CAPITEC LIMITED Reasons for execution
1)PWH LiquidationDATION
2)+ChoCH
3)0.382 Fibonacci
4) &
5)1.618 Fib Expansion
BIdcorp Diamond formation ready for a break ups to R526?We need a Weekly chart as there is too much chop on the daily.
Bidcorp has been moving nowhere slowly since April 2023.
And during this time it's been moving in a Bullish Diamond Formation.
Why it's bullish is because the previous trend and pole was up.
SO we are expecting a sideways move before the break up and out of the pattern.
Next target will be at R526.74
Our opinion on the current state of ETHOSCAP(EPE)Ethos Capital Partners (EPE) is a private equity fund (PEF), incorporated in Mauritius, which invests in unlisted companies for long-term capital appreciation on behalf of its investors. Like most investment holding companies, Ethos trades at a significant discount to its net asset value (NAV). Fifty-six percent of their assets are in South Africa and 39% in the rest of Africa. It has stakes in Tymebank, Ster Kinekor, and Brait. The risk in this company appears to be minimal since it does not invest a significant proportion of its funds in any one investment, and its investments have performed well in the circumstances. It does not pay dividends, so the investor has to look for a capital gain.
In its results for the six months to 31st December 2023, the company reported net asset value (NAV) down 15% at 731c per share. The company said, "The value of the unlisted portfolio was slightly down (3%) over the six-month period, with positive returns from Synerlytic, Crossfin, Gammatek and TymeBank and Twinsaver offset by devaluations in Echo, Kevro and Optasia (which was impacted by the significant devaluation in the Nigerian Naira ('NGN'))."
In an announcement on 24th June 2024, the company reported that its NAV on 31st March 2024 was 10,24c and announced the imminent unbundling of its holding of Brait shares. Ethos shareholders will get 0,50857 Brait shares for every Ethos share held on 9th July 2024.
EPE is well-traded with an average of over R560,000 worth of shares changing hands every day. It made a low at 370c on 25th March 2020 and has since started to move up as its investments recover from COVID-19 restrictions and more recently from the sell-off due to the Ukraine crisis.
In our opinion, this should turn out to be a good investment at current levels where it is still trading well below its NAV, depending on the progress of the current trend in world markets.
Our opinion on the current state of INVICTA(IVT)The Invicta Group consists of five operational segments, namely:
1. Replacement Parts, Services, & Solutions: Industrial
2. Replacement Parts, Services & Solutions: Auto-agri
3. Capital Equipment
4. Replacement Parts, Services & Solutions: Earthmoving Equipment
5. Kian Ann Group
Christo Wiese (of Steinhoff fame) is the chairperson and owns a 37.57% shareholding. In its results for the year to 31st March 2024, the company reported revenue up 7% and headline earnings per share (HEPS) down 4%. The company said, "...the gross profit margin increased by 0.5%, from 32.5% to 33.0%. Selling, administration, and distribution costs were 10% higher. The inclusion of Imexpart Limited acquired during the current financial year contributed 4% to the base cost. Further, we took asset impairments of R22 million in the current financial year."
Technically, the share gave a solid on-balance volume (OBV) buy signal on 5th June 2020 at 644c per share. Since then, the price has risen to 2760c but it is still well below its NAV of 5250c per share. We believe that it will continue to perform.
Our opinion on the current state of MC-MINING(MCZ)MC Mining (previously "Coal of Africa") (MCZ) is a small metallurgical coal-mining company with a single producing mine, Uitkomst. Aside from Uitkomst, the company is developing the Makhado project, the Vele colliery, and MbeuYashu. The Makhado project is the company's flagship operation in the Limpopo province. It is an opencast mine with a life of 16 years and the potential to be extended. In January 2019, the company announced the acquisition of surface rights which will make the Makhado project viable. Production is now expected to commence at the end of 2020, and the mine is expected to produce 800,000 tons of hard coking coal and 1 million tons of export thermal coal. The Makhado purchase improves the risks substantially and makes this into a viable investment.
The IDC has provided R245m for the project, but a further R530m is still needed. The company owns 69% of Baobab Mining and Exploration, which owns the Makhado project.
In its results for the six months to 31st December 2023, the company reported revenue up 80% and a headline loss of 145c (US) per share - up from a loss of 50c in the previous period. The company said, "International thermal coal prices remained under pressure during the period and the average API4 export coal price for the six months was $112/t (H1 FY2023: $265/t). Despite the depressed coal prices, Uitkomst Colliery generated pleasing results for the period with revenue of $16.3 million (H1 FY2023: $14.0 million), yielding a gross profit of $1.5 million (H1 FY2023: $3.9 million) and operating cash flows of $5.1 million."
On 8th April 2024, Business Day reported that Goldway Capital had received acceptances from shareholders amounting to 83.67% of the issued shares - more than the 82.15% required for the takeover to proceed. On 24th June 2024, the company announced that Godfrey Gomwe would resign with effect from 30th June 2024.
Technically, the share spiked up between July and September 2022 before falling back again to lower levels. This remains a volatile commodity share with about R280,000 worth of shares changing hands on average each day, high debt levels, and all the risks of mining exploration and development.
Our opinion on the current state of NASPERS-N(NPN)Naspers (NPN), Africa's largest company, is a massive international social media, gaming, and IT company whose main asset is 73% of Prosus (PRX), which in turn owns 26% of Tencent - a Hong Kong-listed company that provides social media services and gaming in China. Tencent has 10 of China's 20 top mobile applications, reaching over 1.1 billion users.
Naspers itself has an archaic capital structure dominated by its 907,128 unlisted "A" ordinary shareholders. Each "A" ordinary share has 1000 times the voting power of the 438.3 million "N" shares which are listed - so they effectively control the company with 67.4% of the vote. Naspers has many other interests, mainly in e-commerce, and operates in 120 countries worldwide. It has recently bought a further $500 million worth of shares in Letgo - an American classifieds platform that has more than 100 million users. It also owns Takealot and Mr. D Food in South Africa among other interests - but all those other investments are dominated by Tencent. The share's discount to its inherent value is mainly because of its "N" share structure which is frowned upon in the investment community.
Naspers has retained its online shopping operations, Takealot, Mr. D Food, PayU, and Autotrader. On 11th September 2019, Naspers separately listed Prosus on the Euronext in Amsterdam, which houses all its international assets including its stake in Tencent, Mail.Ru, and other internet brands. Naspers held 73% of Prosus and there was a 25% free float. The company has a secondary listing on the JSE. One of the benefits of the Euronext listing is that it removes the risk inherent in the rand. Prosus is now Europe's largest consumer internet company. Tencent continued to grow through the pandemic as more people turned to online gaming.
In its results for the year to 31st March 2024, the company reported revenue up 8% and core headline earnings up 88% to $2.1 billion. The company said, "This was mainly driven by the improved profitability of our Ecommerce consolidated businesses and equity-accounted investments, particularly Tencent, as well as higher net interest income during the year. Headline earnings from continuing operations rose US$1.2 billion to US$1.4 billion. At corporate level, Naspers has a net debt position of US$737 million, comprising US$14.6 billion in central cash and cash equivalents (including short-term cash investments), net of US$15.4 billion in central interest-bearing debt (excluding capitalised lease liabilities). In addition, we have an undrawn US$2.6 billion revolving credit facility."
Technically, since October 2022 the share staged a recovery, and then moved sideways between March 2023 and April 2024. Since then it has broken to new higher levels but still has not risen above its all-time high of R4090 made on 21st November 2017. We still regard this share as under-priced at the current price.
On 18th September 2023, the company announced that Bob van Dijk would resign as CEO with immediate effect. On 17th May 2024, the company announced that Fabricio Bloisi would take over as CEO of both Naspers and Prosus with effect from 1st July 2024.
Our opinion on the current state of ORIONMIN(ORN)Orion Minerals (ORN) is an Australian exploration company listed on the JSE since September 2017 and on the Australian Stock Exchange in Sydney. The company is currently seeking funding for its copper and zinc mine in Prieska, South Africa. The Prieska mine was previously operated by Anglovaal, but ceased operations in 1990 after 20 years, during which it extracted more than 1 million tons of zinc and 430,000 tons of copper concentrate. A significant challenge for the mine is flooding, and Orion aims to exploit this resource using a mechanized approach with minimal labor.
Vedanta Resources, which operates the nearby Gamsberg mine, is considering building a smelter that could service all mines in the area, including resources from Namibia. Before construction can begin on the Prieska mine, nearly 9 million cubic meters of water must be pumped out from the existing structure. Production is expected to commence in 2024. Mining exploration is one of the riskiest investments on the JSE, making this a volatile penny stock engaged in a particularly high-risk venture.
On 8th September 2022, the company announced securing R34.5m from the Industrial Development Corporation (IDC) for a 43.75% stake in its new Okiep copper mining company. Additionally, on 21st October 2022, Orion agreed to a R250m line of credit with the IDC.
In its results for the six months to 30th June 2023, Orion reported a loss of A$15.2m, unchanged from the previous period, with a headline loss per share of 31c compared to a 33c loss in the previous period. The company stated, "The IDC to become a strategic funding partner at project level in both the Okiep Copper Project and Prieska Copper Zinc Mine, with pre-development funding agreements reached, providing a total of ZAR 284.58M for Orion’s two flagship projects."
In a report on the three months to 30th September 2023, Orion updated the PCZM +105 Mineral Resource, increasing the resource to 2.3Mt at 1.7% Cu and 1.6% Zn, including an Indicated Resource of 1.9Mt at 1.82% Cu and 1.70% Zn, bringing the total PCZM Mineral Resource to 31Mt grading 1.2% Cu and 3.6% Zn. As of 30th September 2023, the company had $15.74m in cash.
On 17th April 2024, the CEO confirmed the fulfillment of most outstanding conditions for the acquisition of the Okiep mineral rights, initially announced on 2nd February 2021. The same day, the company requested a halt on the trading of its shares due to a "material announcement on exploration results at Okiep copper mine." On 22nd April 2024, Orion announced a "Spectacular High-Grade Copper Intercept at Okiep Copper Project, Flat Mines Area 49m at 4.89% Cu including 10.23m at 12.47% Cu," causing the share price to jump from 19c to 24c.
Investors should exercise caution with this loss-making penny stock and maintain a strict stop-loss level. On 24th June 2024, the company reported strong assay results at the Okiep Copper Project, Flat Mine East, confirming high-grade potential with intercepts of 9.27m at 3.01% Cu and 15m at 4.80% Cu within 78m averaging 1.57% Cu.
Our opinion on the current state of PBT-GROUP(PBG)PBT Group (PBG) is a fledgling IT company in the general finance sector. It has operations in South Africa and Europe, having recently exited operations in the Middle East and the rest of Africa. The company operates in data analytics, data visualisation, application development, strategic consulting, the cloud, and data platforms. The company did a 10-for-1 consolidation earlier.
The group has established agreements with a number of European companies to expand its operations into Europe. Agreements have been concluded in the Netherlands and Ireland and are imminent in the UK. This is a company that will probably benefit from COVID-19 because it is involved in digitalisation and the facilitation of remote work sites.
In its results for the six months to 30th September 2023, the company reported organic revenue growth of 7.6% and headline earnings per share (HEPS) down 18.6%. The company said, "Profit after tax increased by 9.9% to R47.9 million with profit attributable to the owners increasing by 0.8% to R29.7 million. The business remains sound and continues to generate healthy cash flows. During the past 18 months, PBT Group (Australia) Proprietary Limited (PBT Australia), a wholly-owned subsidiary within the Group, underperformed compared to the rest of the Group. The company has resolved to dispose of PBT Australia."
In a trading statement for the year to 31st March 2024, the company estimated that it would make a headline loss of between 21.5c and 26.1c per share compared with a profit of 82.2c in the previous year. We suggest that since this company has been radically re-invented, you may need to allow some time for the direction of the trend to be established and for the effect of its new European operations to become apparent.
The share has been drifting down for most of 2023 and 2024 so far. You should wait for a new upward trend to emerge.
Our opinion on the current state of PPCPPC is a leading manufacturer and supplier of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa. It has eleven cement factories in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia with a total production capacity of 11.5 million tons. It produces aggregates at its Mooiplaas quarry in Gauteng, which is the largest aggregates producer in South Africa. It has twenty-six batching plants for ready-mix in South Africa and Mozambique.
Importantly, the company has managed to re-negotiate its lending so that it no longer requires a highly dilutive rights issue. No dividends have been paid for the last five years. The carbon tax which came into effect on 1st June 2019 costs PPC between R100m and R120m, which it intends to pass on to consumers. This will make its pricing less competitive against foreign imports unless tariffs can be increased.
PPC is basing its hopes on growth from the rest of Africa. In our view, PPC has been suffering together with the entire construction industry from the lack of new government and quasi-government projects in South Africa. It has been compensating by cutting costs and investing in the rest of Africa, but we regard the cement industry as over-supplied currently, and therefore difficult to manage. The company has also been benefiting from the government's new "localisation" policy, in terms of which government operations have to buy locally produced cement.
In its results for the year to 31st March 2024, the company reported revenue up 20.6% and headline earnings per share (HEPS) of 19c compared with a loss of 20c in the previous year. The company said, "The SA and Botswana group cement revenues increased only marginally by 5.2%, driven by price increases and increased sales of clinker to Zimbabwe, which positively offset the declining cement sales volumes. Revenue from the materials businesses declined by 6.0% relative to the prior year."
Technically, the share was in a downward trend since its high of 568c in October 2021 and we advised waiting for a clear break up through a 65-day moving average which happened on 2-11-2022 at a price of 241c. Since then, the share has moved sideways and upwards to reach 369c, but remains volatile. The company is conducting a R200m share buy-back and has reduced its debt by 20%. On 26th January 2022, the company reported that the CEO and another director had sold about R240.5m worth of shares, which took the share price down sharply - but is not necessarily thought to be negative in the longer term.
Our opinion on the current state of PROSUS(PRX)On 11th September 2019, Naspers (NPN) separately listed Prosus (PRX) on the Euronext in Amsterdam to house all its international assets including its stake in Tencent, Mail.Ru, and other internet brands. Naspers holds 73% of Prosus and there is a 25% free float. One of the benefits of the Euronext listing is that it removes the risk inherent in the rand, so Prosus is a rand-hedge which rises when the rand weakens and vice versa. Prosus is now Europe's largest consumer internet company.
The main asset of Prosus is 26% of Tencent, a Hong Kong-listed company that provides social media services and gaming in China. Tencent has 10 of China's 20 top mobile applications reaching over 1.1 billion users. Tencent remains vulnerable to the authoritarian regulators in China and their involvement in the gaming industry.
Prosus describes itself as, "...a global consumer internet group operating across a variety of platforms and geographies and is one of the largest technology investors in the world. The Prosus Group's businesses and investments serve more than 1.5 billion people in 89 markets and are the market leaders in 77 of those markets. The Prosus Group's consumer internet services span the core focus segments of Classifieds, Payments and Fintech as well as Food Delivery, plus other online businesses including Etail and Travel."
On 18th May 2022, Tencent issued a statement saying that its profit in the March 2022 quarter was half of what it had been in 2021, leading to a negative impact on Prosus shares. On 24th June 2022, the company said that it intended to sell some of its Tencent shares to finance an extended open-ended share buy-back program. This caused the share price to jump up. On 24th October 2022, the re-election of Chinese leader Xi Jinping for a third term caused Prosus shares to fall heavily. Jinping is part of a faction in Chinese politics which aims to keep the "disorderly expansion of capital" under control.
In its results for the year to 31st March 2024, the company reported revenue up 11% and core headline earnings up 84%. The company said, "We have created additional value for our shareholders by continuing the open-ended share-repurchase programme. Since its inception in June 2022, this programme has reduced the free-float share count by 21% and generated US$30bn of value for shareholders."
Technically, the Prosus share has been trending up since November 2023. We still believe that the share is undervalued at current levels. On 18th September 2023, the company announced that CEO, Bob van Dijk, would resign with immediate effect. On 17th May 2024, the company announced that Fabricio Bloisi would take over as CEO of both Naspers and Prosus with effect from 1st July 2024.
Our opinion on the current state of RCLRCL is a large producer of food, sugar products, and chicken in South Africa, which is owned 80.4% by Remgro. The company owns a number of very well-known South African brands such as 5 Star maize meal, Farmer Brown, and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. It was impacted by the listeriosis outbreak, which damaged the market for processed meats and caused costs estimated at about R158m. The company has been impacted by the weak economy, low consumer spending, and high unemployment. The company, through the SA Poultry Association, is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken.
On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100m shares at R8,05 each. On 29th March 2023, the company announced that it had sold Vector Logistics for R1,25bn. In its results for the six months to 31st December 2023, the company reported revenue up 8,4% and headline earnings per share (HEPS) up 52,6%. The company said, "The Vector Logistics segment was classified as a discontinued operation during the second half of the previous financial year. Despite the negative impact of Avian Influenza in the current period, Rainbow delivered an improved result. Sugar's improvement was achieved, despite lower crop yields and largely attributable to higher market prices."
The share has been moving sideways and downwards since its peak on 9th February 2022. On 4th June 2024, the company announced that it would unbundle and separately list Rainbow Chicken. RCL shareholders will get 1 Rainbow share for every RCL share that they hold on 25th June 2024. On 10th June 2024, the company published Rainbow's pre-listing statement, with the last day to trade being 25th June 2024.
In a trading statement for the year to 30th June 2024, the company estimated that HEPS would rise by at least 75%. The company said, "The expected improvement in headline earnings is driven largely by Rainbow and Groceries." We recommended waiting for a clear break up through the long-term downward trendline - which came on 30th April 2024 at 1050c per share. It has since moved up to 1270c.
UPDATE: PPC shifted the analysis to upside target at R4.26W Formation formed on PPC and there has been a breakout of the downside since December.
The M Formation that formed I expected to breakdown never confirmed and so, the analysis has switched.l
It's not easy making analysis probabilities with low liquid penny stocks like PPC.
Funny I never thought PPC and Penny Stock would be in the same sentence but here we are and it shows how unpredictable markets are.
Price>20 and Price>200 - HPT
Target R4.26
UPDATE: IMP continues to disappoint with the commoditiesM Formation is easily turning into a Triple Top
Price<20
Price>200
Need to wait for breakout for the confirmation. Then the first target will be at R38.07.
It's a bearish outlook for platinum and is a downer for the commodity, but hopefully we get a stock market run up to counter for the drop.
UPDATE: Nampak smooth sailing to the first target at R271.81W Formation formed on Nampak, and we waited for the break.
Then we got the price above 200MA.
Now it's already over half way towards the first target at R271.81.
Looks good and if one wants to lock in profits by moving the stop loss above breakeven, it's perfectly fine to do so.
PPH with Potential False BreakdownThe monthly chart of PPH shows we had a falling wedge from which price broke to the downside, we have had a swing low on the monthly chart, if we recover the wedge we will have confirmation that the move down was a false breakdown, this will be a very bullish setup with price expected to move swiftly to close above the purple resistance.
Stop-Loss If we get price going below R16.03 we would have a failed daily cycle meaning there is a high chance we go lower than recent low.
Our opinion on the current state of CORONAT(CML)Coronation (CML) is one of South Africa's largest asset managers and the only one listed on the JSE. Founded in 1993, the company grew very well until 2015. At that point, the founding CEO resigned and a new CEO, Adrian Pillay, took over. Pillay is eminently well-qualified for the job, but things have not gone well since he took over.
The company was heavily invested in African Bank and lost a lot of money there. It was also heavily invested in Steinhoff. These missteps have caused the investment community to re-evaluate Coronation's ability to keep choosing winners on the JSE and elsewhere. The result has been an outflow of institutional funds. The fund management business is all about confidence. As a fund manager, you need to get institutional fund managers to trust your judgment. Usually, that means employing a team of very highly qualified people with solid track records in managing funds. Unfortunately, no matter how good your team is, they are going to make mistakes and lose money sooner or later.
On 8th February 2023, the company announced that it had lost a SARS appeal to have it pay additional taxes. Accordingly, it may have to suspend its dividend. This caused the share price to drop sharply.
In its results for the six months to 31st March 2024, the company reported revenue up 4.3% and headline earnings per share (HEPS) of 200.5c compared with 6.2c in the previous period. Assets under management (AUM) increased 5% to R631bn. The company said, "Net outflows for the period were in line with our expectations at 4% of average AUM. This is largely due to the weak SA savings industry, to which Coronation is significantly exposed. It also reflects the experience of the broader industry, as active asset managers around the world experience persistent net outflows."
Technically, Coronation's shares rose very strongly from 2008 until its peak at R115 per share on 30th December 2014. After that, and under new management, it fell to a low of 2541c with the outbreak of COVID-19. We recommended applying a long-term downward trendline and waiting for a clear upside break, which happened on 21st June 2024 at 3599c. The share was added to our Winning Shares List (WSL) on 11th May 2024 at 3281c. It has since moved up to 3599c and looks like it will rise further.
On 21st June 2024, the Constitutional Court handed down a ruling in Coronation's favour, which means that the company is not liable for a R794m claim by SARS. The company has said that the money it had put aside to meet an adverse judgment could be returned to shareholders.
Our opinion on the current state of MARSHALL(MMP)Marshall Monteagle PLC (MMP) is a diversified investment holding company based in the UK, with strategically located offices globally. The company is involved in procurement, logistics, and trading of various hard and soft commodities, industrial raw materials, and consumer food and non-food products. Additionally, the company holds non-operational investments in commercial and industrial properties as well as listed equities.
In its results for the six months to 30th September 2023, Marshall reported a 19% decline in revenue from continuing operations and headline earnings per share (HEPS) of 2,2c (US), compared with a loss of 6,9c in the previous period. The company stated, "Profit after tax on continuing operations for the period was US$674,000, compared to a loss after tax of US$2,720,000 for the six months period to 30 September 2022. In constant currency terms, the profit was US$554,000."
In a trading statement for the year to 31st March 2024, the company estimated that HEPS would be 5,8c (US) compared with a loss of 4,4c in the previous period. Despite the improvement in financial performance, the share remains very thinly traded with only R37,000 worth of shares changing hands each day on average, making it risky for private investors.
Our opinion on the current state of VUNANI(VUN)Vunani (VUN) is a black-owned financial services group with interests in asset management, investment, banking, property, and stockbroking. It also has an interest in coal mining, which has been performing well with the rise in coal prices.
In its results for the year to 29th February 2024, the company reported revenue up 2% and headline earnings per share (HEPS) of 7,4c compared with 30,1c in the previous year. From a private investor's perspective, the biggest problem with this share in the past was that it was too thinly traded to be a practical investment. In recent weeks, however, the value traded on average each day has risen to R128 000, making it more viable.
There remain many days when there are no trades at all, so it remains quite risky.
Sasol EnergyReason for execution
1)PML & PWL LIQUIDATED
2)+BOS & ChoCH
3)0.236 Fibonacci Retracement
4) positive OF
5)1.618 Fib Expansion
