Get started
Our opinion on the current state of GEMFIELDS(GML)The Gemfields Group (GML), previously known as the Palinghurst Group, is a mining company primarily focused on two major projects: (1) Kagem, the world’s largest producer of emeralds, located in Zambia, and (2) Montepuez in Mozambique, one of the world’s largest ruby mines. Additionally, the company once had a stake in Jupiter Mines, a South African manganese producer. Under the leadership of Brian Gilbertson, the former CEO of BHP Billiton, Gemfields has focused on consolidating and professionally managing the under-developed semi-precious stones market. In 2018, Gemfields listed Jupiter Mines on the Australian Stock Exchange (ASX) and divested 60% of its stake in line with its decision to focus on gemstones. Gemfields' share is fairly liquid, with approximately R500,000 worth of shares trading daily. However, as with all commodity stocks, it is subject to risks associated with fluctuating international prices of emeralds and rubies, as well as the operational risks tied to mining in third-world countries. Despite this, the company appears to have carved out a niche in the gemstones market with limited competition and could benefit from a global economic recovery. Following an insurgent attack near the Montepuez ruby mine (MRM) in October 2022, Gemfields resumed operations shortly after. On 7th August 2023, the company announced plans to construct a new processing plant, which would triple output from the Montepuez mine. In its results for the six months ending 30th June 2024, Gemfields reported revenue of $128 million, down from $153.6 million in the previous period. Headline earnings per share (HEPS) dropped by 25%. The company highlighted the challenge of managing cash availability while making significant investments at the Kagem emerald mine, the Montepuez ruby mine, and other development assets. Technically, the share had risen off an island formation and entered a strong upward trend until July 2023, when the trendline broke. We recommend waiting until the downward trendline is broken before considering further investment. On 11th June 2024, Gemfields appointed Bruce Cleaver as Chairman. In a report released on 19th June 2024, the company announced that it had sold $68.7 million worth of rubies at an average price of $316.95 per carat during its June auctions. The share tends to be volatile, largely due to the nature of the gemstone market and the risks inherent in mining operations in developing countries. While Gemfields has potential, particularly with its unique positioning in the gemstone sector, its performance remains tied to external factors such as market demand and geopolitical risks.
JSE:GML
by PDSnetSA
Our opinion on the current state of PSG-KST(KST)PSG Fin (previously PSG Konsult) is a well-established financial services group that originated from PSG's stockbroking business. Today, it offers a comprehensive range of financial services, including financial planning, unit trusts, healthcare, short-term insurance, and estate planning. PSG still holds a 60% stake in the company. For the six months ending 31st August 2023, PSG Fin reported a 21% increase in recurring headline earnings per share (HEPS) and a 19% rise in assets under management (AUM) to R375.9 billion. Gross written premiums also grew by 12%. The company noted that its technology and infrastructure spending increased by 12%, with these costs being fully expensed, and fixed remuneration costs also grew by 12%. In its trading statement for the six months ending 31st August 2024, PSG Fin estimated a HEPS increase of between 27% and 30%. Although the share currently trades on a price-to-earnings (P/E) ratio of 22.49, which may seem relatively high, it is a quality company that has demonstrated its ability to generate solid returns even in challenging economic conditions. From a technical perspective, the share has been in an upward trend since March 2020 and continues to show good value. On 1st March 2022, PSG announced plans to unbundle its 60.8% holding in PSG Konsult, transferring this stake into the hands of PSG shareholders as a way to release value. PSG Fin was added to the Winning Shares List (WSL) on 23rd May 2024 at 1610c, and the share has since moved up to 1824c. Given its performance and potential, we believe the share has room to go further.
JSE:KST
by PDSnetSA
Our opinion on the current state of REX-TRUE(RTO)Rex Trueform (RTO) is an extremely thinly traded company on the JSE, which makes it impractical for private investors in its current form. Established in 1937 and listed on the JSE since 1945, RTO manufactures and markets clothing and accessories through its Queenspark and J. Crew stores, operating across South Africa. The company also owns a portfolio of properties in the Cape Town area. RTO is controlled by a consortium led by Marcel Golding and Hugh Roberts. In its effort to diversify, the group recently invested R81 million to acquire a 33.8% stake in Sembcorp Siza, a water reticulation and specialist pipe services company operating in KwaZulu-Natal. The company maintains a strong balance sheet and has been exploring opportunities for further diversification. For the year ending 30th June 2024, RTO reported a 1% decline in revenue and a significant drop in headline earnings per share (HEPS), down 90.6%. The company's net asset value (NAV) also decreased by 1% to 1929c per share. Despite its strong financial position, the extremely low trading volumes of both its ordinary and "N" shares make it difficult for investors to take an interest in the stock. Given the lack of liquidity, RTO is not a practical option for most private investors at this time.
JSE:RTO
by PDSnetSA
Our opinion on the current state of TRELLIDOR(TRL)Trellidor (TRL) is a long-established manufacturer of barrier security products, blinds, and security shutters, having been in business since 1976. The company is divided into two main divisions: the Trellidor business, which focuses on security barriers, and the Taylor business, which produces security and decorative blinds. Taylor also imports and distributes cornicing and skirting. With 70 franchise outlets in South Africa and representation in 24 countries (17 of which are in Africa), Trellidor has built a strong brand over the years. As a company linked to the construction and home improvements industry, Trellidor is sensitive to economic conditions, but it has been well-managed and maintains a strong balance sheet. The business has benefitted from the shift toward work-from-home setups and the low-interest-rate environment, both of which have driven demand for home improvements. Additionally, Trellidor has supported its share price through share buy-backs. In its results for the year ending 30th June 2024, Trellidor reported a 12.6% increase in revenue, and headline earnings per share (HEPS) grew to 36.1c, up significantly from 4.2c in the previous period. The company noted "declining revenue in the domestic market and elevated opening debt levels as at 30 June 2023, at higher interest rates." However, it also highlighted growth in its international revenue, which increased to R173.0 million, and a reduction in net debt from R146.7 million to R115.7 million, driven by improved profitability and better working capital management at Taylor. Despite being a thinly traded share, with an average daily trading volume of only about R53,000, Trellidor has shown signs of breaking to new higher levels, potentially attracting more institutional interest. Given the continued demand for security products in South Africa, the company's focus on security solutions positions it well for long-term growth, even though its trading volume makes it a riskier investment option.
JSE:TRL
by PDSnetSA
Our opinion on the current state of MOMMET(MTM)Momentum Metropolitan (MTM) is an insurance company listed on the JSE and the Namibian Stock Exchange, formed by the merger of Momentum and Metropolitan in December 2010. The company operates across the full spectrum of short- and long-term insurance and financial services. Notably, Momentum Metropolitan was the first insurance company to achieve level 1 BBBEE status. The company has been scaling back its presence in certain African markets, closing its operations in Mozambique, Mauritius, Zambia, Tanzania, and Swaziland. At the time of the merger, the combined company held 24% of the South African life insurance market, but this has since declined to 17%. During the first quarter of 2021, Momentum Metropolitan paid out nearly R4 billion in death claims, three times more than expected, largely due to the second wave of COVID-19. The company also announced plans to reduce its office space by 60%, as the work-from-home trend has continued since the pandemic. In May 2023, it was announced that Jeanette Marais would succeed Hilgard Meyer as CEO on 30th September 2023. For the year ending 30th June 2024, the company reported headline earnings per share (HEPS) up 39% and a return on embedded value of 13.3%. Operating profit increased by 31%, from R2.755 billion to R3.608 billion, as many business units benefited from higher investment income and an elevated interest rate environment. However, Momentum Retail's operating profit declined, driven by lower market variances and increased expenses compared to the previous year. Technically, the share began an upward trend in May 2024, and it was added to the Winning Shares List (WSL) on 24th July 2024 at 2402c. It has since risen to 2947c, with further upside potential expected. With a price-to-earnings (P/E) ratio of 9.87 and a dividend yield (DY) of 3.39%, Momentum Metropolitan looks reasonably priced, offering a solid investment opportunity for long-term growth.
JSE:MTM
by PDSnetSA
Our opinion on the current state of BARWORLD(BAW)Barloworld (BAW) is an international supplier of heavy earth-moving equipment and vehicles, serving sectors such as mining, agriculture, infrastructure, power, automotive, and logistics. The company's well-known brands include Caterpillar, Avis, Massey-Ferguson, and Challenger. Barloworld operates in 24 countries, particularly in Southern Africa, Russia, and other emerging markets. Its wide range of operations and geographical reach help to insulate it from recessionary pressures. Recently, Barloworld sold its Spanish and Portuguese operations for about R2.5 billion, which it is now planning to invest in Mongolia through the acquisition of the US-owned Wagner Asia Group. However, the ongoing Ukraine crisis has made it more difficult for the company to receive payments from customers in Russia, and it has increased the costs of certain commodities. Despite this, Barloworld asserts that it has enough resources to manage the situation, although its share price has fallen sharply as a result. In its results for the six months ending 31st March 2024, Barloworld reported an 8% decrease in revenue and an 8% decline in headline earnings per share (HEPS). The company's net asset value (NAV) increased by 9% to 9111c per share. The group’s revenue of R19.2 billion was down 8% year-on-year, driven by a 24% decrease in Vehicle Trading (VT), a 10% drop in Equipment Southern Africa, and a 3% decline in Ingrain. However, these declines were offset by a 43% increase in revenue from Barloworld Mongolia, reflecting the strength of its operations there. In a trading update for the 11 months ending 31st August 2024, Barloworld reported revenue down by 7.4% and net debt reduced from R6.3 billion to R3.5 billion. The company attributed the challenging trading environment in its southern African portfolio to being somewhat balanced by the expansion in Mongolia, driven by government-led infrastructure projects and increased demand for Mongolia's minerals and resources, especially from China. Technically, the share experienced a sharp fall in March 2020 due to COVID-19, followed by a sideways movement in an extended "island formation." However, there has since been an upside breakout from the island, and the share has broken through its long-term downward trendline. On 9th April 2024, the share gave a strong on-balance-volume (OBV) buy signal and has been rising steadily since. At its current price and with a P/E ratio of 7.66, the share appears to offer good value. Nevertheless, the situation in Ukraine and Russia remains a critical factor for Barloworld. On 13th September 2024, the company announced that it might be in violation of US sanctions against Russia due to exports made to its Russian subsidiary. This news caused the share price to drop sharply. While the stock still appears undervalued, further developments regarding US sanctions could have a major impact on its future performance.
JSE:BAW
by PDSnetSA
Our opinion on the current state of METAIR(MTA)Metair (MTA) is a company that produces energy solutions, primarily batteries, and components for the vehicle manufacturing sector. It operates in Africa, Europe, and the Middle East, with its energy storage business located in Turkey under the "Mutlu" operation. The company is well-positioned to grow as the automotive industry transitions from internal combustion engines to electric vehicles. Metair has announced its intention to split its European acid battery business from its South African automotive components business, which could unlock value in the future. Regarding the floods in Natal, Metair reported minimal damage to its facilities and a prompt return to normal operations. However, one of its major Original Equipment Manufacturer (OEM) customers suffered significant damage, temporarily suspending production. Metair received a R150 million insurance payout for business interruption related to the floods. For the six months ending 30th June 2024, Metair reported a 4% increase in revenue, but a headline loss of 3c per share compared to a profit of 41c in the previous period. The company's net asset value (NAV) rose by 12% to 2923c per share. Metair noted that the period required agility and mitigating actions to manage the negative impacts of lower customer demand and volume variability from South African OEMs. The share price has been on a downward trend since October 2021, and we recommend waiting for a clear break above its downward trendline before considering further investment. Although the share has been rising since June 2024, it has not yet broken through its long-term downward trendline. On 6th December 2023, Metair announced that CEO Sjoerd Douwenga would resign effective 31st January 2024 due to ill health. On 16th September 2024, the company announced the sale of its entire shareholding in its Turkish operation, Mutlu, for R1.95 billion, which caused a sharp rise in the share price. The sale of Mutlu provides the company with additional capital and could further boost its balance sheet.
JSE:MTA
by PDSnetSA
Our opinion on the current state of OMUTUAL(OMU)Old Mutual (OMU) is a leading African financial services group offering a wide range of financial solutions to retail and corporate customers across 17 countries, with primary operations in South Africa and the rest of Africa, along with niche businesses in Latin America and Asia. The company is what remains after the unbundling of Quilter, Brightsphere, and most of Nedbank from the original Old Mutual Plc, which was listed on the London Stock Exchange. Some estimates suggest that Old Mutual is currently trading at around 30% below its embedded value. The company manages approximately R1.1 trillion in assets. A significant portion of its recent losses was due to an R8 billion write-down in its investment in Nedbank, which has since started to recover. As part of this recovery, Old Mutual unbundled 62 million Nedbank shares worth about R10.4 billion, distributing them to shareholders at a ratio of 1.32 Nedbank shares for every 100 Old Mutual shares held. Like many insurers, Old Mutual has been vulnerable to the impact of the COVID-19 pandemic, prompting the company to increase its provisions by R2 billion. Despite these challenges, Old Mutual's results for the six months ending 30th June 2024 were positive, with headline earnings per share (HEPS) up by 7% and a return on net asset value (NAV) of 12.6%. The company highlighted that adjusted headline earnings, a key metric for distributable earnings, grew by 3%, supported by a 14% increase in shareholder investment returns driven by improved performance in South African equities. With a price-to-earnings (PE) ratio of 7.95 and a dividend yield (DY) of 4.92%, Old Mutual appears relatively undervalued. Technically, the share has been moving sideways since March 2020, but given its current valuation, it could begin to perform well soon. We view this blue-chip stock as inexpensive at its current price, making it a potential buying opportunity for long-term investors.
JSE:OMU
by PDSnetSA
Our opinion on the current state of GEMFIELDS(GML)The Gemfields Group (GML), formerly known as the Palinghurst Group, is a mining company with two main projects: (1) Kagem, the world's largest producer of emeralds in Zambia, and rubies at Montepuez in Mozambique; (2) Jupiter Mines, a South African manganese producer. The group is led by Brian Gilbertson, the former CEO of BHP Billiton, who saw an opportunity to consolidate and professionalize the semi-precious stones market, which was historically under-developed. This vision led to the establishment of Gemfields' operations. In April 2018, Gemfields listed Jupiter Mines on the Australian Stock Exchange (ASX), disposing of 60% of the company as part of its strategy to focus solely on gemstones, moving away from being a diversified mining company. The Gemfields share is relatively well-traded, with approximately R500,000 worth of shares exchanging hands daily. However, like all commodity shares, Gemfields is exposed to market risks, particularly in relation to emerald and ruby prices, as well as the operational risks of mining in third-world countries. Despite these risks, the company has carved out a niche in the gemstone industry, where competition is limited, positioning it to perform well as global economic conditions improve. On 24th October 2022, Gemfields announced that operations at the Montepuez Ruby Mine (MRM) had resumed after a temporary halt following an insurgent attack 12 kilometers away from the mine. Additionally, on 7th August 2023, the company revealed plans to construct a new processing plant that would triple its ruby output from the Montepuez mine. For the year ending 31st December 2023, Gemfields reported a 23% drop in revenue and a headline loss of 0.9c (US) per share compared to a profit of 4.8c in the previous year. The company attributed this to the cancellation of its higher-quality emerald auction in November 2023 and a write-down of its non-core 6.54% equity holding in Sedibelo Resources, a platinum group metals mining company. In its update for the six months ending 30th June 2024, Gemfields reported total auction revenues of $121 million and a net debt of $44.4 million. The construction of MRM's second processing plant is on budget and on track for completion by the end of H1 2025. In a trading statement for the same period, the company estimated that headline earnings per share (HEPS) would decline by 21% in rands, despite generating auction revenues of $120.6 million and an additional $6.6 million from its Fabergé division. Technically, Gemfields' share price experienced a strong upward trend, which began after an island formation, but that trend was broken in July 2023. Currently, the share remains in a downward trend, and we recommend waiting for the downward trendline to be broken before considering any new positions. On 11th June 2024, Gemfields announced the appointment of Bruce Cleaver as Chairman. In its June 2024 auctions, the company sold $68.7 million worth of rubies at an average price of $316.95 per carat, reflecting the ongoing demand for its gemstones.
JSE:GML
by PDSnetSA
Our opinion on the current state of CHOPPIES(CHP)Choppies (CHP) is a Botswana-based grocery retailer with 212 stores operating in South Africa, Botswana, Zimbabwe, Zambia, and Kenya. It has a primary listing on the Botswana Stock Exchange (BSE) and a secondary listing on the JSE. The grocery market in Southern Africa is highly competitive, and Choppies, being a relatively small player, faces challenges in competing with larger chains that have greater buying power. The company was suspended from trading on the JSE for two years (from November 2018) due to various issues, but resumed trading on 13th November 2020. In its results for the year ending 30th June 2024, Choppies reported a 31.7% increase in revenue. However, headline earnings per share (HEPS) from continuing operations declined by 20.7%. The company attributed the positive impact on group results to the acquisition of Kamoso, while the economic difficulties in Zimbabwe negatively affected its performance. Choppies is clearly recovering from a difficult period, including its prolonged suspension on the JSE. Trading volumes are still relatively low, with about R38,000 worth of shares changing hands daily on average, making it a risky option even for small investors. However, the increasing trading volumes suggest that investor interest may be growing, which could improve liquidity over time.
JSE:CHP
by PDSnetSA
1
Our opinion on the current state of GFIELDS(GFI)Gold Fields (GFI) is a relatively high-cost international gold mining company with one mine in South Africa—South Deep. Acquired in 2006, South Deep has been a challenging asset for Gold Fields, with the company investing a total of R32 billion (R22 billion for the purchase and R10 billion for development) over 14 years to make the mine profitable. Brett Kebble once famously described South Deep as "The world's most expensive long drop," reflecting the operational difficulties the mine has faced. Located 3 kilometers deep, South Deep is technically complex but holds the second-largest unmined gold resource in the world, which has kept Gold Fields committed to its development. In an effort to lower costs and boost efficiency, Gold Fields has cut R800 million in costs and R400 million in capital expenditure at South Deep. Additionally, the company is working with an independent power producer (IPP) to build a 50MW energy project in South Africa. On the international front, Gold Fields has invested $502 million over the last two years to ensure that the Damang and Gruyere operations produce 2 million ounces of gold per year over the next decade. The company is also focusing on bringing the new Salares Norte gold mine in Chile into production. On 11th July 2022, Gold Fields announced plans to list on the Toronto Stock Exchange and introduced a dividend policy that will pay out between 30% and 45% of profits. Its long-term investment in South Deep is starting to show promise, with production expected to increase by 25% over the next four years. On 12th August 2024, the company announced the acquisition of the remaining 50% of Osisko Mining for $1.57 billion (R29 billion), expanding its global operations. However, in its results for the six months ending 30th June 2024, Gold Fields reported a 20% decline in attributable production to 918,000 ounces, with all-in sustaining costs rising to $2,060 per ounce. Earnings per share (EPS) dropped by 22% to 40c (US), compared with 51c in the previous period. The company noted that "Group performance in H1 2024 was impacted by weather-related events and operational challenges at some of our assets." In a trading statement for the same period, Gold Fields estimated a 21% decline in headline earnings per share (HEPS) in rands. Despite the challenges, the company generated auction revenues of USD 120.6 million and an additional USD 6.6 million from Fabergé, contributing to profitability, albeit at a lower level than the previous year. Technically, Gold Fields' stock is highly volatile and sensitive to fluctuations in the international gold price. However, the stock has been in an upward trend over the past five years, making it a volatile but potentially rewarding commodity play for investors seeking exposure to gold.
JSE:GFI
by PDSnetSA
Our opinion on the current state of PEPKORH(PPH)Pepkor Holdings (PPH), formerly known as Pep, is 71.01% owned by Steinhoff International. Following the collapse of Steinhoff due to admissions of "accounting irregularities," Pepkor rebranded to distance itself from the negative publicity associated with its parent company. The group includes well-known retail brands such as Ackermans, PEP Stores, Bradlows, and HiFi Corporation. Since Steinhoff's troubles in December 2017 and the impact of the COVID-19 pandemic, Pepkor's share price plummeted to as low as R10 per share in May 2020. However, the company staged a remarkable recovery, more than doubling in the following year. Pepkor raised R1.9 billion in an accelerated book-build, using the proceeds to reduce debt as a precautionary measure. On 3rd February 2022, Pepkor announced the acquisition of 87% of the Brazilian clothing retailer Avenida. Later, on 13th April 2022, the company reported that its Isipingo distribution center suffered significant damage due to flooding in the Natal area, temporarily closing the facility. The company confirmed it had adequate insurance coverage to manage the losses. In its results for the six months ending 31st March 2024, Pepkor reported a 9.5% increase in revenue, though headline earnings per share (HEPS) declined by 3.8%. The company stated, "Sales growth strengthened further in the second quarter - Market share expansion on three-, six-, and 12-month basis (Retailers' Liaison Committee (RLC) March 2024) - Recovery in retail gross profit margin - Avenida expansion accelerated and ahead of plan." Technically, the share has been trending sideways and downwards since November 2021, and it remains vulnerable to fluctuations in consumer spending. While Pepkor is a solid investment, it could be impacted by lower consumer confidence and spending. On 23rd September 2024, PPH was added to the JSE Top 40 index, replacing Amplats. This inclusion is expected to draw more institutional interest and potentially improve its trading volume and visibility in the market.
JSE:PPH
by PDSnetSA
Our opinion on the current state of TRELLIDOR(TRL)Trellidor (TRL) has been a manufacturer of barrier security products, blinds, and security shutters since 1976. The company operates through two main divisions: the Trellidor business, which focuses on security barriers, and the Taylor business, which produces security and decorative blinds. In addition, Taylor imports and distributes cornicing and skirting. Trellidor has 70 franchise outlets across South Africa and a strong, well-recognized brand. It also has a presence in 24 countries, 17 of which are in Africa. As a company closely tied to the construction and home improvement industry, Trellidor’s performance is affected by the broader economic environment. However, it is well-managed, with a strong balance sheet. It stands to benefit from any improvement in the economy and has already gained from the work-from-home trend and low interest rates. The company has been conducting share buybacks, which has helped support its share price. In its results for the six months ending 31st December 2023, Trellidor reported a 6.9% increase in revenue but a 16.1% decrease in headline earnings per share (HEPS). The decline was attributed to "declining revenue in the domestic market; and increased opening debt levels as at 30 June 2023, at higher interest rates." In a trading statement for the year ending 30th June 2024, the company estimated that HEPS would be between 35.68c and 36.52c, compared to 4.2c in the previous year. This significant improvement is largely due to strong performance from the UK division, which offset weak demand in South Africa. While Trellidor is a relatively thinly traded share, with around R52,000 worth of shares changing hands daily, its recent upward movement suggests it may be attracting some institutional interest. Security remains a priority for South Africans, which gives the company a steady demand base. However, the low trading volume makes it a riskier investment.
JSE:TRL
by PDSnetSA