but I am not buying it LOLOk so I am taking this analysis with a pinch of salt. The JSE Top 40 is showing major upside to come. And yet the Banking sector is showing conflicting signals. I mean we have an Inv Cup and Handle. We have a strong downtrend (safety line) - confirmed We have price<20 and 200MA - Making it a high probability short. Everything about the system is saying SHORT But I am calling BS on this analysis. A part of me wants to go short just for the sake of it because the system says the next target is at R120.12. Are banks predicting a bigger short and crash than we think?
JSE:ABGShort
by Timonrosso
1
Our opinion on the current state of ASTORIA(ARA)Astoria (ARA) is an investment company established to provide investors with exposure to a diverse selection of international equities in developed economies. The share has been trading at a significant discount to its net asset value (NAV) and only recently resumed trading after being suspended from September 2020 to April 2021. The company saw benefits from the sale of "non-lethal self-defense" products during a period marked by civil unrest. Astoria currently owns one-third of Outdoor Investment Holdings, holds a 35.7% stake in Trans Hex, and has divested its stake in CNA. On 19th April 2021, the company announced that trading in its shares had resumed following the distribution of 51.15 million shares. In its results for the six months ending 30th June 2024, the company reported headline earnings per share (HEPS) of 79.29 cents, a significant improvement from a loss of 18.32 cents in the previous period. The company's net asset value (NAV) increased from 74.76 cents (US) per share to 77.2 cents. Trading volume for the share has seen some improvement, with an average of R227,000 worth of shares traded per day, although there are still days with no trades. The share is currently under a cautionary announcement and appears to offer good value at its current levels.
JSE:ARA
by PDSnetSA
Our opinion on the current state of EXXARO(EXX)Exxaro (EXX) is a BEE coal company with interests in iron and heavy minerals, with operations in Australia, America, and Europe. It is a major provider of coal to Eskom's Medupi power station. The company has been aiming to increase coal production from 48 million tons to about 60 million tons by 2022, though this policy might be adjusted due to the lower demand for coal on the world market. Despite the challenges, Exxaro is known for being a cash-generative operation, usually profitable depending on coal prices. While demand for coal has been strong both locally and in the export market, the global shift towards renewable energy poses a long-term threat to the business. It is becoming increasingly difficult for the company to secure funding for new coal-fired power stations, as banks are pressured by environmental groups. On 9th April 2021, Exxaro announced the sale of its interest in Exxaro Coal Central (Pty) Ltd and the Leeuwpan Coal Mine operation. In its results for the year to 31st December 2023, the company reported a 17% decrease in revenue and a 22% decline in headline earnings per share (HEPS). The company stated, "The revenue contribution from our energy operations was 16% higher than FY22. Energy generation from the Cennergi operating wind assets was higher, driven by improved wind conditions compared to the prior year. Group EBITDA decreased by 29% to R13 399 million (FY22: R19 001 million), mainly attributable to the 36% decrease in Coal EBITDA." The share has been on a downward trend since the beginning of 2023. The Ukraine conflict initially had a beneficial impact on Exxaro's share price through higher commodity prices, but that effect has since dissipated. The company announced that, with the lower price of coal, it was no longer viable to transport coal to port by truck—something it had been forced to do due to inefficiencies in the South African rail and port systems. Exxaro remains a volatile commodity play, with its share price currently in a downward trend but potentially bottoming out. In a pre-close update on 25th June 2024, the company stated, "Total coal production (including buy-ins) and sales volume for 1H24 are expected to decrease by 14% and 12% respectively, mainly due to the reduced demand from Eskom at Grootegeluk, based on their latest internal plan." In a trading statement for the six months to 30th June 2024, Exxaro estimated that HEPS would fall by between 31% and 45%, attributing this to lower sales prices and volumes amid ongoing logistical challenges and reduced offtake from Eskom, partially offset by a slightly weaker exchange rate at its coal business. Technically, the share has been volatile but has remained in an upward trend since November 2015.
JSE:EXX
by PDSnetSA
Our opinion on the current state of GFIELDS(GFI)Gold Fields (GFI) is a relatively high-cost international gold mining house with a single mine in South Africa—South Deep. South Deep was bought by Gold Fields in 2006, and the company has struggled to make the mine profitable, pouring a total of R32bn (R22bn purchase price plus R10bn in development costs) into it over the past 14 years. Brett Kebble once described South Deep as, "The world's most expensive long drop...". South Deep is 3 kilometers deep and a very difficult mine with many technical complications, but it is the second-largest unmined gold resource in the world—hence Gold Fields' persistence. Gold Fields is working with an independent power producer (IPP) to build a 50MW project in South Africa. The company has spent a total of $502m over the past two years to ensure that Damang and Gruyere (international operations) would produce 2 million ounces a year for the next ten years. South Deep now has R800m less in costs and R400m less in capital expenditure. The company is focusing on bringing the new Salares Norte gold mine in Chile into production. On 11th July 2022, the company said that it would list on the Toronto Stock Exchange and that it would adopt a dividend policy of paying between 30% and 45% of profits out. Its protracted investment in South Deep is definitely beginning to pay off, with output expected to rise by about 25% over the next 4 years. In its results for the year to 31st December 2023, the company reported headline earnings per share (HEPS) of 94c (US) compared with 119c in the previous period. The average rand/US dollar exchange rate weakened by 13%, and the company's debt increased by $320m to $1024m. In an update on the first quarter of 2024 ending on 31st March 2024, the company reported 464 000 ounces of attributable production with an all-in sustaining cost of $1738 per ounce. The company said, "Production for the quarter was severely impacted by weather-related events and operational challenges, particularly at the Gruyere, St Ives, South Deep, and Cerro Corona mines, resulting in group attributable equivalent gold production (excluding Asanko) for the quarter being 18% lower year on year (YoY) and 22% lower quarter on quarter." In a trading statement for the six months to 30th June 2024, the company estimated that HEPS would fall by between 25% and 33%. The company said, "Gold volumes sold are expected to improve in the second half of 2024 with the ramp-up of Salares Norte and production improvements at the Gruyere, St Ives, and South Deep mines." Technically, the share is very volatile and subject to shifts in the international price of gold, but it has been in an upward trend over the past five years. It remains a volatile commodity play.
JSE:GFI
by PDSnetSA
Our opinion on the current state of S-OCEAN(SOH)South Ocean (SOH) is a manufacturer of low-voltage electrical cables and an importer of light fittings and electrical accessories. The company has an electrical cable manufacturing plant at Alrode and employs 400 people. The company described itself as, "...an investment holding company, comprising two operating subsidiaries which manufacture low-voltage electrical cables, and which holds property for investment purposes." It also owns Anchor Park, which is a property company. In December 2010, this share traded for as much as 245c, but then it fell back on persistent losses to trade at around 22c - on very thin volumes. In its results for the six months to 30th June 2024, the company reported revenue up 5,7% and headline earnings per share (HEPS) down 10%. The company said, "Group profit before tax decreased by 10.6% (2023: 47.0%, increase in earnings before tax) to a profit of R59.0 million (2023: R66.0 million) compared to the prior period." The share is in a strong upward trend, and volumes traded have increased sharply. The share was added to the Winning Shares List (WSL) on 6th July 2024 at 225c.
JSE:SOH
by PDSnetSA
Our opinion on the current state of SAPPI(SAP)Sappi (SAP) manufactures paper, dissolving wood pulp (DWP), and paper pulp internationally and supplies products in 150 countries. DWP is used to manufacture clothing, packaging products, and many other applications. DWP, specialty, and packaging products were seen as the profit generator in the future, but until recently, the price of DWP had fallen sharply. Then in 2021, the price of DWP began to rise as demand from China surged. It is directly linked to the level of consumer spending, and it is well-diversified geographically, selling products in 150 countries. The company said that the civil unrest in July 2021 had cut its profit by R220m. The company has had problems with the backlogs at Durban port and rising energy costs. On 13th April 2022, the company reported that the excessive flooding in the Natal province had caused it to close three of its mills. The company claimed $28m (about R430m) from insurers. On 21st April 2022, the company said that there had been no material damage and that operations had resumed, but 23,000 tons of production was lost, and 45,000 tons of inventory was damaged. In an update on the quarter to 1st March 2023, the company reported HEPS down 67%. The company said, "Sappi delivered an EBITDA excluding special items of US$167 million against a backdrop of a challenging global economy and significantly weaker paper and pulp markets." In an update on the nine months to 30th June 2023, the company reported sales down 18% and headline earnings per share (HEPS) down 43%. The company's net asset value (NAV) was up 6% at 446c per share. The company said, "The Group faced persistent challenges in the global economy and encountered ongoing weakness in paper and pulp markets, leading to a reduction in EBITDA to US$106 million for the quarter ended June 2023." In its results for the year to 30th September 2023, the company reported sales down 20% and HEPS down 62% in US dollars. The company's net asset value (NAV) was 5% higher at 438c per share. The company said, "The widespread disruption caused by ongoing geopolitical instability, weak global economic growth, rising interest rates, and an underperforming Chinese economy negatively impacted markets for our products." In an update on the 3 months to 31st December 2023, the company reported sales down 23% and a headline loss per share of 22c (US) compared with a profit of 34c in the previous period. The company said, "Profitability was negatively impacted by approximately US$45 million due to the lower production volumes associated with the planned maintenance shutdowns at the Saiccor, Ngodwana and Cloquet mills offset somewhat by a US$26 million positive plantation fair value price adjustment." In an update on the second quarter ending on 31st March 2024, the company reported sales down 6% and HEPS down 58%. The company's net asset value (NAV) dropped 13% to 387c per share. The company said, "Operating performance for the second quarter was slightly ahead of expectations with the group delivering EBITDA(2) excluding special items of US$183 million, which was 10% above the prior year." In an update on the 3 months to 30th June 2024, the company reported sales up 3% and net asset value (NAV) down 9% at 405c (US) per share. The company said, "Operating performance for the third quarter was substantially above last year with the group delivering EBITDA(2) excluding special items of US$151 million." Technically, the share has been in an upward trend since August 2023 but has become volatile in recent weeks. It is essentially a commodity share and hence somewhat risky.
JSE:SAP
by PDSnetSA
Our opinion on the current state of MPACT(MPT)Mpact (MPT) is a large producer of paper and plastics packaging in Southern Africa. It recycles paper and cardboard and makes corrugated cardboard containers for a variety of industries as well as polystyrene trays for the food industry. It has 20 manufacturing operations, with South African sales accounting for 86% of its business. It employs over 5000 people. The business is impacted by the general level of consumer spending, which has been depressed because of COVID-19 and was improving at least until the advent of the Ukraine crisis, as well as weather considerations that affect the demand for corrugated containers for fruit and other agricultural products, especially in the Cape. Like many businesses in the current environment, Mpact has been working to preserve cash, but it has benefited from a switch to local suppliers during the pandemic. In its results for the six months to 30th June 2024, the company reported revenue slightly down at R6.17bn and headline earnings per share (HEPS) of 144.6c compared with 211.6c in the previous period. The company's net asset value (NAV) increased 9% to 3411c per share. The company said, "The uncertain socio-political environment leading up to the national elections, high levels of loadshedding that continued until the end of March, high inflation and interest rates all contributed to weak consumer and business sentiment." The share fell from a high of R51 in April 2016 to levels around R8 in March 2020 but has since recovered to 2902c. At the current level, it is on an earnings multiple of 5.66 - which looks cheap. Technically, the share looks like it may be entering a new upward trend, but it has been moving sideways since August 2022. On 1st August 2024, the company announced that it had sold its Versapak business for R267.7m.
JSE:MPT
by PDSnetSA
Our opinion on the current state of PICKNPAY(PIK)Pick 'n Pay (PIK) is a retail grocery chain with over 2000 stores, mostly in South Africa, but also in the rest of Africa. The company was started by Raymond Ackerman in 1967 and became the dominant grocery retailer over time, before being displaced by Shoprite/Checkers. Summers has once again resumed the role of CEO, following his stint at Pick n Pay as CEO between 1999 and 2007. In its results for the 52 weeks to 25th February 2024, the company reported turnover up 5.4% and a headline loss of 203.06c compared with a profit of 259.25c in the previous year. The company said, "Trading profit declined 87.4% to R385.0 million, reflecting a R1.5 billion trading loss for Pick n Pay (a sharp reversal versus FY23's R1.3 billion profit), and a R1.9 billion trading profit for Boxer (R1.8 billion profit in FY23). The result was further impacted by a 198.8% increase in net interest paid to R701.8 million, as a result of higher gearing and increased interest rates." Technically, Pick 'n Pay has been in a downward trend since 2016 and has lost substantial ground to Shoprite. On the latest results, it remains in a long-term downward trend. The link-up with Mr. D and Takealot should help the company catch up in the online shopping market. To recapitalize the business, Pick 'n Pay is planning to separately list Boxer and conduct a rights issue to raise R4bn in mid-2024. The rights issue was approved by shareholders at a general meeting on 26th June 2024. The company will issue 252.2 million nil paid letters of allocation (NPL) in the ratio of 51.11 NPLs for every 100 Pick n Pay shares held—resulting in a dilution of 33.8%. The NPLs will be listed separately for a period. The take-up price was set at 1586c per share—a discount of approximately 32.48%. The rights offer was more than 100% oversubscribed. The rights issue caused the price of Pick 'n Pay shares to fall on 17th July 2024. The rights issue would require the Ackerman family to inject R1bn to retain their holding at 25% of the company. We recommended that you apply a 200-day simple moving average and wait for a clear upside break before investigating further. That break came on 27th May 2024 at a price of 2558c. The share moved up to 2850c before the rights issue but is trading at 2226c at the beginning of August 2024. The share remains risky.
JSE:PIK
by PDSnetSA
Our opinion on the current state of TELKOM(TKG)Telkom (TKG) was historically the government-controlled provider of fixed-line telephone connectivity in South Africa. With the advent of cell phones, Telkom had to subsidize the development of its own competition in the form of Vodacom, MTN, and more recently, Cell-C. This subsidy was primarily through termination rates for calls, which are now being phased out. Over the past twenty years, Telkom's CEO, Sipho Maseko, has stated that Telkom has effectively subsidized other networks to the tune of R70bn. Currently listed on the JSE, Telkom is still partially government-controlled, with the government owning 41% and the Government Employees Pension Fund (GEPF) owning 11.9%. Despite this, it operates as an independent organization divided into five divisions: 1. Open Serve: South Africa's primary supplier of wholesale connectivity with the country's largest network. 2. Telkom Consumer: The largest supplier of broadband internet connectivity with a growing mobile phone network. 3. Yellow Pages: Provides advertising and marketing to local businesses. 4. BCX: An ICT solutions company operating in Southern Africa. 5. Swiftnet: Formed in April 2018 to house Telkom's masts, towers, and property interests. Swiftnet owns a diverse portfolio of 1,330 properties, with 40 earmarked for development. Telkom is also impacted by the rulings of the Independent Communications Authority of South Africa (ICASA) regarding "inter-connect" fees. However, Telkom has been well-managed, and its downsizing efforts are expected to improve profitability moving forward. The company is steadily transitioning from fixed-line to mobile services. On 23rd July 2021, CEO Sipho Maseko announced his intention to step down, effective from 30th June 2022. On 22nd March 2024, the company announced the sale of Swiftnet for R6.75bn to a consortium of investors, with the cash intended to reduce Telkom's debt. In its results for the year ending 31st March 2024, Telkom reported group revenue up 1.6% and headline earnings per share (HEPS) up 201.3%. The company stated, "Total headline earnings per share (HEPS) and basic earnings per share (BEPS) increased by more than 100% to 376.0 cents and 385.5 cents, respectively, driven by improved operational performance. Profit for the year also increased by more than 100% to R1.9 billion, boosted by the non-recurrence of once-off restructuring costs and lower depreciation, while higher interest rates increased net finance costs compared to the prior year." In a trading update for the three months ending 30th June 2024, the company reported revenue up 3.9% and EBITDA up 24.1%. The company noted, "Telkom had a good start to the financial year with pleasing performance on the top line benefiting from our data-led strategy and compelling value propositions." Technically, Telkom's share price fell from highs of around R98 in June 2019 to levels around R15.00 in March 2020 and has been moving sideways and down since then. The company has high debt levels compared to its market capitalization, which makes it risky for investors. While the latest results are positive, Telkom is still battling to find a new direction in a very difficult economy and against stiff competition.
JSE:TKG
by PDSnetSA
Our opinion on the current state of CURRO(COH)Curro (COH) is a private education group focused on building and operating schools for children up to matriculation. The company's tertiary division was unbundled and separately listed on the JSE as Stadio (SDO) on 3rd October 2017. Curro has capitalized on the decline in government education since 1994, and it is a spin-off from PSG, which still holds a 17.2% stake. On 30th December 2015, Curro reached an exceptionally high price-to-earnings (P:E) ratio of 245 on the JSE, driven largely by its perceived growth potential. The company's business model seemed limitless as it continued to acquire or build more schools. Currently, Curro operates 178 schools across 76 campuses, with an average of just over 72,000 students. However, Curro has faced challenges, including falling pupil numbers and parents struggling to pay school fees. The company has also impaired the value of its schools by R202 million and increased its bad debts provision. On 1st March 2022, PSG announced that it would unbundle its 63.6% holding in Curro into the hands of PSG shareholders, aiming to release value for those shareholders. Curro has been involved in legal actions with the City of Johannesburg to prevent schools from being classified as businesses for rates purposes. The company won this case on 2nd March 2023. In its results for the year ended 31st December 2023, Curro reported a 32% increase in recurring headline earnings per share (HEPS) and a 15% increase in revenue. The company noted that Curro’s weighted average number of learners for 2023 increased by 2% to 72,031, and revenue grew by 15% to R4,764 million. Tuition fees increased by 12%, supported by growth in learner numbers, price-mix across grades, and annual fee increases. Additionally, ancillary revenue rose by 33%, contributing R120 million more than the previous year. In a trading statement for the six months ending 30th June 2024, Curro estimated that HEPS would increase by between 10.9% and 21.3%. Technically, Curro’s share price has been moving sideways since the COVID-19 impact in March 2020, but there may be signs of a new upward trend emerging. Education is generally considered a good investment because parents tend to prioritize paying for their children's education, which means education companies have lower working capital requirements. While these companies do not typically face union problems, they are capital-intensive, as each school requires significant infrastructure to operate, adding an element of risk.
JSE:COH
by PDSnetSA
$JSEPAN - Pan African Resources: Target Reached, More Upside?See link below for previous analysis. The double bottom target and new all time high of 685 cps has been reached and exceeded. Looking at the price structure from 283 cps, I am now viewing the advance as a five wave impulse that is currently in wave 3 of (5). A correction for wave 4 will set the scene for further advance in wave 5; in commodities and commodity stocks, fifth waves tend to be larger than third waves which is very bullish for PAN. Buy the dips.
JSE:PANLong
by Loyiso_BlaqueSoros_Mpeta
1