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Our opinion on the current state of MR-PRICE(MRP)Mr. Price (MRP) is a retailer of clothing, household goods, and sportswear through shop fronts and online in Africa and Australia. Unlike most retailers, Mr. Price receives most of its sales in cash, but there is a growing credit element. Mr. Price has a reputation for being cheaper than other stores. This was a definite advantage during COVID-19 as consumers tried to stretch the buying power of their income. In our view, this is a good share doing extremely well in a very difficult industry, especially in the current economic environment in South Africa. There is little doubt that Mr. Price has grown its market share at the expense of other clothing retailers during the COVID-19 period. On 15th March 2021, the company announced the acquisition of Yuppiechef, a primarily online retail kitchenware business for an undisclosed amount. On 13th April 2022, the company announced that it had purchased 70% of Blue Falcon Trading for R3,3bn in cash. Blue Falcon is the "...largest independent retailer of branded leisure, lifestyle and sporting apparel and footwear in South Africa." In its results for the 52 weeks to 30th March 2024, the company reported retail sales up 16,2% and headline earnings per share (HEPS) up 6,7%. The company said, "Despite a challenging retail environment, the group delivered a strong second half performance as diluted headline earnings per share grew 17.4%, due to significantly improved sales momentum, GP margin expanding 160bps to 40.6% and market share gains of 90bps." In a trading update for the 13 weeks to 29th June 2024, the company reported retail sales up 4,6% with comparable sales down 0,2%. The company said, "The group has gained market share for 11 consecutive months and on a 12-month rolling basis has gained just over R1.1bn in market share." Technically, the share was in a downward trend from April 2022. On 23rd November 2023, the share broke up through its downward trendline at a price of 16055c indicating a new upward trend. It has since moved up to 20899c. In our view, this is a very high-quality share that should be accumulated on weakness. On a P:E of 16,25 it still looks like good value.
JSE:MRP
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 which 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 year to 31st December 2023 the company reported headline earnings per share (HEPS) up 8% and net asset value up 11,2% at 3363c per share. The company said, "The weak economy, weighed down further by load shedding and other public infrastructure failures, impacted many businesses and consumers who were already struggling because of high interest rates and a prolonged period of high inflation." In a trading statement for the six months to 30th June 2024 the company estimated that HEPS from continuing operations would fall by between 32,5% and 37,8%. The company said, "The Group's operating profit margin for the six-months ended 30 June 2024 decreased from the high levels achieved in the six months ended 30 June 2023 ("prior period"), which benefited from a strong recovery in Paper margins following selling price increases at the end of 2022." The share fell from a high of R51 in April 2016 to levels around R8 in March 2020 but has since recovered to 2870c. At the current level it is on an earnings multiple of 5,6 - 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.
JSE:MPT
by PDSnetSA
Our opinion on the current state of AMPLATS(AMS)Anglo American Platinum (AMS), or Amplats, is the second largest platinum producing company in the world (after Sibanye), producing a large portion of the world's platinum. It is owned 77,62% by Anglo American. Amplats was one of the first platinum mining companies in South Africa to move away from expensive deep-level mining towards shallower, more mechanised mining. The company has reduced the number of mines it is operating from 18 to 7 over the past 5 years, decreased overheads by 50% and its number of employees by 50%. This shift is now paying handsome dividends. The Mogalakwena open-cast operation is a palladium-rich operation with costs in the lowest quartile in the platinum group metals (PGM) industry world-wide. A new project at Mogalakwena will see platinum production up by 250 000 ounces and palladium production up by 270 000 ounces. Amplats also recently bought out Glencore's 40,2% stake in their joint venture Mototolo mine and the adjacent Der Brochen property for R1,5bn. Mototolo is a highly mechanised shallow mine which can be extended into Der Brochen without putting in new surface infrastructure. The platinum price is plagued by an effective re-cycling industry which produces about 2 million ounces a year by recovering from old auto catalysts. We believe AMS is the best of the PGM shares on the JSE - but it remains a commodity share and thus volatile and unpredictable. As part of its plans to boost production at Mogalakwena, the company has plans to relocate 1000 families of its employees which could result in unrest. On 10th December 2021 the company announced a R3,9bn extension to the life of its Mototolo/De Brochen mines to beyond 30 years. On 15th February 2023 the company announced that CEO, Natascha Viljoen, would resign but would serve out her 12 month notice period. In its results for the six months to 30th June 2024 the company reported tonnes milled down 7%, production of refined PGMs up 5% and revenue down 19%. Headline earnings fell 18% and the company said, "Realised PGM dollar basket price fell 24% to an average of US$1,442 per PGM ounce due to declining realised palladium and rhodium metal prices, which were 34% and 49% lower respectively." This share is a speculation on the international prices of the platinum groups metals that it produces and hence very volatile. Technically, the share has been falling since March 2022. This mainly due to the challenges faced by the industry including loadshedding and the falling prices that they are getting for their production. We recommend that you wait for a clear upside break through the downward trendline before investigating further. On 19th February 2023 the company announced the possible retrenchment of 3700 employees.
JSE:AMS
by PDSnetSA
Our opinion on the current state of KAROO(KRO)Karooooo (KRO), formerly known as Cartrack, is a vehicle recovery, insurance, telematics, and fleet management company operating in 24 countries worldwide. The company boasts a 92% recovery rate, claiming it to be the best in the industry. Karooooo has demonstrated rapid organic growth, with a 21% compound annual growth rate in its subscriber base over the past six years. Approximately 96% of the company's turnover is annuity income, providing a stable and predictable revenue stream. Zak Calisto, the founder, holds a significant ownership stake of 68.5% in the Singapore-based firm Karooooo. The company has almost no working capital requirements, and its annuity income ensures that overheads are covered before the month begins, making it an attractive investment option, especially for private investors seeking a rand-hedge. Karooooo's listing on NASDAQ with an inward listing on the JSE enhances its ability to raise funds on the international market, attracting strong institutional interest. The company's financial performance continues to be robust. In its results for the year ending 29th February 2024, Cartrack subscribers increased by 15% to 1.97 million, and subscription revenue rose by 17%. Operating profit grew by 18% to a record ZAR1,043 million, and earnings per share increased by 24% to ZAR23.85. On 12th February 2024, Karooooo announced a buyback program for up to 1 million of its own ordinary shares in the market. In the first quarter update, the company reported a 17% increase in subscribers and a 15% rise in subscription revenue. Operating profit for the quarter grew by 34% to ZAR300 million, and earnings per share increased by 41% to ZAR7.17. Despite trading at a P/E ratio of 26.87, which is relatively high, Karooooo's impressive growth track record and strong financial performance justify its valuation. The company's stable annuity income, minimal working capital needs, and global presence make it a resilient investment. Given these factors, Karooooo remains a "must-have" investment for private investors, and accumulating shares on any weakness is recommended.
JSE:KRO
by PDSnetSA
Our opinion on the current state of REINET(RNI)Reinet (RNI) is an investment holding company primarily noted for its significant stake in British American Tobacco (BAT). This stake, which represents roughly 2.12% of BAT, is worth about $1.8 billion and accounts for 31% of Reinet's net asset value (NAV), down from 85% ten years ago. This decline in proportion is mainly due to a drop in BAT's share price, reflecting a more challenging legal environment for tobacco, especially in the US where the Food and Drug Administration is considering new regulations on menthol cigarettes. Despite the reduced value of the BAT holding, Reinet has shown no urgency to divest this asset. BAT continues to provide substantial dividends, driven by growth in third-world countries despite declining cigarette sales in first-world countries. As BAT's share price has fallen, the significance of other assets in Reinet's portfolio has grown. The largest of these is its 46% stake in Pension Insurance Corporation (Penscorp), now representing 36.8% of the portfolio. Additionally, Reinet has a diverse range of private equity investments accounting for around 15% of its portfolio. In its results for the year ending 31st March 2024, Reinet reported an 8.1% increase in NAV, reaching 3402 euro cents per share, with a compound annual growth rate of 8.8% since March 2009. By 30th June 2024, the NAV had further increased to 3669 euro cents per share. As a rand-hedge stock, Reinet's value benefits from any weakening of the rand. Technically, the share fell from a high of R343 in February 2020 to lows in January 2021. The recommendation was to wait for a break up through its long-term downward trendline, which occurred on 16th September 2019 at R270 per share. It is now trading at R451.42. The share experienced a significant decline following an announcement by BAT about writing down the value of its US operations by GBP25 million (R595 billion), which led to a 10% drop in BAT's share price. Investors considering Reinet should factor in the potential movements of the rand, given its influence on the share's performance. Despite the volatility linked to BAT's challenges, Reinet's diversified portfolio and steady NAV growth make it a resilient investment option.
JSE:RNI
by PDSnetSA
$JSEMTN - MTN: 7753 Invalidated, Now What?See link below for previous analysis. 7753 cps eventually gave way triggering an update of the wave count. I have shifted the terminal wave E of the (B) wave triangle and I an now counting the sell-off from 14289 cps as an ending diagonal/falling wedge. I maintain that a bottom is near and I will monitor price at the low trendline of the wedge. The MACD is still giving a bullish convergence signal, indicating that selling momentum is weak. I am neutral at this juncture as it is a bit late to be bearish.
JSE:MTN
by Loyiso_BlaqueSoros_Mpeta
Our opinion on the current state of KUMBA-IO(KIO)Kumba (KIO) is a highly successful iron mining operation that is 79% owned and controlled by Anglo American. The share price saw a significant drop to R223 in March 2020 due to COVID-19 but recovered to R668 before falling again after the March 2022 quarterly results. Notably, exports account for 94% of the company's total sales, making it less reliant on local sales but more vulnerable to the strengthening of the rand and the efficiency of rail transport to ports. To mitigate its reliance on Eskom, Kumba plans to build a 100MW solar park over the next three years. The company has faced challenges such as heavy rain and poor rail performance. On 10th October 2022, Kumba announced that due to the force majeure at Transnet, it would lose about 50,000 tons of production per day, increasing to 90,000 tons after seven days. This would result in a loss of approximately 120,000 tons of exports, costing the company about $8.5 million per day in production and $11.7 million in lost export revenue. In its results for the year ending 31st December 2023, Kumba reported revenue up 16% and headline earnings per share (HEPS) up 26%. The company noted, "Average realised FOB export price of US$117/tonne, 15% above benchmark - Cost savings of R1.0 billion, underpins C1 unit costs of US$41/tonne - Resilient EBITDA* margin of 53%, up from 50% - Closing net cash* of R13.2 billion." The company is considering 490 retrenchments. In an update for the three months ending 31st March 2024, Kumba reported total production down 2% and sales down 10%, largely driven by a 12% decrease in Kolomela's production to 2.7Mt, while Sishen's production increased by 4% to 6.6Mt. In a production and sales update for the six months ending 30th June 2024, the company reported volumes down 2% and sales down 5%. The company stated, "The iron ore market pulled back strongly in the first half and the reconfiguration of our business to a lower production and cost profile is helping to build greater resilience in the challenging market environment. Weak steel demand in China and Europe coupled with robust iron ore supply contributed to the Platts IODEX 62% Fe CFR benchmark iron ore price falling by 26% since the start of the year." The share trades at a multiple of 5.89 and offers a dividend yield (DY) of 8.97%, which compensates investors to some extent for the commodity risk in this rand-hedge share. However, it remains volatile and hence risky. The offer by BHP to buy Anglo includes the unbundling of Kumba. At this stage, it is not certain that the deal will go ahead.
JSE:KIO
by PDSnetSA
Our opinion on the current state of AMPLATS(AMS)Anglo American Platinum (AMS), or Amplats, is the world's second-largest platinum-producing company (after Sibanye), responsible for a significant portion of global platinum production. Anglo American owns 77.62% of Amplats. The company was a pioneer in the South African platinum mining sector, shifting from expensive deep-level mining to shallower, more mechanised mining operations. Over the past five years, Amplats has reduced the number of its mines from 18 to 7, cut overheads by 50%, and halved its workforce. These strategic changes are now yielding substantial benefits. The Mogalakwena open-cast operation, a palladium-rich mine, boasts some of the lowest costs in the platinum group metals (PGM) industry worldwide. A new project at Mogalakwena is set to increase platinum production by 250,000 ounces and palladium production by 270,000 ounces. Additionally, Amplats recently acquired Glencore's 40.2% stake in their joint venture Mototolo mine and the adjacent Der Brochen property for R1.5bn. The Mototolo mine is a highly mechanised shallow operation that can be extended into Der Brochen without the need for new surface infrastructure. The platinum market faces challenges from an efficient recycling industry, which produces about 2 million ounces annually by recovering platinum from old auto catalysts. Despite these challenges, we believe AMS is the best PGM share on the JSE, although it remains a volatile and unpredictable commodity share. As part of its expansion plans at Mogalakwena, Amplats plans to relocate 1,000 families of its employees, which could lead to potential unrest. On 10th December 2021, the company announced a R3.9bn extension to the life of its Mototolo/De Brochen mines, extending their operational life to beyond 30 years. On 15th February 2023, the company announced that CEO Natascha Viljoen would resign but would serve out her 12-month notice period. In its results for the year to 31st December 2023, Amplats reported refined PGM production down 1%, with the rand basket price of PGMs per ounce down 26%. Revenue fell 24%, and headline earnings per share (HEPS) decreased by 71%. The company stated, "Refined production was 1% lower, primarily due to lower metal-in-concentrate production and the impact of Eskom load-curtailment of c.82,000 PGM ounces. This was offset by the release of concentrate stocks. Sales volumes increased by 2% due to the drawdown in refined stock. Our realised dollar basket price fell by 35% in 2023 to $1,657 per PGM ounce - the lowest level since 2019." This share is a speculation on the international prices of the platinum group metals it produces and is hence very volatile. In an update for the three months to 31st March 2024, Amplats reported PGM production down 7% and PGM sales volumes unchanged. In a trading statement for the six months to 30th June 2024, the company estimated that HEPS would be between 15% and 25% lower. The company stated, "Earnings have decreased for the year largely due to a 24% lower realised ZAR PGM basket price relative to H1 2023." Technically, the share has been falling since March 2022, mainly due to industry challenges including loadshedding and falling prices for their production. We recommend waiting for a clear upside break through the downward trendline before investigating further. On 19th February 2023, the company announced the possible retrenchment of 3,700 employees.
JSE:AMS
by PDSnetSA
Our opinion on the current state of BHP(BHG)BHP is a global commodities company headquartered in Melbourne, Australia, with a workforce of 62,000 primarily based in the Americas and Australia. The company processes a diverse range of minerals, oil, and gas, including copper, iron ore, coal, oil, and gas. BHP owns significant interests in several major mining operations worldwide: - **Escondida Mine** (Chile): BHP holds a 57.5% stake in this mine, which is one of the world's largest producers of copper and also yields gold and silver. - **Antamina Mine** (Peru): BHP owns 33.75% of this mine, which produces copper and zinc. - **Pampa Norte** (Chile): This operation produces copper cathode in the Atacama Desert. - **Samarco** (Brazil): BHP holds a 50% stake in this iron ore production operation. - **Cerrejon** (Colombia): BHP owns one-third of this open-cut coal mine. - **Saskatchewan (Canada)**: BHP holds mineral rights to one of the world's largest unexploited potash deposits. - **Olympic Dam** (Australia): This site hosts one of the largest ore bodies for copper, uranium, and gold globally. - **Western Australia Iron Ore**: A system of five mines connected by more than 1000km of railways. - **Queensland Coal**: This includes the Mitsubishi Alliance and Mitsui Coal. - **Mt. Arthur Coal Mine** (New South Wales): An open-pit coal mine. - **Nickel West** (Australia): A nickel mining and processing operation. - **Petroleum Resources**: High-quality resources in the Gulf of Mexico, Australia, Trinidad, and Tobago. In its results for the six months to 31st December 2023, BHP reported a 6% increase in revenue but a 48% decline in headline earnings per share (HEPS). The company's tangible net asset value (NAV) per share was $8.68, slightly down from $8.91 in the previous period. The company highlighted strong production records at its copper operations in South Australia and Chile, and noted progress in the Jansen Stage 2 project in Canada, which will nearly double its planned potash production capacity. Despite volatility in global commodity prices and softer-than-expected demand in the developed world, demand from China remains healthy, and India is seen as a bright spot. For the nine months to 31st March 2024, BHP remained on track to meet its production targets for copper, iron ore, and energy coal. Copper volumes increased by 10%, driven by strong performance and additional production from South Australia, record year-to-date output from Spence, and improved grades and production at Escondida. In its operational review for the year ending 30th June 2024, BHP reported a strong performance across its copper business, with the highest production in four years at Escondida and another record year at Spence. As a diversified international mining company, BHP is directly impacted by commodity prices and global economic recovery. The share price has been on a long-term upward trend since the commodity cycle turned upwards in January 2016 but experienced a sharp decline with the coronavirus pandemic. It recovered strongly post-March 2020, continuing its upward trend but facing pressures from falling commodity prices since early 2024. On 25th April 2024, BHP announced a share offer for the entire issued share capital of Anglo American, contingent on Anglo unbundling Amplats and Kumba. The offer was initially rejected by Anglo, followed by two further improved offers, with negotiations still ongoing. This bid might spark a bidding war with other industry giants such as Rio Tinto and Glencore.
JSE:BHG
by PDSnetSA
Our opinion on the current state of TRENCOR(TRE)Trencor's (TRE) primary asset is its 47.78% ownership of Textainer, a US-listed company specializing in the rental of shipping containers (Twenty-foot Equivalent Units or TEUs). Notably, Trencor spent R100 million buying back its own shares between 4th October 2018 and 6th December 2018. Investors have expressed dissatisfaction with Textainer's performance compared to its competitors. For instance, Triton had a return on equity of 16%, while Textainer's was only 1.7%. Trencor has unbundled its holding of Textainer into the hands of its shareholders, resulting in a tax liability of R17 million. In its results for the year to 31st December 2023, the company reported headline earnings per share (HEPS) of 71.5c, a significant increase from 1.7c in the previous period. The company's net asset value (NAV) rose to 813c per share. However, in a trading statement for the six months to 30th June 2024, the company estimated that HEPS would fall by between 84.6% and 86.1%. The company noted, "The SA rand/US dollar exchange rate at any point in time can have a material impact on basic earnings and headline earnings per share." The share has an average daily trading volume of R660,000, making it practical for investment. Additionally, the share is in an upward trend, which may be appealing to potential investors.
JSE:TRE
by PDSnetSA
Our opinion on the current state of RICHEMONT(CFR)Richemont (CFR) is the world's second-largest supplier of luxury goods, controlled by the Rupert family in Stellenbosch. Its sales are entirely located overseas, making it an excellent rand-hedge. The company’s luxury brands include Mont Blanc, Cartier, Lancel, Jaeger-LeCoultre, Van Cleef, and Piaget. Richemont has boosted online sales to 21% of turnover by acquiring Yoox-Net-A-Porter (YNAP), Watchfinder, a UK online group, and entering into a joint venture with the online giant Alibaba. This joint venture aims to develop apps to penetrate the Chinese market and offer its line of luxury goods through Alibaba's Tmall Luxury Pavilion. Richemont is directly linked to the recovery of the world economy following the pandemic. While the company's sales clearly took a hit from COVID-19, they are expected to continue rising, especially now that it is aggressively offering its products online. This share is also impacted by the slowdown in the Chinese economy and the developments in Central and Eastern Europe. It will benefit from the recovery in the world economy but will be impacted by changes in the strength of the rand. In its results for the year to 31st March 2024, the company reported sales up 3% and 8% in constant currencies. Headline earnings per "A" share fell by 4%. The company said, "Jewellery Maisons delivering a 33.1% operating margin, with sales up 6% at actual exchange rates (+12% at constant exchange rates). Strong net cash position of EUR 7.4 billion, with a solid increase in cash flow generated from operating activities to EUR 4.7 billion." In an update on the first quarter to 30th June 2024, the company reported sales up 1% in constant currencies and, "Mid-single digit growth at the Jewellery Maisons and the Group's 'Other' business area (which includes the Group's Fashion & Accessories Maisons) offsetting lower sales at the Specialist Watchmakers impacted by strong exposure to Asia Pacific." This share made an "island" formation in October and November of 2023 before beginning a new upward trend. It is clearly a rand hedge, but it is dependent on the Chinese consumer. We expect it to perform well, but on a P/E of 21,57 it is not cheap.
JSE:CFR
by PDSnetSA
Our opinion on the current state of BELL(BEL)Bell (BEL) is a manufacturer and distributor of heavy and earth-moving equipment to the mining, construction, agriculture, and waste management industries. The company has been directly impacted by the slowdown in construction since 2008 and the collapse of the mining industry. Bell's articulated dump trucks are exported worldwide from South Africa and Germany. Bell also has dealerships for several other global manufacturers, giving it a product range of over 120 products. Roughly 60% of its business comes from outside South Africa. The company employs 3200 people, of whom 88,6% are in South Africa. The CEO of Bell, Gary Bell, has indicated to Business Day that the company would consider delisting, with 1A Bell making an offer to minorities (but he did not disclose at what price). Some minority shareholders are now saying that the board has a fiduciary duty to put the company up for sale to the highest bidder. On 18th February 2021, the company announced that a deal had been struck for 1A Bell to buy a further 31,4% of Bell, giving it a 70% stake at R10 per share - a 13% discount to the share price. In its results for the year to 31st December 2023, the company reported revenue up 32% and headline earnings per share (HEPS) up 69%. The company's net asset value (NAV) increased 21% to 5527c per share. The share trades over R1m worth of shares on average each day, making it suitable for a private investor. There was an on-balance-volume (OBV) buy signal on 7th September 2023 at 1752c per share. Since then, the share has moved up to 2480c. On 15th July 2024, the company announced that the Bell family had made a firm offer to buy out the 30% of Bell which it did not own at R53 per share - which is an 82,3% premium to the 30-day volume weighted average price (VWAP) of the price of 11th July 2024 (3100c). The share will be delisted once the transaction is completed. This move to delist at a substantial premium indicates confidence from the Bell family in the company's future prospects. For current investors, this offer represents a significant return on their investment, and for potential investors, it highlights the importance of monitoring company buyout offers for opportunities.
JSE:BEL
by PDSnetSA
Our opinion on the current state of M&R-HLD(MUR)Murray and Roberts (MUR) is a large South African construction company that has suffered from the sub-prime crisis and the slump in construction spending following the 2010 World Cup. This brought the share down from a massive double-top formation at around R100 per share to a low below R5 in May 2020. The company has been consolidating and reducing costs. It has transformed itself into a "...multinational engineering and construction Group focused on the natural resources market sectors..." with three primary business platforms: underground mining, oil & gas, and power & water. On 27th March 2023, the company announced that it had sold its Australian operations (65% of Insig Technologies) for A$1, thus disposing of A$7m in liabilities. On 8th December 2023, the company reported that it would be able to reduce its debt from R2bn in April 2023 to R350m as a result of "Cementation Canada Inc's recently renewed banking facility agreement with a Canadian bank will provide for Cementation Canada to pay CAD40 million." In its results for the six months to 31st December 2023, the company reported revenue of R6,6bn, up from R5,9bn in the previous period. The company made a headline loss of 16c per share, compared to the loss of 27c made in the previous period. The order book fell from R16,1bn to R14,7bn and net debt reduced to R247m from R1,96bn. The company said, "Interest for the reporting period decreased to R75 million (FY2023 H1: R134 million*) and the tax charge was R81 million (FY2023 H1: R65 million*). Interest is expected to not exceed circa R100 million per annum, as from the new financial year." Murray and Roberts remains a relatively risky penny stock, but there are signs that it may be on a recovery path. On 15th July 2024, the company announced that it had won a $200m multi-year contract in Latin America. The company's transformation and recent contract wins suggest potential for recovery, but caution is advised due to its historical volatility and current penny stock status. Investors should monitor the company's performance and news closely for further signs of stabilization and growth.
JSE:MUR
by PDSnetSA
Our opinion on the current state of NORTHAM(NPH)Northam (NPH) is a fully empowered platinum mining company operating in the Bushveld complex. In the current difficult legislative environment where the 3rd mining charter is regarded as unfriendly from an investment point of view, Northam is probably the only mining house buying up new properties. It has come to an arrangement with Anglo American to exploit a property adjacent to its Zondereinde mine (the deepest platinum mine in South Africa). It has also bought Eland Platinum from Glencore for R175m, which it intends to re-start at a cost of R2bn. On 29th October 2019, the company announced the acquisition of Maroelabult for R20m, which is west of the Eland mine with an analogous ore body. This has accelerated the bringing to production of Eland and required very little capital. With the Eland mine, Northam got a concentrator plant which can process up to 250,000 tons a month. In return, Glencore got the right to market all of Northam's chrome. At the same time, Northam has recently commissioned a new smelter to try to process its backlog of platinum ore, which is estimated to be worth about R2,5bn. Zondereinde is a deep-level mine which has all the problems associated with mining at depth, while Booysendal is a shallow mechanised mine which is much easier to manage. Both mines are profitable, but the empowerment structure results in Northam always reporting a loss because of the preference dividend that must be paid. Once Booysendal is complete, the company should generate strong cash flows. The appointment of Mcebisi Jonas (former South African Minister of Finance) and Jean Nel (previously CEO of Aquarius Platinum) as non-executive directors will significantly add to the strength of the board. The company has the stated intention of doubling its workforce as it strives to become a major PGM supplier in the world. With plans to increase production of PGM's over the next few years to 1 million ounces, this is probably one of the better options in the industry. The company has also sold its Impala shares for R3,1bn. In its results for the six months to 31st December 2023, the company reported sales revenue down 25,5% and headline earnings per share (HEPS) down 92,5%. The company said, "Disposal of Northam’s investment in RBPlat into the Implats Mandatory Offer for R9.0 billion in cash and 30 065 866 Implats Shares, significantly strengthening our balance sheet and liquidity position. The PGM industry is currently navigating significantly depressed PGM prices and high inflation, together with a raft of global geopolitical uncertainties and locally, Eskom load curtailment events. For the 6-month period ended 31 December 2023 (H1 F2024), the ZAR 4E basket price achieved decreased by 42.3%." In a voluntary production update on the year to 30th June 2024, the company reported a 10,4% increase in the production of refined 4E metals and a 7,3% increase in total metals sold. The company said, "The current price environment may endure for some time, and this, combined with higher general inflation, continues to exert pressure on the entire PGM sector. Given our UG2 dominant resource base, well-capitalised mining assets and proactive balance sheet management, Northam remains well-positioned." Since April 2021, there has been a steady decline in the share price, which has seen it fall back substantially. Despite this, we see a good future for this company in the longer term, but it remains a volatile commodity share. We recommend waiting for a clear break up through the downward trendline before investigating further.
JSE:NPH
by PDSnetSA
Our opinion on the current state of SASFIN(SFN)Sasfin (SFN) is a banking group that specialises in various types of finance for small businesses and high net-worth individuals. It was listed on the JSE in 1987. The company has been investing heavily into its digital platforms and acquisitions. The share was in a strong downward trend, and we advised investors to wait until there was a measurable turn in the price, such as an upside break through its long-term trendline, before investigating further. That upside break has not yet occurred, mainly because of the impact of COVID-19, but there are signs that the share is beginning to recover. On 16th October 2023, the company announced, "Sasfin has entered into binding heads of agreement to dispose of its capital equipment finance and commercial property finance businesses to African Bank Limited." This caused the share price to rise sharply. On 27th February 2024, the company announced that it had received a civil summons from the South African Revenue Services (SARS) for a damages claim of R4,782bn plus interest and penalties in respect of income tax, value-added tax (VAT), and penalties allegedly owed by former foreign exchange clients of the bank. The company has a market capitalisation of just R484m. In its results for the six months to 31st December 2023, the company reported headline earnings per share (HEPS) down 62.39% and net asset value (NAV) up 4.09% to 5191c per share. The company said, "The primary reasons for the decrease were negative adjustments to the Group's fair value loans and private equity portfolio as well as an increase in credit impairments, reflecting the challenging economic environment for businesses within South Africa." The share is fairly thinly traded, with only about R110 000 worth of shares changing hands on average every day. On 15th July 2024, the company announced that it intended to delist from the JSE. Shareholders will be offered R30 per share - a 66% premium to the 30-day VWAP on 12th July 2024.
JSE:SFN
by PDSnetSA