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$JSEPIK - Pick n Pay: Is There Life In This Stock?See link below for previous analysis. Could a bear market that began in August 2016 be finally over? There is not enough technical evidence yet but the rally from 1662, preceded by MACD convergence, could provide a bigger relief rally or it could just be a dead cat bounce. I am still looking at the large Elliott Wave structure as a triple- zigzag (WXYXZ). I am sitting on my hands on this one but I will monitor price above 1662 cps.
JSE:PIKLong
by Loyiso_BlaqueSoros_Mpeta
Mustek`s Cup & Handle pattern in play.After tumbling from its all time highs of R18.05 in April 2023, JSE's Mustek Limited went on a steep downtrend and reached lows around R8.00 beginning of April 2024. The instrument has since formed a Cup & Handle pattern from this R8.00 zone on the 'Daily' line chart, giving bullish reversal sentiments up to at least R10.44 and a +13.4% run chance from current levels. An aggresive long position can be initiated at current market order, otherwise conservatively around R8.98 to target TP1 at R10.44, TP2 at R11.19 and TP3 at R12.25 and all with a Stop Loss at R8.40. A greed target can also be placed at around R13.27 while utilising the same stop loss. Bearish sentiments will be in play once the intrument slips below R8.50.
JSE:MSTLong
by Source_Sailor
2
Our opinion on the current state of MC-GROUP(MCG)MultiChoice (MCG) is a leading entertainment company in Africa and one of the fastest-growing pay-TV broadcast providers in the world with 21.1 million subscribers in 50 countries. The company's 90-day subscriber base is split 42% (8.9 million) in South Africa and 58% (12.2 million) in the rest of Africa. The share was spun out of Naspers and separately listed on the JSE on 27th February 2019. This company is probably close to an ideal company for the private investor because its income is mostly annuity income, in the form of debit orders, with a very diverse client group. It has virtually no working capital because it is essentially a service company and does not need to carry large stocks. It also does not have a large unskilled or semi-skilled workforce, although it has had union problems in the past. The potential for pay-TV in Africa appears to be substantial but may be eroded by 5G internet access in the future and the existence of free online access through platforms. Icasa (Independent Communications Authority of SA), in its efforts to boost competition, is looking at changing the rules for dominance in the pay-TV market, which may impact on MultiChoice. This may include changing the rules for dominance in sports coverage which has been MultiChoice’s strongest appeal. This would impact on MultiChoice’s ability to negotiate exclusive sports contracts. Obviously, this company is in the home entertainment business which received a boost from the COVID-19 lockdowns. On 2nd March 2023, the company announced that it had entered into an agreement with Sky News and NBC Universal to enhance the Showmax service and make it dominant in Africa. In its results for the year to 31st March 2024, the company reported revenue down 5% and a headline loss per share of 715c compared with a loss of 301c in the previous year. Core headline earnings per share (HEPS) was down 38%. The company said, "The group's 9% decline in active subscribers was mainly due to a 13% decline in the Rest of Africa business as mass-market customers in countries like Nigeria had to prioritise basic necessities over entertainment, while the South African business showed more resilience with a 5% decline." In our view, this is a solid blue-chip share which faces some problems with the alternative products available to its subscribers. On 5th February 2024, MCG reported that Canal+ had increased its stake in MCG to 35.01% triggering a mandatory offer at R105 per share to the remaining shareholders. The company rejected the offer as too low. On 28th February 2024, the company announced that the Takeover Regulation Panel (TRP) had ruled that since Canal+'s ownership of MCG had exceeded 35%, it was required to make a mandatory offer to buy out the remaining shareholders in terms of section 123 of the Companies Act (71 of 2008). On 6th March 2024, the company announced that Canal+ had increased its offer to R125 per share. On 7th April 2024, the company announced that it had reached a cooperation agreement with Canal+ in terms of which it would work with Canal+ to implement the takeover. On 24th April 2024, the company announced that Canal+ had acquired 41.6% of its issued shares and it had filed the required notices with the Takeover Regulation Panel (TRP) and the Companies and Intellectual Property Commission (CIPC). On 16th May 2024, Business Day reported that Canal+ had increased its stake to 45.2%. On 4th June 2024, Canal+ made an offer of R125 per share for all the remaining shares in MC Group which it did not own. Technically, the share had been falling since 6th March 2023 and we recommended waiting for a break up through the 65-day exponential moving average before buying. That happened on 19th December 2023 at a price of 7440c. After that, the share rose to just over R120 on 30th April 2024. Since then it has been drifting down and has broken down through its 65-day exponential moving average.
JSE:MCG
by PDSnetSA
Our opinion on the current state of MOTUS(MTH)Motus (MTH) was unbundled from Imperial (IPL) and separately listed on the JSE on 22nd November 2018. It is a company that owns motor dealerships in South Africa, the UK, and Australia. The company has four divisions: import and distribution, retail and rental, motor-related and financial services, and aftermarket parts. It imports and sells more than 80,000 vehicles per annum and runs 356 dealerships and 134 rental outlets for Tempest and Europcar. It offers vehicle finance and fleet management in South Africa with 730,000 clients and retails parts and accessories for older vehicles through 720 franchised outlets. Altogether, it has a 20% share of the South African retail vehicle market, selling roughly 100,000 vehicles per annum. It is the importer of Hyundai, Kia, Mitsubishi, and Renault. The CEO, Osman Arbee, said that the company plans to pay generous dividends because of its strong cash flows. The company generates 65% of its turnover in South Africa and 93% of its operating profit. On 1st October 2021, the company announced that it had acquired FAI Automotive in the UK for R550m. In its results for the six months to 31st December 2023, the company reported revenue up 11% and headline earnings per share (HEPS) down 27%. The company said, "The South African operations contributed 55% to revenue and 66% to EBITDA for the period (2022: 65% and 77%, respectively), with the remainder being contributed by the UK, Australia, and Asia. The Group's passenger and commercial vehicle businesses, including the UK and Australia, retailed 64,076 new units (2022: 66,147), and 43,747 pre-owned units (2022: 43,422) during the period." In a trading statement for the year to 30th June 2024, the company estimated that HEPS would decrease by between 25% and 35%. The company said, "...consumers are experiencing considerable strain on their disposable income. The higher-than-normal vehicle and parts price inflation, exacerbated by the impact of the weak Rand, has negatively impacted affordability." Technically, the share has fallen from a high above R130 in September 2022 to current levels around R86. It is on a P:E of 4.78, which makes it reasonably priced in our estimation. We see this as a very well-established blue-chip share that is to some extent dependent on the state of the economy and the level of consumer spending. We think it will turn out to be a good investment, especially as the economy improves and provided the loadshedding problem can be contained.
JSE:MTH
by PDSnetSA
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 six months to 30th September 2023, the company reported revenue up 20.9% and headline earnings per share (HEPS) of 26c compared with a loss of 5c in the previous period. The company said, "Increased demand is required to enable us to more effectively utilise the capacity available in our primary market. PPC Zimbabwe saw a strong recovery across all key metrics when compared to the negative impact of the planned shutdown in the prior comparative period." In an operational update for the 10 months to 31st January 2024, the company reported revenue up 27.6%. The company said, "Revenue growth in the South African and Botswana cement business continued to be driven by price increases, positively offsetting the declining sales volumes as experienced in the half year." In a trading statement for the year to 31st March 2024, the company estimated that HEPS would be between 27c and 28.5c compared with a loss of 9c in the previous period. The company said, "...the current period EPS and HEPS numbers being impacted by a strong performance by PPC Zimbabwe in the current period compared to the prior period in which it had an extended kiln shutdown. In addition, in the current period, PPC Zimbabwe changed its functional currency from the Zimbabwean dollar to the United States dollar." 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 2nd November 2022 at a price of 241c. Since then, the share has moved sideways and upwards 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 summary, PPC is making strides in improving its financial health and operational efficiency, particularly with the re-negotiation of its lending and the share buy-back program. The company's focus on cost-cutting and growth in Africa, coupled with the positive impact of the localisation policy, suggests a potential for recovery. However, the over-supply in the cement industry and the competitive pricing challenges due to carbon tax and foreign imports add a layer of risk. Investors should be cautious and monitor for sustained improvements in performance and stability in the share price.
JSE:PPC
by PDSnetSA
Our opinion on the current state of SPAR(SPP)Spar (SPP) runs a chain of supermarkets across Southern Africa with 2402 stores. It also operates the Build-It chain in hardware and building materials and the Tops Liquor chain. The company has operations in Southern Ireland under the name "BWG," which operates through 1392 stores, and the Spar chain of 388 stores in Switzerland. Spar is expanding into Poland with the acquisition of 80% of Piotr i Pawel, which has 77 delicatessens, for 1 euro. This operation is expected to break even in about two years as its outlets are converted into Spar stores. Spar spent about 80 million euros to stabilize the Polish company. As a group, Spar is a very serious competitor in the South African retail industry, making extensive use of franchising to expand its network. The development of the new Polish enterprise has been frustrated by COVID-19. Its diversification into Ireland and Switzerland gives it a solid rand-hedge component which does not appear to be reflected in its multiple. In its results for the six months to 31st March 2024, the company reported turnover up 7.9% and headline earnings per share (HEPS) down 7.6%. The company said, "While the continuing Group delivered an operating profit of R1.6 billion with a marginal positive improvement on the prior comparative period, net finance costs negatively impacted profit before tax which declined by 11.2%. SPAR Southern Africa reported a total increase in wholesale turnover of 4.8% for all business units. BWG Group (Ireland and South West England) delivered a solid trading performance with turnover increasing by 5.7% for the period in EUR terms, and 16.0% in ZAR terms. Turnover for the Swiss business declined by 4.6% in CHF terms (increased by 8.7% in ZAR terms)." In our view, the share is now underpriced at current levels and represents something of a bargain. We advised waiting for a break up through its long-term downward trendline, which now appears to have happened on these latest results. Spar's diversified operations across different regions and sectors provide a degree of stability and a hedge against the rand. The company's performance in Southern Africa, despite the economic challenges, and its solid results in Ireland and Switzerland, suggest a robust underlying business. The Polish acquisition, though initially challenging, represents a long-term growth opportunity. Given these factors, Spar appears to be a good investment at its current price, especially after breaking its long-term downward trendline.
JSE:SPP
by PDSnetSA
Our opinion on the current state of SPAR(SPP)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 six months to 31st August 2023, the company reported revenue up 4% and headline earnings per share (HEPS) of 18.2c compared with 20.4c in the previous period. The company said, "The group generated total comprehensive income for the period of R35.9 million (2022: R39.3 million), while total profit attributable to equity holders of the company amounted to R28.9 million (2022: R32.3 million)." In a trading statement for the year to 29th February 2024, the company estimated that HEPS would fall by between 63% and 83%. From a private investor's perspective, the biggest problem with this share is that it is simply too thinly traded to be a practical investment. The low trading volume can result in difficulty buying or selling shares at favorable prices and may lead to increased volatility. While Vunani has diverse interests and has shown growth in some areas, the significant drop in HEPS and the thin trading volume make it a less attractive option for private investors. Potential investors should consider these factors and may want to look for more liquid and stable investment opportunities.
JSE:SPP
by PDSnetSA
1
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 six months to 31st August 2023, the company reported revenue up 4% and headline earnings per share (HEPS) of 18.2c compared with 20.4c in the previous period. The company said, "The group generated total comprehensive income for the period of R35.9 million (2022: R39.3 million), while total profit attributable to equity holders of the company amounted to R28.9 million (2022: R32.3 million)." In a trading statement for the year to 29th February 2024, the company estimated that HEPS would fall by between 63% and 83%. From a private investor's perspective, the biggest problem with this share is that it is simply too thinly traded to be a practical investment. The low trading volume can result in difficulty buying or selling shares at favorable prices and may lead to increased volatility. While Vunani has diverse interests and has shown growth in some areas, the significant drop in HEPS and the thin trading volume make it a less attractive option for private investors. Potential investors should consider these factors and may want to look for more liquid and stable investment opportunities.
JSE:VUN
by PDSnetSA
Our opinion on the current state of TELKOM(TKG)Historically, Telkom (TKG) was the government-controlled provider of fixed-line telephone connectivity in South Africa. With the advent of cell phones, Telkom was forced to subsidize the development of its own competition in the form of Vodacom, MTN, and more recently Cell-C. This subsidy took the form of termination rates for calls which are now being phased out. Over the past twenty years, the CEO of Telkom, Sipho Maseko, stated that Telkom has effectively subsidized other networks to the tune of R70bn. Telkom is currently listed and is owned 41% by the government and 11.9% by the Government Employees Pension Fund (GEPF), so it could still be considered to be government-controlled. In reality, it operates as an independent organization divided into five divisions: 1. **Open Serve**: South Africa's primary supplier of wholesale connectivity with the country's largest network. 2. **Telkom Consumer**: The largest supplier of broadband internet connectivity with a growing mobile phone network. 3. **Yellow Pages**: Provides advertising and marketing to local businesses. 4. **BCX**: An ICT solutions company operating in Southern Africa. 5. **Swiftnet**: Formed in April 2018 to house Telkom's masts, towers, and property interests. Swiftnet owns a diverse portfolio of 1,330 properties and has 40 earmarked for development. Telkom is impacted by the rulings of the Independent Communications Authority of South Africa (ICASA) regarding "inter-connect" fees. However, in our opinion, Telkom has been well managed, and its downsizing should result in improved profitability going forward. The company is steadily switching from fixed-line to mobile. On 23rd July 2021, CEO Sipho Maseko announced that he would be stepping down with effect from 30th June 2022. In its results for the six months to 30th September 2023, the company reported revenue up 2.5% and headline earnings per share (HEPS) up 46.7%. The company said, "Profit for the period was boosted by lower depreciation charges and growth in EBITDA, while higher interest rates materially increased net finance costs compared to the comparative period." In a trading update for the three months to 31st December 2023, the company reported revenue up 2% and EBITDA stable at R2477m. The company said, "Our cost-reduction initiatives also contributed to improved operating EBITDA as they partially offset inflationary increases, increased bad debt provisions and the added cost of load shedding." In a trading statement for the year to 31st March 2024, the company estimated that normalized HEPS would increase by between 195% and 205%. The company said, "Growth in earnings has also been positively impacted by lower depreciation and write-offs in FY2024 after asset impairments recognized in FY2023. This growth was partially offset by higher net finance charges and foreign exchange and fair value movements in FY2024." On 22nd March 2024, the company announced that they had sold Swiftnet for R6.75bn to a consortium of investors. The cash will be used to reduce Telkom's debt. Technically, Telkom's share fell from highs of around R98 in June 2019 to levels around R15.00 in March 2020. It has been moving sideways and down since then. The company has high debt levels compared to its market capitalization, which makes it risky for investors. In our view, this company is battling to find a new direction in a very difficult economy and against stiff competition. Despite efforts to improve profitability and reduce debt, Telkom faces significant challenges that make it a risky investment. Potential investors should be cautious and consider the company's high debt levels and the competitive landscape.
JSE:TKG
by PDSnetSA
Old Mutual trading styles for buys - Target R13.70There are many different ways to trade Old Mutual looking at this chart. 1. Reversal trader They will wait for the support to establish as it's done at R10.00 and then will buy and hold until it reaches the top of the range. 2. Breakout trader WIll wait for the price to go up and complete the W Formation where it will breakout and trade up to R13.70 3. High probability trader This one will have to wait the longest for the price to not only close above the W Formation but also close above the Downtrend and the 20MA and 200MA. Either way, Old Mutual does look bullish as things stand. Enjoy!
JSE:OMULong
by Timonrosso
1
Our opinion on the current state of GEMFIELDS(GML)The Gemfields Group (GML) (previously Palinghurst Group) is a mining group that has two major projects: (1) Kagem, the world's largest producer of emeralds (in Zambia) and rubies (at Montepuez in Mozambique), and (2) Jupiter Mines, a South African producer of manganese. The group is led by Brian Gilbertson, previously the CEO of BHP Billiton. Gilbertson identified that the semi-precious stones market was under-developed and offered an opportunity for consolidation and professional management, hence the Gemfields operation. Jupiter was listed on the Australian Stock Exchange (ASX) in April 2018, and in the process, Gemfields disposed of 60% of that company in line with its decision to cease being a diversified mining company and to focus purely on gemstones. The share is fairly well-traded with approximately R5 million worth of shares changing hands on average every day. Like all commodity shares, it is risky and its fortunes depend on the prices of emeralds and rubies on the international market, as well as the risks associated with mining in third-world countries. It appears to have found a niche for itself where there is very limited competition, and it should do well as the world economy recovers. On 24th October 2022, the company announced that operations had resumed at MRM and key personnel had returned following an insurgent attack on a mine about 12km away on 20th October 2022. On 7th August 2023, the company announced that it would construct a new processing plant that would triple its output from the Montepuez ruby mine. In its results for the year to 31st December 2023, the company reported revenue down 23% and a headline loss of 0.9c (US) compared with a profit of 4.8c. The company said, "The Group’s financial performance was impacted in the year by the withdrawal of November 2023’s higher-quality emerald auction and an unrealised write-down of Gemfields’ non-core 6.54% equity holding in Sedibelo Resources, the platinum group metals mining company." Technically, the share rose off an island formation and entered a strong new upward trend which lasted until July 2023 when the trendline was broken. We recommend waiting until a new upward trend is established. On 11th June 2024, the company announced the appointment of Bruce Cleaver as Chairman. In summary, Gemfields Group presents a potentially lucrative opportunity in a niche market with limited competition. However, the company faces significant risks associated with commodity prices and geopolitical instability in its operating regions. Investors should monitor the establishment of a new upward trend and be aware of the inherent risks before making any investment decisions.
JSE:GML
by PDSnetSA
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 its 73% ownership of Prosus (PRX), which in turn owns 26% of Tencent, a Hong Kong-listed company providing 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 where it is dominated by its 907,128 unlisted "A" ordinary shareholders. Each "A" ordinary share has 1,000 times the voting power of the 438.3 million "N" shares which are listed, effectively controlling 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 with 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, including Takealot, Mr. D. Food, PayU, and Autotrader. On 11th September 2019, Naspers separately listed Prosus on the Euronext in Amsterdam, housing 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. On 27th January 2023, Bloomberg announced that Naspers intended to retrench about 30% of its workforce. In its results for the six months to 30th September 2023, the company reported revenue from continuing operations up 9% and core headline earnings up 90%. The company said, "This was primarily due to improved profitability of our e-commerce consolidated businesses and equity-accounted investments, particularly Tencent, and higher net interest income during the period. At 30 September 2023, the ongoing open-ended share repurchase programme has reduced the Naspers net share count by 14% and generated US$25bn for our shareholders." In a trading statement for the year to 31st March 2024, the company estimated that HEPS would rise to between 669c and 677c (US) compared with 119c in the previous year. Technically, since October 2022, the share has staged a recovery, and then moved sideways between March 2023 and April 2024. Since then, it has broken to new higher levels. 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. Overall, Naspers continues to show strong financial performance and strategic growth. The ongoing share repurchase program, the robust performance of Tencent, and the new leadership under Fabricio Bloisi suggest potential for further appreciation. Despite the complexities of its share structure, the company's diverse portfolio and substantial assets make it an attractive investment, particularly at its current undervalued levels.
JSE:NPN
by PDSnetSA
Our opinion on the current state of PREMIER(PMR)Premier is a food producer that was spun out of Brait (BAT) through an initial public offer (IPO) and separately listed on 24th March 2023, raising R3.6 billion at a share price of 5382c per share. Brait retained 47.1% of Premier. The company has successfully mitigated the impact of load shedding on its operations, with the associated costs not having a material impact on its financial performance. In its results for the year to 31st March 2024, the company reported revenue up 3.6% and headline earnings per share (HEPS) up 17.4%. The company said, "Both the Millbake and the Groceries and International categories contributed to the growth, increasing by 3.7% and 3.3% respectively. The softening to single-digit revenue growth was expected given the impact of significant soft commodity inflation in the prior year and its subsequent stabilization." Since it listed on 24th March 2023, the share has been drifting sideways and slightly up. However, it is very early days, and no meaningful technical analysis is yet possible. We expect this share to be a blue-chip quality operation that is sought after by institutional investors, making it a solid, if unexciting, investment for private investors. The company's ability to manage operational challenges such as load shedding and the growth in its key segments suggests that Premier has strong fundamentals and potential for steady, long-term growth.
JSE:PMR
by PDSnetSA
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 that 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 that aims to keep the "disorderly expansion of capital" under control. In its results for the six months to 30th September 2023, the company reported revenue up 13% and headline earnings up 85%, "...primarily due to improved profitability of our ecommerce consolidated businesses and equity-accounted investments, particularly Tencent, and higher net interest income during the period." Core headline earnings per share (HEPS) almost doubled to 76c per share. In a trading statement for the year to 31st March 2024, the company estimated that HEPS would increase to between 107c and 111c (US) compared with 23c in the previous period. The company said, "...headline earnings per share for the year are expected to increase driven by improved profitability of our ecommerce consolidated businesses and equity-accounted investments, in particular Tencent, and an increase in our net interest income." 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. Prosus appears to be in a strong position with its diversified internet assets and strategic moves to enhance profitability. However, investors should be aware of the regulatory risks in China and market volatility. The recent leadership change may also bring new strategic directions for the company.
JSE:PRX
by PDSnetSA
Our opinion on the current state of EFORA(EEL)Efora Energy (EEL) is an African oil and gas company incorporated in 1993 and listed on the JSE in October 1994. The company is involved in numerous projects from oil production to midstream and downstream distribution. It has operations in Egypt, Nigeria, the DRC, Zimbabwe, and South Africa. Africoil is a subsidiary that distributes 45 million liters of oil products monthly and has two depots in Boland and Beitbridge. Most of its sales are in South Africa. In Egypt, the company owns the Mena International Petroleum Company, which is developing the Lagia oil field in the Sinai Peninsula. In the DRC, the company owns 68% of Semliki, which in turn owns 18.3% of block III in the North-East of the DRC bordering Uganda. This is in an exploratory phase. In Nigeria, the company has a 50% joint venture with Energy Equity Resources (EER) to lift and trade Nigerian oil. In its results for the six months to 31st August 2021 (published on 27th November 2023), the company reported revenue down 95% and a headline loss of 0.32c per share compared with a loss of 25.08c in the previous period. In its results for the six months to 31st August 2022, the company reported headline earnings per share (HEPS) would be between 0.68c and 0.74c compared with a loss of 0.32c in the previous period. In a trading statement for the six months to 31st August 2023, the company estimated that it would make a headline loss per share of between 0.67c and 0.81c compared with a profit of 0.71c in the previous period. This share has been suspended since 9th October 2020 because of delays in producing its financial statements. On 31st January, it announced that it expected to produce interim and final accounts for 2023 by 28th February 2024, but that deadline has passed without the reports being issued. Given the significant delays in producing financial statements and the ongoing suspension of the share, Efora Energy is currently a high-risk investment. The lack of timely financial reporting and the resulting suspension from trading make it impractical for most investors. Potential investors should wait for the company to resolve its reporting issues and for the share to resume trading before considering any investment.
JSE:EEL
by PDSnetSA
Our opinion on the current state of LABAT(LAB)Labat (LAB) is a 57% black-owned investment holding company that listed on the JSE in 1999. The company buys and improves subsidiaries and then sells them for a profit. At the moment, Labat has two operations: South African Micro-Electronic Systems (SAMES) and Labat Logistics. On 14th April 2020, the company announced that it had acquired 70% of Biodata, an East London-based company focused on cannabis healing. The acquisition is to be paid for in shares. The market for cannabis in South Africa in 2020 was expected to be worth around R27 billion. On 5th May 2020, the company issued a profit forecast for the years 2021 and 2022, in which it said it was raising R112 million by issuing shares and that it would generate a profit of R60 million in 2021 and R162.3 million in 2022, resulting in headline earnings per share (HEPS) of 10.9c and 29.9c, respectively. On 8th May 2020, the company announced that it had decided to put Force Fuel into business rescue due to a drop in volumes as a result of COVID-19. In its results for the six months to 30th November 2022, the company reported revenue up 19.4% and a headline loss of 1c per share compared with 4.3c in the previous period. The company said, "During the period under review, Labat Africa has been concentrating on growing its Healthcare business by implementing its highly focused strategy and has successfully completed the seed-to-customer value chain with the acquisition of Sweetwaters Aquaponics." The company's shares were suspended on the JSE in October 2023 and will remain suspended until the company appoints new auditors and produces audited financial statements for FY23 and interims for the six months to 30th November 2023. Even when trading, this is a volatile, loss-making penny stock, so investors should leave it alone. Overall, while Labat has shown some growth in revenue and has made strategic acquisitions, its financial instability, loss-making status, and recent suspension make it a highly risky investment. Potential investors should approach with caution and consider more stable opportunities.
JSE:LAB
by PDSnetSA
Our opinion on the current state of OCEANA(OCE)Oceana (OCE) is Southern Africa's largest fishing business with significant fishing interests in the US through its Louisiana-based subsidiary Daybrook Fishing. It is listed on both the JSE and the Namibian stock exchange. The company produces canned fish, fish meal, fish oil, hake, and mackerel, as well as lobster and squid. It is subject to quotas issued by the government periodically, which can be affected by moves towards Black economic empowerment. Additionally, weather conditions can significantly impact the size of the catch. In its results for the six months to 31st March 2024, the company reported revenue up 12% and headline earnings per share (HEPS) up 84.6%. The company said, "The growth was primarily driven by US-based Daybrook delivering record first-half earnings as well as a pleasing Lucky Star performance following improved second-quarter canned food sales volumes." Technically, the share has been rising since July 2022. It trades on an earnings multiple (P:E) of around 9.45. In our view, this is a solid blue-chip, which has been made more volatile by its exposure to weather conditions and regulation. The new CEO says that the company is looking to make an acquisition in aquaculture but is precluded from doing so in South Africa because of competition restraints. On 27th March 2023, the company announced that it had obtained a secondary listing on the A2X exchange. Oceana appears to be a well-managed company with strong growth prospects, particularly with its US operations performing well. However, potential investors should be aware of the volatility that comes with its dependence on weather conditions and regulatory changes. The company's strategic moves, including potential acquisitions in aquaculture, suggest a forward-thinking approach to growth. Overall, Oceana is a good investment but requires consideration of its inherent risks.
JSE:OCE
by PDSnetSA
Our opinion on the current state of OMNIA(OMN)Omnia (OMN) is a diversified chemicals company supplying products to the agricultural, chemicals, and mining industries in South Africa and 48 other countries. The Agricultural division is the leader in fertilizers in Southern Africa, supplying granular, liquid, and specialty fertilizers in Southern Africa, Eastern Africa, Australia, New Zealand, and Brazil. The mining division is the leading supplier of explosives in South Africa, Mali, Swaziland, Sierra Leone, Malawi, Senegal, Zambia, Zimbabwe, Botswana, Mozambique, and the DRC. The chemicals division manufactures and distributes specialty, functional, and effect chemicals and polymers operating throughout the African continent. The company gets most of its sales from agriculture for fertilizers and the mining industry for explosives. In its efforts to diversify away from the South African economy, OMN acquired Oro Agri in America for $100 million and Umongo Petroleum for R780 million. They also commenced the construction of a R630 million nitro phosphate plant at Sasolburg. Omnia's performance reflects the general performance of the South African economy. It has been very well managed and grows consistently by acquisition and organically, but it operates in very tough markets where it has become difficult to make good profits. It is a relatively risky investment and dependent on commodity prices and agriculture, both of which have done well. In its results for the year to 31st March 2024, the company reported revenue down 16% and headline earnings per share (HEPS) down 6%. The agriculture division saw turnover down 22%, mining down 3%, and chemicals down 23%. The company said, "Since raising capital of R2.0 billion in FY20, we have settled debt in excess of R4.0 billion, invested R2.8 billion in capex and returned R4.3 billion to shareholders." Technically, the share has been in a downward trend since its peak in May 2022. We recommend waiting for it to break up through its long-term downward trendline, which may occur fairly soon. Given its strategic moves and financial management, Omnia could present a good investment opportunity once it shows signs of technical recovery. However, potential investors should be aware of the inherent risks associated with its dependency on commodity prices and agricultural performance.
JSE:OMN
by PDSnetSA