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Probabilities of further upside on JSE's Vodacom share price?JSEVOD fell off a cliff from its all-time high of R186.99 in August 2017 and left a gap between R177.10 and R168.81 while going on a downward trajectory, reaching lows of R90.70 around March 2020. We then saw a bounce rally taking us to R163.48 before sellers stepped in around April 2022 to have price sniff R85.44 by April 2024. We have seen a positive recovery since then, with price painting what seems to be an Inverse Head & Shoulders pattern. The bullish crossover of the 50 and 200 Day EMA has also already occurred with the Daily RSI firmly in bullish territory. Since August 2024 a bullish flag seems to also be developing as the right shoulder of the H&S pattern, giving added confluence to probabilities of further upside. Seeing that price is still only hanging around the 50 Day EMA, there is a slight possibility that sellers might have their last and final show of strength from a zone around R110.00 ~ R111.00 to pull price back to R99.20 where we expect conservative buyers to pick the stock up for a rally to R138.86 and beyond. Earnings data coming out on 11 November 2024 might, if positive, act as a catalyst for buys up to a resistance zone around R116.22 which will need to be overcome and positively retested for aggressive buyers to step in. Recommended BUY Position: R99.20 (Conservative) with a Stop Loss of R96.00 R117.20 (Aggressive after testing R116.22) With a Stop Loss of R113.30 Take Profit 1: R138.86 Take Profit 2: R156.30 Take Profit 3: R188.80 Take Profit 4: R430.00 (Much later in life)
JSE:VODLong
by Source_Sailor
Our opinion on the current state of PSG-KST(KST)PSG Fin (previously PSG Konsult) is a well-established financial services group that originated from PSG's stockbroking business and now offers a broad range of financial services, including financial planning, unit trusts, healthcare, short-term insurance, and estate planning. PSG retains a 60% stake in the company. In its results for the six months ending 31st August 2024, PSG Fin reported a 28% increase in recurring headline earnings per share (HEPS) and a 16% rise in assets under management (AUM) to R435.7 billion. Gross written premiums also grew by 10%. The company noted that while operating conditions remained challenging, more favorable equity markets and sustained high interest rates positively impacted its results during the period. The share currently trades on an earnings multiple (P:E) of 22.81, which suggests that it is not cheap. However, PSG Fin is a high-quality company with a proven ability to deliver solid returns, even in difficult economic conditions. Technically, the share has been in an upward trend since March 2020, indicating good value at current levels. On 1st March 2022, PSG announced that it would be unbundling its 60.8% holding in PSG Konsult to its shareholders, a move aimed at releasing value. PSG Fin (KST) was added to the Winning Shares List (WSL) on 23rd May 2024 at a price of 1610c, and the share has since risen to 1850c. Given its solid track record and growth potential, it appears poised for further gains.
JSE:KST
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 offering (IPO) and separately listed on 24th March 2023. The IPO raised R3.6 billion at a share price of 5382c per share, with Brait retaining a 47.1% stake in Premier. Despite challenges, Premier has successfully mitigated the impact of loadshedding on its operations, and the associated costs did not significantly affect its financial performance. In its results for the year ending 31st March 2024, Premier reported revenue growth of 3.6% and headline earnings per share (HEPS) up 17.4%. The company attributed this growth to both the Millbake and Groceries and International categories, which saw revenue increases of 3.7% and 3.3%, respectively. Premier noted that the softening to single-digit revenue growth was expected due to the significant soft commodity inflation in the prior year and its subsequent stabilization. In a trading statement for the six months ending 30th September 2024, Premier estimated that HEPS would increase by between 25% and 33%. The improvement in operational earnings was driven by margin management, cost-saving initiatives, and the delivery of material operational efficiencies. Following its listing in March 2023, the share price initially moved sideways and slightly upward. However, since July 2024, the share has risen steeply. Premier is expected to be a blue-chip operation, attracting institutional investors, making it a solid, though not particularly high-growth, investment for private investors. Premier was added to the Winning Shares List (WSL) on 21st August 2024 at 7635c, and it has since risen to 10617c, demonstrating strong upward momentum.
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by PDSnetSA
Our opinion on the current state of PICKNPAY(PIK)Pick 'n Pay (PIK) is a retail grocery chain with over 2,000 stores, primarily in South Africa but also operating in other parts of Africa. The company was founded by Raymond Ackerman in 1967 and became the dominant grocery retailer in the country before being surpassed by Shoprite/Checkers. Richard Brasher previously served as CEO, but Sean Summers, who led the company from 1999 to 2007, has returned to the role of CEO in an effort to restore the company's competitive edge. In its results for the 52 weeks ending 25th February 2024, Pick 'n Pay reported a 5.4% increase in turnover but posted a headline loss of 203.06c per share, compared to a profit of 259.25c in the previous year. The company highlighted a significant decline in trading profit, which fell 87.4% to R385 million. This was largely due to a R1.5 billion trading loss from Pick 'n Pay, a sharp reversal from FY23's R1.3 billion profit. Meanwhile, Boxer contributed R1.9 billion in trading profit, compared to R1.8 billion in the previous year. The company also faced a substantial 198.8% increase in net interest paid, reaching R701.8 million, driven by higher gearing and increased interest rates. Technically, Pick 'n Pay has been in a long-term downward trend since 2016, having lost significant market share to Shoprite. The company has been working to catch up in the online shopping market through partnerships with Mr. D and Takealot. To recapitalise the business, Pick 'n Pay plans to list its Boxer division separately and conduct a rights issue to raise R4 billion by mid-2024. The rights issue was approved by shareholders at a general meeting on 26th June 2024. The company issued 252.2 million nil paid letters of allocation (NPLs) in the ratio of 51.11 NPLs for every 100 Pick 'n Pay shares held, resulting in a 33.8% dilution. The take-up price was set at 1586c per share, representing a discount of approximately 32.48%. The rights offer was more than 100% oversubscribed, but the rights issue caused the share price to fall on 17th July 2024. The Ackerman family had to inject R1 billion to maintain their 25% stake in the company. In a trading statement for the 26 weeks ending 25th August 2024, Pick 'n Pay estimated that headline earnings per share (HEPS) would decline by between 20% and 30%. The company reported that like-for-like sales grew by just 0.1% for Pick 'n Pay, while Boxer saw stronger growth, with sales increasing by 13.5%. Internal sell price inflation was 4.3%. We previously recommended applying a 200-day simple moving average and waiting for a clear upside break before further investigation. That break occurred on 27th May 2024 at a price of 2558c, with the share rising to 2850c before the rights issue. However, by the end of August 2024, the share was trading at 2392c. Given the company's challenges, the share remains risky for investors at this stage.
JSE:PIK
by PDSnetSA
Our opinion on the current state of MONDIPLC(MNP)Mondi (MNP) is a large international paper and packaging company that originated in South Africa but now operates in 30 countries, employing 26,000 people across approximately 100 sites. The company is involved in the full spectrum of packaging, including owning and managing forests, and producing wood pulp, paper, and plastic films for a wide variety of packaging solutions. Mondi is known for its professional management and broad operational scope. The company was impacted by the Ukraine crisis. On 28th February 2022, Mondi reported that around 12% of its revenue came from its Russian operations, including its high-margin, cost-competitive pulp and paper mill in Syktyvkar. However, Mondi decided to divest all of its Russian assets, which had a net asset value (NAV) of €687 million at the end of 2021. On 12th August 2022, Mondi completed the sale of its Russian subsidiary for about R25 billion, which led to a sharp increase in the share price. Prior to this, Mondi had sold its personal care business for €615 million on 1st July 2022. For the six months ending 30th June 2024, Mondi reported revenue down 4% and earnings per share (EPS) down 30%. Despite these declines, the company highlighted an underlying EBITDA of €565 million, which was lower than the previous period but still reflected an encouraging performance supported by improving market conditions, stronger order books, and higher sales volumes. In its update for the third quarter ending 30th September 2024, Mondi reported underlying EBITDA of €223 million, down from €351 million in Q2 2024, primarily due to planned maintenance shutdowns and a forestry fair value loss. Mondi remains a blue-chip company, but the paper and packaging business is challenging, which makes the stock volatile. Technically, Mondi’s share price had been in a strong upward trend after March 2020 but was derailed by the Ukraine situation in March 2022. Since then, the stock has been moving sideways and upward with significant volatility. In March 2024, Mondi announced the acquisition of 54% of LSE-listed DS Smith Plc for GBP5.14 billion, and on 9th October 2024, the company further expanded by acquiring the packaging assets of Schumacher Packaging for €634 million. These acquisitions indicate Mondi's strategic efforts to grow its presence in the global packaging sector, despite the challenging environment. While Mondi is fundamentally strong, its exposure to global economic cycles, particularly in the packaging and commodities sector, means the stock will continue to be volatile.
JSE:MNP
by PDSnetSA
Our opinion on the current state of INSIMBI(ISB)Insimbi (ISB) is a group that manufactures and supplies specialist products to the industrial sector. The company is involved in sourcing, buying, packaging, and processing ferrous and non-ferrous alloys, refractory and foundry materials, as well as plastic blow-moulding and injection moulding. Insimbi also recycles metal alloys and provides technical support to users of its products. In its results for the six months ending 31st August 2024, the company reported an 11% decrease in revenue and a headline loss of 1.22c per share, compared to a profit of 15.46c in the previous period. The company cited challenging operating conditions, partly due to volatile prices for key commodities such as copper, aluminium, nickel, and steel. Technically, the share was in an upward trend until June 2018 but fell to a low of 50c on 18th December 2020. It subsequently rose to a high of 139c in June 2023 before entering a new downward trend. Insimbi could benefit from a recovery in the South African economy, but it remains a risky commodity share. The stock is thinly traded, with an average of about R36,000 worth of shares changing hands daily, making it illiquid and potentially dangerous for private investors. As a result, Insimbi remains a high-risk penny stock, especially given its exposure to volatile commodity prices.
JSE:ISB
by PDSnetSA
Our opinion on the current state of DRDGOLD(DRD)DRDGOLD (DRD) is the JSE's oldest listed company, having been listed in 1895. It has evolved into a gold surface treatment operation, focusing on re-treating surface dumps with traces of gold that can be profitably extracted using modern methods. DRDGOLD's all-in sustaining cost of extraction is just over R627,247 per kilogram, compared to an average received gold price of R917,996. The nature of surface treatment operations presents lower risk than traditional underground gold mining, as it has less union exposure and avoids the costs and challenges associated with underground mining. The company's profitability is more predictable, given the known life and grade of its operations. The share is known for its volatility, largely tied to fluctuations in the international gold price. However, DRDGOLD has a debt-free balance sheet and generates strong free cash flows. A significant development occurred when Sibanye swapped its surface dumps for an additional 265 million DRD shares, increasing its stake to 38%. On 10th January 2020, Sibanye further exercised its option to increase its shareholding to 50.1% at a cost of R1.086 billion. DRDGOLD’s CEO, Niel Pretorius, aims to join other tailings projects on the West Rand to create a massive unified reprocessing operation. The company is also building a 20MW solar and battery facility to enhance operational efficiency and sustainability. In its results for the year ending 30th June 2024, DRDGOLD reported revenue up 14%, with headline earnings per share (HEPS) up 4%. However, gold production and sales were down 5%, and cash operating costs increased by 20% in rands. The company announced plans to lift tonnage throughput to 3 million tonnes per month and gold production to over 6 tonnes per annum by FY2028. For the three months to 30th September 2024, DRDGOLD reported a 7% increase in production and a 4% increase in sales. All-in sustaining costs dropped 5% to R933,686 per kilogram. Cash operating costs per kilogram of gold sold decreased by 4% to R856,723/kg, despite winter tariffs from Eskom during June to August driving up total cash operating costs. Technically, DRDGOLD's share price reached a high of 2,458c on 9th May 2023, before entering a downward trend. However, it broke through its long-term downward trendline on 3rd July 2024 at 1,673c, signaling a new upward trend. While the stock remains volatile, given its sensitivity to international gold prices, DRDGOLD’s debt-free position and stable operations make it an attractive, albeit risky, commodity investment.
JSE:DRD
by PDSnetSA
Our opinion on the current state of CMH(CMH)Combined Motor Holdings (CMH) operates 43 car dealerships representing 28 brands, including major names like Nissan, Volvo, Toyota, Opel, Subaru, Lexus, Mazda, Isuzu, and Ford. The company sells both new and used vehicles and is closely tied to the health of the broader economy, as consumers tend to hold onto their cars longer during economic downturns. COVID-19 significantly impacted the company, prompting it to reduce its car rental staff by up to one-third, cut its fleet by 40%, and close 20 branches. Ongoing issues like electricity disruptions from Eskom and low business confidence have also negatively affected operations. Despite these challenges, the car rental division has been steadily recovering. In its results for the six months to 31st August 2024, CMH reported a 1.3% decline in revenue and a 31.9% drop in headline earnings per share (HEPS). The company attributed these declines to poor returns in May and June 2024, influenced by political uncertainty during the run-up to the elections and the formation of a tentative Government of National Unity (GNU), which dampened consumer confidence and spending on high-cost items like vehicles. Technically, the share made a "V-top" at 3350c on 10th May 2018 and then dropped sharply to around 950c in May 2020 due to the impact of COVID-19. Investors were advised to wait for a break above the long-term downward trendline, which occurred at 1489c on 2nd February 2021. Since then, the share has risen steadily to its current level of 3522c, where it trades at an undemanding price-to-earnings (P:E) ratio of 6.5. In our view, CMH offers good value at these levels, making it an attractive option for investors.
JSE:CMH
by PDSnetSA
Our opinion on the current state of BHP(BHG)BHP is a global commodities company headquartered in Melbourne, Australia, with operations in minerals, oil, and gas, and employing around 62,000 people, mostly in the Americas and Australia. The company is involved in producing a wide range of resources, including copper, iron ore, coal, oil, and gas. Key assets of BHP include: - **Escondida** (57.5% ownership) in Chile, one of the world's largest copper producers, also producing gold and silver. - **Antamina** (33.75% ownership) in Peru, producing copper and zinc. - **Pampa Norte** (100% ownership) in Chile, producing copper cathode in the Atacama Desert. - **Samarco** (50% ownership) in Brazil, producing iron ore. - **Cerrejón** (one-third interest) in Colombia, an open-cut coal mine. - **Saskatchewan** mineral rights in Canada, holding one of the world’s largest unexploited potash deposits. - **Olympic Dam** in Australia, which is one of the world's largest copper, uranium, and gold ore bodies. - **Western Australia Iron Ore** (WAIO), a network of five mines linked by over 1,000 km of railways. - **Queensland Coal**, which includes Mitsubishi Alliance and Mitsui Coal. - **Mt. Arthur** open-pit coal mine in New South Wales. - **Nickel West** in Australia, a nickel mine with smelting and refining capabilities. - In petroleum, BHP holds resources in the Gulf of Mexico, Australia, Trinidad, and Tobago. In its results for the six months ending 31st December 2023, BHP reported a 6% increase in revenue but a 48% drop in headline earnings per share (HEPS). The company’s tangible net asset value (NAV) was $8.68 per share, compared to $8.91 in the previous period. BHP emphasized its status as the lowest-cost producer of iron ore at its WAIO operations and highlighted record copper production at its South Australia and Chile operations. Additionally, it approved Jansen Stage 2 in Canada, which will nearly double its planned potash production capacity. The company noted commodity price volatility and softer-than-expected demand in developed markets, although China’s demand remained healthy despite housing market weakness, and India emerged as a strong performer. For the three months ending 30th September 2024, BHP reported a strong start to the 2025 financial year, with increased production across major commodities: copper production was up 4% due to higher grades and recoveries at Escondida, and WAIO production was up 3%. BHP’s share price has been in a long-term upward trend since the commodity cycle turned positive in January 2016. However, it has been affected by falling commodity prices since early 2024. While the share remains volatile due to its exposure to commodity prices, it continues to be supported by its diversified asset base. On 25th April 2024, BHP announced a share offer for the entire issued share capital of Anglo American, with the condition that Anglo unbundle its holdings in Amplats and Kumba. Anglo rejected the offer as well as two subsequent improved offers. Negotiations are ongoing, and this development could spark a bidding war with competitors like Rio Tinto and Glencore.
JSE:BHG
by PDSnetSA
Our opinion on the current state of QUILTER(QLT)Quilter Plc (QLT) was spun out of Old Mutual as part of its "managed separation" process and began trading on the London Stock Exchange (LSE) with a secondary listing on the JSE from 25th June 2018. Quilter is a UK-based financial services group offering asset management both domestically and internationally. The company serves 900,000 customers and had GBP101.7 billion in assets under management (AUM) as of 30th June 2023. Quilter is also involved in life assurance and has a strong track record as a multi-manager for client wealth. More than 60% of Quilter's shareholders are South African institutions, making it a significant rand-hedge stock. Any strengthening of the rand against the British pound could see the share price fall, while a weakening rand would likely boost the share price. In its results for the six months to 30th June 2024, Quilter reported core net inflows up 164%, adjusted profit up 28%, and an operating margin of 29%. AUM increased by 13% to GBP110.6 billion. The company attributed its positive performance to increased interest rates, which supported investment returns on shareholder cash, stronger markets that increased average assets under management and administration (AuMA), improved net inflows, and effective cost management through its Simplification programme. In a trading statement for the third quarter of 2024, Quilter reported record inflows of GBP1.4 billion, bringing AUM to GBP116.2 billion by the end of the quarter. Technically, the share has broken out of an "island" formation and is now in a new upward trend. Quilter is considered a solid rand-hedge investment and a favorite among institutional investors. As the UK economy continues to recover, Quilter is well-positioned to benefit from that growth.
JSE:QLT
by PDSnetSA
Our opinion on the current state of SASFIN(SFN)Sasfin (SFN) is a banking group that specializes in various types of finance for small businesses and high-net-worth individuals. Listed on the JSE in 1987, the company has been investing heavily in its digital platforms and acquisitions. The share had been in a strong downward trend, and investors were advised to wait for a measurable turn in the price, such as an upside break through its long-term trendline, before making further investments. While this upside break has not yet occurred—primarily due to the effects of COVID-19—there are signs that the share is beginning to recover. On 16th October 2023, Sasfin announced that it had entered into binding heads of agreement to dispose of its capital equipment finance and commercial property finance businesses to African Bank Limited. This news caused the share price to rise sharply. However, on 27th February 2024, the company announced that it had received a civil summons from the South African Revenue Services (SARS) for a damages claim of R4.782 billion, plus interest and penalties, related to income tax, value-added tax (VAT), and penalties allegedly owed by former foreign exchange clients of the bank. Sasfin has a market capitalisation of just R484 million. In its results for the six months to 31st December 2023, the company reported headline earnings per share (HEPS) down 62.39% and net asset value (NAV) up 4.09% to 5191c per share. The company explained that the decrease in HEPS was due to negative adjustments to its fair value loans and private equity portfolio, as well as an increase in credit impairments, reflecting the challenging economic environment for businesses in South Africa. In a trading statement for the year ending 30th June 2024, Sasfin estimated that it would make a headline loss of between 181.41c and 200.5c, compared to a profit of 366.18c in the previous year. The expected loss was primarily due to increased expected credit losses, negative fair value adjustments, and high once-off costs, including provisions raised for administrative sanctions. The share is fairly thinly traded, with an average of R85,000 worth of shares changing hands daily. On 15th July 2024, Sasfin announced its intention to delist from the JSE, offering shareholders R30 per share—a 66% premium to the 30-day volume-weighted average price (VWAP) as of 12th July 2024. On 16th October 2024, *Business Day* reported that the JSE had put Sasfin on notice of suspension due to its failure to produce financial statements within three months of the end of its financial year, adding further uncertainty to the company’s position.
JSE:SFN
by PDSnetSA
Our opinion on the current state of KAROO(KRO)Cartrack was folded into a new international listing under the name Karooooo (KRO) on 21st April 2021. The company operates in vehicle recovery, insurance, telematics, and fleet management across twenty-four countries worldwide. With a 92% vehicle recovery rate, Karooooo claims industry leadership in this area. It has experienced rapid organic growth, with its subscriber base growing at a compound annual rate of 21% over the past six years. Notably, 96% of the company's revenue is derived from annuity income, providing stable, recurring revenue. The company's founder, Zak Calisto, owns 68.5% of the Singapore-based firm Karooooo. Given its strong annuity income, rand-hedge characteristics, and rapid growth, Karooooo is an attractive investment for private investors. It has also been gaining strong institutional interest. The company's business model requires almost no working capital, and its high levels of annuity income ensure overheads are covered at the start of each month. Investors are encouraged to accumulate shares during any market weakness. On 7th December 2020, the company announced its listing on the NASDAQ with an inward listing on the JSE, allowing it to raise funds on the international market. On 12th February 2024, Karooooo announced that it would buy back up to 1 million of its ordinary shares in the market, reflecting confidence in its future performance. In its results for the six months to 31st August 2024, the company reported earnings per share (EPS) up 31% and a 17% increase in subscribers to 2,136,610. Subscription revenue grew by 15%. The company highlighted that Cartrack delivered record operating profit of ZAR293 million, a 16% increase compared to Q2 2024's ZAR252 million. The gross profit margin expanded to 74% from 71%, and the operating profit margin remained strong at 29%. Additionally, Karooooo Logistics’ operating profit grew by 20%. Although the share is not cheap, trading at a P:E of 30.31, its impressive growth record and rand-hedge qualities make it a "must-have" investment for private investors.
JSE:KRO
by PDSnetSA
Our opinion on the current state of BYTES(BYI)Bytes Technology, spun out of Altron, was separately listed on the London Stock Exchange (LSE) and the JSE. At the time of listing, it had a market capitalisation of around R13 billion, which has since grown to R26.5 billion. Altron shareholders benefited from the demerger, receiving GBP542 million in shares and cash, marking a significant release of value. Bytes Technology describes itself as "one of the UK's leading software, security, and cloud services specialists." It is also the largest reseller of Microsoft products in the UK, with approximately 60% of its revenue generated from annuity-based income. In its results for the six months to 31st August 2024, the company reported a 2.9% decline in revenue but a 19.5% increase in headline earnings per share (HEPS). The company attributed the strong increase in operating profit to continued demand for its broad range of software, solutions, and services. Technically, the share rose to a cycle high of 16,100c on 25th January 2024, and there are expectations that it will exceed this high in the near future. The current downward trend is likely due to the relative strength of the rand this year. However, Bytes Technology remains a solid rand-hedge and is expected to perform well going forward. On 21st February 2024, the company announced the resignation of its CEO, Neil Murphy, with immediate effect, and he was replaced by Sam Mudd. Despite this leadership change, the company is positioned to maintain its strong performance in the market.
JSE:BYI
by PDSnetSA
Kumba Iron Ore Analysis 10/15/24DISCLOSURE: As of 10/15/24 I have no open positions in Kumba Iron Ore JSE: KIO Introduction: Kumba Iron Ore is a South African Iron Ore mining company. They operate 3 mines in South Africa, all of which are quality assets operating profitably at current Iron Ore prices. The second business segment is logistics, or the transport of minerals across South Africa and internationally. Fundamentals: Looking at the 3 mines and their average costs the company is profitable at any Iron Ore prices about $40/metric ton. Well below the current prices. The return on the company's assets is very high and debt is negligible. The mine's have a long runway of 20+ years before they are at risk of running dry. With a long runway, profitable mines, the company looks attractive on a fundamentals basis. Iron Ore spot price: Current Iron prices are around $100/metric ton. Iron being a commodity tied to the general economy could see a drop in an economic downturn. $50 Iron could be possible atleast in the short term with an upside of $200/metric ton in a good economic environment for Iron. tradingeconomics.com Valuations: Kumba Iron Ore is currently trading at a P/CF and a P/E of 3.67 and 5.69 respectively. By both metrics the company is very cheap relative to the fundamentals. With a dividend yield of 11% easily covered by the company's cash flows Kumba Iron Ore looks very attractive for a long term investor bullish on Iron Ore. If you enjoyed this report follow for more! PM for consulting, portfolio analysis, and research requests.
JSE:KIOLong
by sihen999
UPDATE Murray and Roberts - Th big restest in play before upsideSince the last update, M&R was heading up on a smooth trajectory. The bears probably thought it was going up too quickly and too soon. So there is a temporary pause in the uptrend with the inv cup and handle. We are likely to get an uptrend test to see if there are any sellers around that area. If ther price bounces from there or anywhere around the higher low, we could see it continue with the current target at R4.75
JSE:MURLong
by Timonrosso
Our opinion on the current state of CALGRO-M3(CGR)Calgro (CGR) is a developer of large-scale integrated properties, rental units, and memorial parks. Established in 1995, the company was listed on the JSE in November 2007. Calgro acquires suitable land, plans developments, and then sells or rents residential units or memorial park plots. The company recently secured additional funding of $25 million to finance new development projects. However, one of the challenges it faces is illegal land invasions, which have affected its operations. In its results for the six months to 31st August 2024, Calgro reported a 26.4% decrease in revenue and headline earnings per share (HEPS) of 101.4c, up from 78.88c in the previous period. The company explained, "A decrease in revenue for the period under review was primarily driven by reduced unit sales due to pressure on the already constrained consumer, and delayed transfers. The Group, however, banked over R200 million in cash during the first two weeks of September." Technically, the share has been in a strong upward trend since March 2023. Like many property companies, Calgro is still trading well below its net asset value (NAV), offering substantial value to investors. It was added to the Winning Shares List (WSL) on 15th August 2024 at 356c and has since risen to 660c, reflecting significant growth.
JSE:CGR
by PDSnetSA
Our opinion on the current state of MERAFE(MRF)This ferrochrome operation is controlled by Glencore and operates mines, furnaces, and smelters in Mpumalanga and Limpopo. The Glencore-Merafe joint venture has the capacity to produce up to 2.3 million tons of ferrochrome annually. Merafe receives 20.5% of the proceeds, with the balance going to Glencore. A significant issue for the operation is electricity supply, as smelters require vast amounts of power. The 15.6% increase in Eskom tariffs last year was a major burden, and the current year's increase of just under 10%, effective from 1st April 2022, poses additional challenges. The company is also concerned about Eskom's capacity to supply additional power for future expansions. As a result, the Lion 3 expansion has been suspended until the electricity issue can be resolved. All smelters, except for the Lydenburg smelter, are operational. Another challenge is the availability of trains from Transnet to transport its product. As a commodity share, Merafe faces the inherent risks associated with global demand for ferrochrome and stainless steel. The increase in demand for stainless steel driven by the economic boom in the U.S. has now slowed. In its results for the six months to 30th June 2024, Merafe reported revenue down 0.4% and headline earnings per share (HEPS) of 28.2c, compared to 42c in the previous period. Ferrochrome production was down 17%, though the company's net asset value (NAV) increased by 3%. In a production update for the nine months to 30th September 2024, the company reported attributable ferrochrome production up 2%. Technically, the share reached a high of 192c on 4th April 2022 and trended down until a rally in September 2022. It found brief support at 104c per share before trending upward, though the rally was short-lived. The share remains volatile, as is common for commodity-related stocks.
JSE:MRF
by PDSnetSA
Our opinion on the current state of NUMERAL(XII)Previously known as "Go Life International" (GLI), Numeral is a company listed in Mauritius with a secondary listing on the JSE's Alt-X market. Its focus is on "nutraceuticals," which are products associated with alternative medicine. These products claim to offer health benefits but are not pharmaceuticals. The company was formed to acquire and exploit nutraceutical-producing companies in South Africa and currently owns Go Life Health Products and Gotha Health Products. In its results for the six months to 31st August 2023, the company reported zero revenue and a headline loss per share of 0.0051c (US), compared with a loss of 0.0044c in the previous period. The company noted that its asset base had been completely eroded, necessitating a full write-off of all underlying investments totaling $34,851,774 in 2020. The recapitalization process was completed in the first quarter of 2023, and the board approved subscription agreements for the issue of 465,000,000 new shares, of which 132,500,000 were treasury shares recovered above. In its financials for the nine months to 30th November 2023, the company again reported zero revenue and a headline loss per share of 0.07c (US). The company made a loss of $80,777 in the nine months and has a negative net asset value (NAV). Furthermore, the company has a history of delaying the publication of its financials. Until Numeral can generate revenue, increase the free float, and improve the tradability of its shares, it is not considered a practical investment for private investors. On 6th November 2023, the company's board announced its proposal to change the company's name to "Numeral Limited" from "Go Life International." In a trading statement for the six months to 31st August 2024, the company estimated that headline earnings per share (HEPS) would increase by 292%.
JSE:XII
by PDSnetSA
Our opinion on the current state of SASFIN(SFN)Sasfin (SFN) is a banking group specializing in various types of finance for small businesses and high net-worth individuals. It was listed on the JSE in 1987. The company has been heavily investing in its digital platforms and acquisitions. The share was in a strong downward trend, and investors were advised to wait for a measurable turn in the price, such as an upside break through its long-term trendline, before investigating further. This break has not yet occurred, mainly due to the impact of COVID-19, though there are signs that the share is beginning to recover. On 16th October 2023, the company announced, "Sasfin has entered into binding heads of agreement to dispose of its capital equipment finance and commercial property finance businesses to African Bank Limited." This caused the share price to rise sharply. However, on 27th February 2024, Sasfin announced that it had received a civil summons from the South African Revenue Services (SARS) for a damages claim of R4.782 billion plus interest and penalties related to income tax, value added tax (VAT), and penalties allegedly owed by former foreign exchange clients of the bank. Sasfin has a market capitalization of just R484 million. In its results for the six months to 31st December 2023, Sasfin reported headline earnings per share (HEPS) down 62.39% and net asset value (NAV) up 4.09% to 5191c per share. The company attributed the decline to negative adjustments to the group's fair value loans and private equity portfolio, as well as an increase in credit impairments due to the challenging economic environment for businesses in South Africa. In a trading statement for the year to 30th June 2024, Sasfin estimated that it would make a headline loss of between 181.41c and 200.5c, compared to a profit of 366.18c in the previous year. The expected loss is due to increased expected credit losses, negative fair value adjustments, and high once-off costs, including a provision for administrative sanctions. The share is fairly thinly traded, with only about R85,000 worth of shares changing hands on average each day. On 15th July 2024, Sasfin announced its intention to delist from the JSE. Shareholders will be offered R30 per share, which represents a 66% premium to the 30-day volume-weighted average price (VWAP) as of 12th July 2024.
JSE:SFN
by PDSnetSA
Our opinion on the current state of QUANTUM(QFH)Quantum (QFH) operates in the chicken business, with four key divisions: animal feeds, eggs and layers, broilers, and an African division where it sells related products. The company was significantly impacted by the drought in Southern Africa, but as the drought conditions eased and the price of animal feeds decreased, Quantum benefited from higher egg prices and lower feed costs. The chicken industry is known to be challenging. It is labor-intensive, exposing companies to union action, and it involves substantial working capital tied up in stock and debtors. The industry is also susceptible to unexpected disease outbreaks, such as avian flu or Newcastle disease, and it has faced challenges from the dumping of cheap chicken into the South African market from Europe, Brazil, and America. Despite these challenges, with top-tier management, profitability can be achieved. However, due to the inherent risks, investors generally view the sector as high-risk, which is reflected in Quantum's low price-to-earnings (P:E) multiple and high dividend yield (DY). The unprotected strike at Kaalfontein Farm has restricted output and cost the company an estimated R10 million. Quantum also suffered an outbreak of highly pathogenic avian influenza (HPAI) at its Lemoenkloof Farm, in addition to dealing with loadshedding and labor unrest. In its results for the six months to 31st March 2024, the company reported revenue down 13% and headline earnings per share (HEPS) of 21.7c, compared with 2.9c in the previous period. Quantum said, "During the current reporting period the average price of yellow maize on the South African Futures Exchange (“SAFEX”) decreased by 16.6%; and the average landed price (Cape Town harbour) of soya meal decreased by 5.7%." In a trading statement for the year to 30th September 2024, Quantum estimated that HEPS, "...will be at least 87.4 cents higher than the loss per share of 17.4 cents reported for the financial year ended 30 September 2023." The future remains uncertain, and the chicken business is prone to volatility. Prospective investors should be prepared for fluctuations due to factors such as raw material costs and operational challenges in the current economic environment. On 7th March 2024, the company announced that Astral Foods had sold 9.77% of its stake in Quantum. This sale led to a 73% jump in Quantum's share price, as speculation arose about a potential takeover. However, on 13th March 2024, Quantum announced that it had received a letter from Country Bird Holdings (CBH) indicating that it had no intention of making a takeover bid.
JSE:QFH
by PDSnetSA
Our opinion on the current state of WESIZWE(WEZ)Wesizwe (WEZ) is a miner of platinum group metals (PGMs) through its development of the Bakubung Platinum Mine (BPM). The mine is being developed to access the Merensky and Upper Group 2 (UG2) resources, located near Rustenburg on the Western Limb of the Bushveld Complex. In addition to BPM, the company owns 17.1% of projects 1 and 3 of Maseve Investments. In its results for the six months to 30th June 2024, Wesizwe reported headline earnings per share (HEPS) of 7.36c per share, a significant improvement compared to a loss of 59.63c in the previous period. The company stated, "Administration expenditure increased by 749% to R35.05 million, from R4.13 million in the prior corresponding period. - Net foreign exchange gains of R170 million due to the strengthening of the Rand against the US Dollar (2023: R1.783 billion loss)." The share trades about R145,000 worth on average every day, making it viable for small private investors. However, Wesizwe is a marginal precious metals company, and its performance is heavily dependent on PGM prices, which makes it a risky investment. The share price has fallen from a high of 197c in October 2021 to around 53c following recent results. Given its volatility and risk profile, there are likely better options available in the PGM market for investors.
JSE:WEZ
by PDSnetSA
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 successfully until 2015. At that point, the founding CEO resigned, and Adrian Pillay, a well-qualified individual, took over. However, the company has faced challenges since Pillay's appointment. Coronation was heavily invested in African Bank and Steinhoff, both of which experienced significant financial issues, leading to substantial losses. These missteps have caused the investment community to question Coronation's ability to maintain its past success in selecting strong investments on the JSE and beyond. As a result, the company has seen an outflow of institutional funds, which has negatively impacted confidence in its fund management. In the asset management industry, confidence is crucial, particularly from institutional fund managers who must trust the judgement of asset managers. A solid track record of managing funds is essential, but even the most qualified teams will make mistakes and lose money at times. On 8th February 2023, Coronation announced that it had lost a SARS appeal regarding additional taxes, which could potentially result in the suspension of its dividend. This news caused the share price to drop sharply. However, in its results for the six months to 31st March 2024, the company reported a 4.3% increase in revenue and headline earnings per share (HEPS) of 200.5c, compared with 6.2c in the previous period. Assets under management (AUM) also grew by 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 strongly from 2008 until reaching a peak of R115 per share on 30th December 2014. After that, and under new management, the shares fell to a low of 2541c at the outbreak of COVID-19. A long-term downward trendline was applied, and a clear upside break occurred on 21st June 2024 at 3599c. The share was added to the Winning Shares List (WSL) on 11th May 2024 at 3281c and has since risen to 3900c, with indications that it will rise further. On 21st June 2024, the Constitutional Court ruled in Coronation's favor, meaning the company is not liable for a R794m claim by SARS. The company indicated that the funds set aside for a potential adverse judgement could be returned to shareholders. Additionally, on 13th October 2024, Coronation announced its intention to increase black ownership from the current 31% to 51%, which would help it secure more business from government agencies like the Government Employees Pension Fund (GEPF).
JSE:CML
by PDSnetSA
Our opinion on the current state of ZEDER(ZED)Zeder (ZED) is PSG's listed, 43.7%-held investment holding company in agriculture. Zeder sold its 28.6% stake in Pioneer Foods (PFG) to PepsiCo for a sum-of-the-parts (SOTP) value of R10.7 billion, receiving about R6.41 billion. As a result, Zeder declared a special dividend of 230c. Zeder's largest investment now is its 98% stake in Capespan, which markets fruit both locally and overseas. This is followed by a 93% holding in Zaad, which specializes in seeds and seed production, and a 41% holding in Kaap Agri. In September 2019, Zeder's CEO acquired 40% of East Africa Seeds (EAS) for Zeder subsidiary Zaad, and that holding has since been increased to 97%. The company has warned of rising food prices due to increasing fertilizer and fuel prices following the February 2022 invasion of Ukraine. In its results for the six months to 31st August 2024, the company reported that its net asset value (NAV) had dropped by 17.9% to 215c per share, primarily due to the payment of ad-hoc special dividends of R0.40 per share. The company also made a headline loss of 4.1c, compared to a profit of 3.6c in the previous period. Zeder said, "After a sharp decline in the Agbiz Agribusinesses Confidence Index during Q2 2024, the index has subsequently recovered by 10 points to 48 points." Zeder carries the exposure of agricultural enterprises to drought and other adverse weather conditions, but it is a well-managed company. At 194c, the share looks fairly valued against its NAV of 215c. While volatile, the share has been rising since April 2024.
JSE:ZED
by PDSnetSA