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Our opinion on the current state of OANDO(OAO)Oando PLC (OAO) is an oil and gas company with significant operations in Nigeria and listings on both the Johannesburg Stock Exchange (JSE) and the Nigerian Stock Exchange. The company's shares present a high-risk investment profile for several reasons that are intrinsic to its operational context and the nature of its industry. **1. Commodity Price Volatility:** As an oil and gas company, Oando's financial performance is heavily dependent on the fluctuating international prices of oil. This exposes the company to global market trends and economic cycles over which it has little control. **2. Political and Economic Instability:** Operating primarily in Nigeria adds another layer of risk due to the country's political instability and economic fluctuations. This environment can affect operations and profitability through changes in regulation, fiscal policies, and other governmental actions that could impact the business. **3. Thinly Traded Shares:** Oando’s shares are thinly traded, which can result in liquidity issues for investors. This means buying or selling shares without affecting the price can be difficult, potentially complicating entry and exit strategies for private investors. **Recent Financial Performance:** - **For the year ending 31st December 2020:** Oando reported a substantial after-tax loss of 141 billion naira, indicating a downturn in business performance with a 17% drop in turnover. - **For the year ending 1st December 2021:** The company saw a reversal in fortunes, albeit on a much smaller scale, reporting a profit of 34.7 million naira. - **For the year ending 31st December 2022:** The company returned to a loss, posting an 81.2 million naira deficit. **Regulatory and Trading Issues:** - On 3rd April 2024, Oando’s share trading was suspended on the JSE, pending the publication of its year-end results for 2022 and interim results for 2023, reflecting regulatory concerns and potentially significant issues in financial reporting or operational performance. - Trading remains suspended as of the latest updates, with the share price last recorded at 9 cents. Given these circumstances, Oando represents a highly speculative investment. The combination of high operational risks, political and economic instability in its primary region of operations, commodity price dependence, and recent financial performance makes it a precarious choice for private investors seeking stable returns. Investors should exercise extreme caution, considering both the macroeconomic factors affecting the oil and gas sector and the specific challenges facing Oando. It is advisable to closely monitor developments related to the company’s regulatory issues, financial health, and the broader Nigerian political and economic environment before considering an investment in such a volatile entity.
JSE:OAO
by PDSnetSA
Our opinion on the current state of GTCSA(GTC)GTC, or Globe Trade Centre, is a significant player in the real estate market of Central and Eastern Europe, managing a substantial portfolio of properties across several key cities including Warsaw, Bucharest, Budapest, Belgrade, Sofia, and Zagreb. The company's operations encompass forty-seven office buildings and six retail properties, combining for a gross lettable area (GLA) of approximately 829,000 square meters. With assets valued around 2.35 billion euros, GTC plays a crucial role in the region’s property market. The company is dual-listed, with shares available on both the Warsaw Stock Exchange (WSE) and the Johannesburg Stock Exchange (JSE). For the year ending 31st December 2023, GTC reported a 10% increase in rental revenue, reflecting a strong operational performance despite various market challenges. The loan-to-value (LTV) ratio stood at 49.3%, indicating a moderate level of debt used in financing the company's assets. This level of LTV shows that the company is leveraging its capital structure efficiently, balancing risk and growth effectively. Occupancy rates were robust at 87%, a healthy indicator of the demand for GTC’s property offerings and management effectiveness in a competitive market. Additionally, the company concluded the year with a strong liquidity position, holding 60 million euros in cash. This financial health is crucial for sustaining operations and pursuing further growth opportunities. Despite its operational successes and strategic market positioning, GTC faces a significant challenge regarding its stock's liquidity on the Johannesburg Stock Exchange. The shares are noted as being extremely thinly traded, which poses difficulties for private investors looking to buy or sell the stock without affecting its price significantly. This lack of liquidity can deter investment, as it may complicate entry and exit strategies for investors. For those considering investing in GTC, it's important to weigh the solid operational performance and strategic asset portfolio against the potential trading challenges on the JSE. The company’s strong presence in a diverse range of key Eastern European markets, combined with its sound financial management, positions it well for future growth. However, the trading liquidity issue is a significant consideration that needs careful evaluation, particularly for those looking to engage in more flexible or short-term trading strategies. Overall, GTC appears well-managed and positioned to capitalize on the growth opportunities in Central and Eastern European real estate markets. Prospective investors should keep an eye on developments that might increase JSE trading volumes or consider alternative ways to invest, such as directly on the Warsaw Stock Exchange where liquidity issues may be less pronounced.
JSE:GTC
by PDSnetSA
Our opinion on the current state of COPPER360(CPR)Copper 360 is a company primarily focused on two aspects: processing historical mined copper rock dumps and mining surface and shallow copper resources. This dual focus not only targets copper production but also aims at environmental cleanup, which is increasingly significant in today’s mining industry. The company has leveraged an extensive database acquired from major mining entities like Newmont and Gold Fields, who previously operated in the district. This strategic move has provided Copper 360 with valuable historical data that could enhance its exploration and production capabilities. Financially, Copper 360 showed signs of improvement in its fiscal year ending 31st August 2023. Although still operating at a loss—R4.9 million—it marked a significant reduction from the R31.6 million loss reported in the previous period. This improvement was attributed to increased production and the end of major capital expenditures. Furthermore, the acquisition of Nama Copper Resources has poised the company to boost production while reducing execution build and delivery risks. The company has set an ambitious target for FY 2025 with an expected EBITDA of over R650 million and plans for major resource upgrades to enhance mining flexibility and growth. In terms of funding, the company successfully raised R274 million on 21st December 2023 to support the acquisition of Nama Copper and to foster production growth at the Rietberg mine. Earlier, in February 2023, the company had also raised just under R100 million through a share sale, underscoring ongoing efforts to secure the capital necessary for expansion. A notable strategic development was the memorandum of understanding signed with Far West Gold Recoveries in March 2024, indicating potential collaborations to leverage existing mining infrastructure and technology. This agreement aligns with the company’s disclosure that the dumps could contain up to 450,000 tonnes of copper metal, illustrating the significant untapped potential of its resources. The recent production report from 24th April 2024 indicated that Copper 360 had produced 136 tons of high-grade copper concentrate (over 30%) from the Northern Cape, which showcases the quality of the extracted copper and the efficacy of their processing methods. However, the company’s share price trajectory has shown volatility since its listing on 12th April 2023, with a noticeable drift downwards from the initial 500c to 371c. This performance may raise concerns about the company’s valuation and market confidence, especially given the inherent risks of the commodity market and the specific challenges of operational ramp-up in mining. For investors, Copper 360 presents a high-risk, high-reward opportunity. While the company is making strides in increasing production and improving financial health, the fluctuating nature of commodity prices, the necessity of further capital, and the operational risks associated with mining startups make it a volatile investment. Prospective investors should approach with caution, closely monitor the company’s operational progress and market conditions, and consider waiting for more stability in the share price before committing capital.
C
by PDSnetSA
Capitec Vuvuzela with bullish bias & strong fundaments to R2,485Capitec has been in this Broadening Pattern (Vuvuzela) formation since November 2023. It breaks into higher highs and lower lows. But the overall momentum and trend channel is up. It will continue trading in this range until we get a breakout of the resistance or support. My bet is it will first trade to the top of the range at R2,485.92. Capitec has always been the outlier compared to the other banks with very little correlation. WHen it does well, it runs up regadless what the bigger banks are doing. Also fundamentally, it doesn't seem to follow suit with the Big 5. Firstly, Capitec announced a substantial 15% growth in headline earnings, which reached R9.7 billion. This increase was driven by growth across various sectors of the bank, including a notable 124% profit surge in its business banking sector and a significant increase in net lending, investment, and insurance income​ Also, Capitec has been actively investing in innovative digital solutions and client rewards programs, which have contributed to its strong performance. They introduced a variety of digital payment solutions like Apple Pay, Samsung Pay, and Google Pay with zero transaction fees, as well as their own secure online payment tool, Capitec Pay. So ye, big up to an innovative unclipped wings bank like Capitec.
JSE:CPILong
by Timonrosso
Our opinion on the current state of SASOL(SOL)Sasol, a prominent international chemicals and energy company based in South Africa, has its origins in the oil-from-coal technology developed during the apartheid era. The company is significantly influenced by fluctuations in the oil market, with about 50% of its profits directly linked to oil prices. Sasol's major growth initiatives include its 50% stake in the ethane cracker plant in Louisiana, USA, known as the "Lake Charles Chemical Project" (LCCP), and its expanding gas operations in Mozambique, where it has been granted licenses to explore an extensive area of about three thousand square kilometers. Sasol is also noted for its substantial environmental footprint, being the largest producer of greenhouse gases in South Africa and one of the top 100 fossil-fuel companies contributing to global emissions. This position places Sasol under continual international pressure to effectively manage and reduce its carbon emissions. The impact of COVID-19 initially led to a significant recovery in Sasol's share price, driven by rising oil prices. However, this recovery has been undermined by recent declines in commodity prices, particularly oil, which have adversely affected the company's financial performance. For the six months ending on 31st December 2023, Sasol reported a decrease in revenue from R149.8 billion to R136.3 billion, primarily due to lower chemical prices and weaker oil prices. The company experienced a 34% drop in headline earnings per share (HEPS) and a 2% decrease in net asset value (NAV). Sasol's operations continue to be impacted by the volatile macroeconomic environment, characterized by fluctuating petrochemical prices and unstable product demand. Additional challenges include inflationary pressures and the underperformance of state-owned enterprises critical to Sasol's supply chain. Despite these challenges, Sasol has made some operational improvements in South Africa and has recently been successful in an appeal against environmental regulatory decisions that threatened its Secunda plant operations. The company has also begun to diversify its energy sources, securing 550 megawatts of renewable energy, which aligns with its goals to reduce carbon emissions. However, production issues, particularly at the Secunda plant, led to a 9% drop in production in the quarter ending March 2024, prompting Sasol to revise its full-year production guidance for 2024 to between 6.9 and 7.1 million tons. These developments have resulted in a sharp decline in Sasol's share price, which continues to trade well below its long-term downward trendline, reflecting the stock's high volatility and the broader uncertainties in the global commodity markets. For investors, Sasol presents a complex case. While the company holds significant potential due to its strategic initiatives in the energy sector and its efforts to transition towards more sustainable operations, it remains highly susceptible to external economic and environmental factors. Potential investors should carefully consider the inherent risks associated with Sasol's dependency on global commodity prices and its ongoing challenges in operational and environmental compliance before making investment decisions.
JSE:SOL
by PDSnetSA
Our opinion on the current state of OANDO(OAO)Oando (OAO) is a Nigerian oil and gas company that operates both within Nigeria and internationally, with listings on the Johannesburg Stock Exchange (JSE) and the Nigerian Stock Exchange. The company’s shares embody high risk for several reasons, primary among them being its exposure to the volatile oil market and the political instability in Nigeria. Historically, Oando has faced significant challenges, including regulatory scrutiny and allegations of financial misconduct. In April 2018, trading of Oando's shares was suspended by the Nigerian Securities and Exchange Commission to allow for a forensic audit into allegations of corruption and insider trading. The outcomes of these proceedings have cast a long shadow over the company's reputation and operational stability. Further complicating matters, on June 3, 2019, the Nigerian SEC ordered certain board members to resign and imposed fines on the company, which Oando contested in court. This situation mirrors issues faced by other companies in Nigeria, such as MTN, indicating a pattern of contentious relations between corporate entities and regulatory bodies in the country. Financially, Oando has been under considerable pressure. In 2019, it was reported that the company's liabilities exceeded its assets, casting doubt on its ability to continue as a going concern. Although Oando reported a shift in corporate strategy to focus on dollar-earning assets, which included the sale of a significant stake in Axxela to Helios Investment Partners, its financial performance has been inconsistent. For the year ending December 2019, Oando posted a significant loss, and although there was a brief return to profitability in 2021, the company reported another substantial loss in 2022. The trading of Oando’s shares has been marked by low volume, indicating a lack of investor confidence and liquidity. This situation was exacerbated when the JSE suspended trading of its shares in April 2024, pending the publication of its overdue financial results for 2022 and interim results for 2023. When the company finally published its 2022 results, it revealed yet another loss. Given these circumstances, Oando represents a highly speculative investment with considerable risks associated with its financial instability, regulatory challenges, and the geopolitical environment within Nigeria. Potential investors should exercise extreme caution, considering the company’s history of volatility and the ongoing concerns about its financial health and regulatory compliance. The recommendation would be to avoid this stock unless one has a high tolerance for risk and a deep understanding of the Nigerian market’s complexities.
JSE:OAO
by PDSnetSA
Our opinion on the current state of KUMBA-IO(KIO)Kumba Iron Ore (KIO) is a leading iron ore mining operation, primarily owned (79%) and controlled by Anglo American. The company's performance has been significantly influenced by global market dynamics and local operational challenges. The share price experienced a dramatic drop to R223 in March 2020 due to the COVID-19 pandemic but managed a robust recovery to R668 before experiencing a decline following the March 2022 quarterly results. A critical aspect of Kumba's business model is its heavy reliance on exports, which constitute 94% of its total sales. This international focus exposes the company to fluctuations in the rand exchange rate and the efficiency of rail transport logistics to ports, which are vital for its export operations. In response to operational challenges, including dependency on Eskom for power, Kumba plans to develop a 100mw solar park over the next three years, aiming to enhance its energy self-sufficiency. In October 2022, Kumba faced significant disruptions due to a force majeure declared by Transnet, resulting in substantial production and export losses. This event highlighted the vulnerabilities in its supply chain, significantly impacting its financial performance due to lost production and export revenues. For the fiscal year ending 31st December 2023, Kumba reported a 16% increase in revenue and a 26% rise in headline earnings per share (HEPS). The company achieved an average realized FOB export price of US$117/tonne, which was 15% above the benchmark. Cost-saving measures contributed to a reduction in C1 unit costs to US$41/tonne, supporting a resilient EBITDA margin of 53%, an improvement from the previous 50%. The company also reported a strong closing net cash position of R13.2 billion. Despite these financial strengths, Kumba is considering 490 retrenchments as part of its operational adjustments. The first quarter of 2024 saw a 2% decrease in total production and a 10% reduction in sales, primarily due to a 12% decrease in production at the Kolomela mine. Conversely, production at the Sishen mine increased by 4%, buffered by healthy stock levels throughout the value chain. Kumba's shares currently trade at a price-to-earnings (P/E) multiple of 6.3 and offer a dividend yield of 8.39%. These metrics suggest that the investment may offer reasonable compensation for the inherent commodity risk and the volatility associated with being a rand-hedge share. However, potential investors should consider the risks of operational dependencies and global market sensitivities that could affect Kumba’s performance. Overall, while Kumba Iron Ore presents potential for strong returns, especially via dividends, it remains subject to significant operational and market risks that require careful consideration.
JSE:KIO
by PDSnetSA
Our opinion on the current state of CAPITEC(CPI)Capitec Bank (CPI) stands as a formidable presence in the South African banking sector, having significantly disrupted the market since its inception by PSG. Known for its customer-centric model, Capitec has successfully attracted a vast client base, primarily serving the previously unbanked segments of the population. This approach has enabled it to become the country's largest bank by customer numbers, boasting 21.1 million clients. Capitec's strategy of offering accessible and affordable banking solutions has been instrumental in its ability to capture retail market share from traditional banks. Its innovative offerings, such as adding approximately 90,000 funeral policies every month, underscore its commitment to addressing the diverse needs of its clientele. The bank's performance has been robust, with an impressive average annual growth in headline earnings per share (HEPS) of 32.2% over the past 19 years. This growth trajectory highlights Capitec's effective management and strong market positioning. Despite holding less than 10% of the retail deposit base—a reflection of its focus on lower living standards measure (LSM) levels—Capitec continues to expand its influence in the financial sector. A significant development in Capitec's corporate strategy was the unbundling of its holding by parent company PSG, a move aimed at unlocking shareholder value. Additionally, Capitec's commitment to broad-based black economic empowerment (BBBEE) was demonstrated through its plan to distribute approximately R1 billion worth of shares to long-serving staff, initiated on 19th January 2022. Although this move led to a temporary dip in share price due to expected dilution, it reflects a long-term investment in employee stakeholder engagement and equity. For the fiscal year ending on 29th February 2024, Capitec reported a 16% increase in HEPS and a return on equity (ROE) of 26%. The bank also grew its number of active clients by 10% to 22.2 million. Notably, non-interest income significantly contributed to the earnings growth, comprising 72% of income from operations after credit impairments. This shift towards non-interest income is a strategic move that diversifies revenue streams and reduces dependence on traditional interest-based income. The stock has been on an upward trajectory since June 2023, currently trading at a price-to-earnings (P/E) ratio of 23.7. While this is higher than the JSE Overall index and other leading banks, Capitec's strong fundamentals, consistent performance, and strategic market positioning justify this premium. In conclusion, Capitec remains a compelling investment within the South African banking sector. Its innovative approach to banking, combined with significant growth and strategic expansions, position it well for continued success. Investors should consider accumulating shares on any market weakness, taking advantage of Capitec's potential for long-term growth and value creation.
JSE:CPI
by PDSnetSA
Our opinion on the current state of AMPLATS(AMS)Anglo American Platinum (Amplats or AMS) stands as the second-largest platinum producer globally, under the majority ownership (77.62%) of Anglo American. In recent years, Amplats has strategically shifted from deep-level mining to more economical and mechanized methods, significantly reducing its operational footprint from 18 mines to 7. This transition has notably cut overhead costs and the workforce by 50%, enhancing operational efficiency and profitability. Amplats' flagship Mogalakwena operation, known for its palladium-rich deposits, operates within the lowest cost quartile of the platinum group metals (PGM) industry worldwide. A planned expansion at this site is expected to significantly increase platinum and palladium output, reinforcing the company's strong position in the PGM market. Additionally, Amplats has consolidated its mining interests by acquiring Glencore’s 40.2% stake in the Mototolo mine and the adjacent Der Brochen property for R1.5 billion. This acquisition allows Amplats to expand the Mototolo mine into Der Brochen without additional surface infrastructure, optimizing production and resource use. However, the platinum industry faces challenges from an effective recycling industry, which recovers approximately 2 million ounces annually from old auto catalysts, potentially impacting demand for newly mined platinum. Despite this, Amplats remains a leading choice among PGM shares on the Johannesburg Stock Exchange (JSE), though it is subject to the inherent volatility and unpredictability of commodity stocks. In December 2021, Amplats announced a significant R3.9 billion investment to extend the life of the Mototolo/De Brochen mines beyond 30 years, underscoring its commitment to long-term production sustainability. However, the company faces potential unrest with plans to relocate 1,000 families to boost production at Mogalakwena, highlighting the social challenges associated with mining operations. Financially, the year ending 31st December 2023 was challenging for Amplats. The company reported a slight decrease in refined PGM production and a significant 26% drop in the rand basket price per ounce, contributing to a 24% decline in revenue and a 71% fall in headline earnings per share (HEPS). Factors such as Eskom's load curtailment adversely impacted production, although this was partially offset by releasing concentrate stocks. Looking ahead to the first quarter of 2024, PGM production decreased by 7%, while sales volumes remained unchanged, indicating ongoing operational challenges. Amplats continues to face industry-wide issues such as load shedding and declining commodity prices, which have pressured the share price since March 2022. Given these dynamics, potential investors should approach Amplats with caution. The company's performance and stock price are heavily influenced by fluctuating international prices for PGMs and operational challenges. Investors are advised to look for a clear upward trend before considering entry, as indicated by the recent suggestion to watch for a break through the downward trendline for more favorable investment conditions. Additionally, the announced potential retrenchment of 3,700 employees in February 2023 could further affect the company’s operations and stock performance.
JSE:AMS
by PDSnetSA
Our opinion on the current state of SOUTH32(S32)South32 (S32) is a major player in the global mining sector, initially spun off from BHP Billiton in 2015 to manage BHP's South African coal assets. Today, it stands as a diversified miner involved in the extraction of base metals and minerals like zinc, coal, aluminium, silver, lead, nickel, and manganese, with operations extending across South Africa, South America, and Australia. Significant strategic shifts have been a hallmark of South32's operational strategy. In a notable move, the company divested its South African coal assets, which primarily supplied Eskom, to Seriti as of 1st June 2020. This divestiture is part of a broader trend where South32 is reducing its exposure to South Africa, citing administrative and legislative uncertainties. This sentiment is mirrored in comments by CEO Graham Kerr, who has expressed reservations about mining exploration in South Africa until the mining charter is finalized. Concurrently, South32 has enhanced its investment in base metals through the acquisition of the remaining 83% of Arizona Mining, not previously owned. This acquisition is strategic, considering Arizona Mining's rich portfolio in zinc, manganese, and silver, which Kerr described as "one of the most exciting base metal projects in the world." Financially, South32 has faced challenges with its revenue down 20% for the year ending 30th June 2023. However, headline earnings per share (HEPS) stood at 22.6 cents (US), a decrease from the previous year's 59.5 cents. Despite this downturn, the company has reported strong production growth in commodities crucial for a low-carbon future, achieving record production levels in aluminium, base metals, and manganese. Continued operational updates through 2023 and into 2024 reveal a company adapting to market demands and environmental considerations. Notably, South32 plans to transition its Hillside smelter to renewable energy sources and reduce dependence on Eskom over the next decade. This is part of a $1.4 billion share buy-back plan, indicating confidence in the company's value and future. Recent production updates have been mixed, with stable guidance overall but specific challenges such as the impact of hurricane Megan on its Australian manganese operations. The company's share price has mirrored the volatility in the commodity markets, showing resilience post-COVID19 but facing declines as commodity prices fell since March 2023. In conclusion, South32 remains a robust entity in the mining sector with a strategic focus on diversification and sustainability. It offers significant potential for investors looking to engage with a company actively transitioning towards commodities that support a low-carbon future while navigating the complexities of global and regional mining landscapes.
JSE:S32
by PDSnetSA
Our opinion on the current state of ORIONMIN(ORN)Orion Minerals (ORN) is an Australian-based exploration company, also listed on the Johannesburg Stock Exchange and the Australian Stock Exchange in Sydney. It focuses on the development of its copper and zinc assets in Prieska, South Africa. This mine, formerly operated by Anglovaal, ceased operations in 1990 after two decades of extracting significant quantities of zinc and copper concentrate. One of the critical challenges Orion faces at this site is managing the flooding that has occurred since the mine's closure. Orion is planning a revival of the Prieska mine with a mechanized and minimal labor strategy. Additionally, the potential development of a smelter by Vedanta Resources, which operates the nearby Gamsberg mine, could provide essential support to the entire mining region, including potential inputs from Namibia. This smelter would be instrumental once Orion commences the substantial task of pumping out nearly 9 million cubic meters of water from the mine to begin production, anticipated to start in 2024. Exploration and mining carry inherent risks, making them some of the most volatile investments on the JSE. Orion's venture into this field is particularly precarious, as evidenced by its fluctuating financial performance and the nature of penny stocks. On the funding front, Orion has taken significant steps, securing R34.5 million from the Industrial Development Corporation (IDC) for a 43.75% stake in its new Okiep copper mining operation and a R250 million line of credit for further project development. For the six months ending 30th June 2023, Orion reported a consistent loss of A$15.2 million, with a slight improvement in its headline loss per share. The company has emphasized the role of the IDC as a strategic funding partner, underlining the critical support it receives for its flagship projects in Okiep and Prieska. Recently, Orion announced a major discovery in its Okiep Copper Project, reporting a "Spectacular High-Grade Copper Intercept" that significantly impacted its share price, propelling it from 19c to 24c. This news highlights the potential upsides of investing in mining explorations, despite their inherent risks. Investors considering Orion should be cautious, given the company's history of losses and the overall volatility associated with mining stocks. While the recent discovery could offer considerable upside, the general advice would be to maintain a strict stop-loss level to manage potential risks effectively. This strategy is crucial in navigating the highs and lows typical of the mining sector, especially for companies like Orion, which operate on the frontier of resource extraction.
JSE:ORN
by PDSnetSA
Our opinion on the current state of MERAFE(MRF)The Glencore-Merafe joint venture, a significant player in the ferrochrome industry, operates mines, furnaces, and smelters predominantly in Mpumalanga and Limpopo, South Africa. This joint venture is one of the largest ferrochrome producers globally, with the capacity to produce up to 2.3 million tons of ferrochrome annually. Merafe Resources, as part of this partnership, receives 20.5% of the proceeds, with the majority stake held by Glencore. One of the critical challenges facing the operation is the electricity supply. Ferrochrome smelting is energy-intensive, and the recent increases in electricity tariffs by Eskom—15.6% last year and an additional increase of just under 10% from 1st April 2022—have significantly impacted operational costs. Furthermore, concerns about Eskom's ability to provide sufficient power have led to the suspension of their Lion 3 expansion project, indicating the severity of the energy challenges. Operational difficulties extend beyond energy, with issues also arising in logistics, specifically the availability of Transnet trains to transport their products, which is another bottleneck affecting the venture's efficiency. Despite these challenges, the financial performance for the year ending 31st December 2023 showed a revenue increase of 16% and a slight improvement in headline earnings per share (HEPS), rising from 56.4c to 60.1c. Merafe reported a record profit of R1.753 billion during a tough economic period, supported by high demand and supply constraints in the chrome market, although ferrochrome itself saw weaker demand and lower sales volumes. Looking ahead to the first quarter of 2024, the company noted a significant reduction in chrome production, approximately 26%, primarily due to the non-operation of the Rustenburg smelter in response to market conditions. This adjustment reflects the broader challenges within the ferrochrome market and the impact of global economic shifts. In terms of stock performance, the share price of the joint venture peaked at 192c on 4th April 2022 but has experienced a general downward trend since, with a brief rally in September 2022. Recently, the share found some support at 104c, showing a slight upward trend, though the recovery was short-lived, underscoring the share's volatility. Overall, while the Glencore-Merafe joint venture operates in a sector with robust potential, given the global demand for stainless steel, it faces significant operational and market challenges. These include not only energy and logistical issues but also the broader economic conditions affecting commodity prices and demand. As such, it remains a volatile commodity share, susceptible to both external market forces and internal operational challenges. Investors interested in this sector should be mindful of these risks and consider the broader economic indicators that influence commodity markets.
JSE:MRF
by PDSnetSA
Our opinion on the current state of ELLIES(ELI)Ellies (ELI) is a South African electronics company that specializes in importing and distributing electrical products and supplying solar power solutions. Despite its early successes, Ellies has faced significant financial difficulties in recent years, highlighted by a dramatic decline in its share price from nearly R10 in 2013 to just 2 cents recently. Ellies has attempted to pivot from its dependence on MultiChoice and DStv dish installations towards a focus on solar energy solutions, reflecting shifts in market demand and energy trends. However, the company has struggled with profitability and cash flow, leading to multiple rounds of retrenchments as part of Section 189 procedures under the Labour Relations Act. The most recent of these was announced on 26th September 2022, which resulted in a nearly 20% drop in its share price. Financial performance has continued to deteriorate, with the company reporting a significant decrease in revenue by 30.6% for the six months ending on 31st October 2023. During this period, Ellies also reported an increased headline loss per share of 13.2c, compared to a loss of 4.58c in the previous corresponding period. The company's financial state has further been strained by negative equity of 7.3c per share. The dire financial situation prompted Ellies to enter business rescue on 31st January 2024, a last-ditch effort to salvage the company. Unfortunately, the situation worsened, leading to the resignation of four non-executive directors in April 2024, followed by an announcement on 10th April that the company would be going into liquidation, as the business rescue practitioners determined there was no viable path to recovery. On 22nd April 2024, Ellies took the further step of voluntarily suspending trading of its shares, indicating the cessation of its operations and the final phase of its corporate existence. This marks a stark turnaround from its earlier market position and highlights the challenges faced by the company in adapting to changing market dynamics and sustaining its business model. Investors and stakeholders in Ellies have witnessed a significant erosion of value, and the company’s trajectory serves as a cautionary tale of the risks associated with investing in volatile and highly competitive industries like electronics and energy solutions. The failure to stabilize the business and achieve a successful pivot strategy has led to its ultimate downfall, underlining the importance of agile management and robust financial health in navigating the complexities of today's business environment.
JSE:ELI
by PDSnetSA
Our opinion on the current state of CASHBIL(CSB)Cashbuild is the leading retailer in Southern Africa for building materials and hardware, primarily focusing on the home improvement market. The company's growth strategy in the region, characterized by slow economic activity, primarily revolves around expanding its store footprint. This expansion is viewed as a positioning strategy to capitalize on any potential recovery in the broader economic environment of Southern Africa. For the six months ending on 24th December 2023, Cashbuild reported a modest revenue increase of 2%, but experienced a significant reduction in headline earnings per share (HEPS), which decreased by 20%. Additionally, the company's net asset value (NAV) declined by 16% to 7757 cents per share. These financial indicators reflect the challenging conditions in which Cashbuild operates. The company noted that while revenue from pre-existing stores (312 stores existing before July 2022) saw a slight increase of 1%, the nine new stores also contributed a 1% increase to total growth. However, despite stable gross profit levels, the gross profit margin percentage decreased from 25.3% to 24.7%. This margin contraction was alongside a modest selling price inflation of 3.2% as of December 2023 compared to the previous year. In its update for the third quarter ending 31st March 2024, Cashbuild continued to report revenue growth, albeit limited to 3%, with the nine new stores again contributing 1% to this growth. Selling price inflation was slightly lower at 2.4%. These figures suggest ongoing efforts to manage costs and pricing in a tight economic context. From a technical perspective, Cashbuild’s shares have experienced significant volatility. The stock was on a downward trend from March 2018, hitting a low in March 2020 at R120 per share. It then saw a substantial rise to R337 in February 2021, before entering another downward trend. Currently priced at R143.50, the stock trades at a P/E ratio of 13.29 and offers a dividend yield of 3.66%. Despite Cashbuild's strong management and strategic positioning to leverage any economic upswing, the company operates in a highly competitive sector that demands continual adaptation to market forces and consumer behavior. Although the share price has seen declines, making it more accessible, it still presents as somewhat pricey given the broader market conditions. Potential investors should weigh the robust management against the operational challenges and market position before considering an investment, especially in light of the competitive pressures and economic uncertainties prevailing in Southern Africa.
JSE:CSB
by PDSnetSA
Merafe Dividend messed up analysis to the upside of R2.00What a difference a dividend makes! The payment went out on the 15 April 2024, and because there are derivatives that traders can trade off - the algorithm droped the share price quite significantly. I don't think this company should be providing such high dividends if it wants growth in the share price, but hey I'm just the guy behind a computer. So last time, we saw a Dividend release in September, it took 6 months for the share price to make it's way up and close the gap. Now it is likely for the same thing to happen. This is not a technical analysts haven type market because fundamentals trump the price action. But overall, I guess shareholders are remotely happy for their income distribution and in the long run Merafe will one day hit R2.00 :D
JSE:MRFLong
by Timonrosso
$JSEDRD - DRD Gold: Will The Laggard Play Catch-Up?See link below for previous analysis. Gold and JSE Gold gold stock have been on a strong run lately. DRD clearly did not get the memo as the stock is trending up but very slowly comapared to its peers and with the tailwinds provided by the gold price. When such a disconnect occurs, one needs to take a deep look into the fundamentals which is beyond the scope of this analysis. From an Elliott Wave perspective; The bull run from 864 to 2546 cps is in five wave for wave 1. The bear from 2546 to 1200 is for wave 2. The current rally is the early stage of wave 3. I will maintain a bullish stance above 1200 though with low conviction.
JSE:DRDLong
by Loyiso_BlaqueSoros_Mpeta