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Our opinion on the current state of EFORA(EEL)Efora Energy (EEL), established in 1993 and listed on the JSE in October 1994, is an African oil and gas company engaged in a range of projects spanning oil production, and midstream to downstream distribution. The company's operations extend across Egypt, Nigeria, the DRC, Zimbabwe, and South Africa. Its subsidiary, Africoil, distributes 45 million liters of oil products monthly and operates two depots in Boland and Beitbridge, with the majority of its sales occurring in South Africa. In Egypt, Efora owns the Mena International Petroleum Company, which is currently developing the Lagia oil field in the Sinai Peninsula. In the DRC, Efora holds a 68% stake in Semliki, which in turn owns 18.3% of Block III, located in the northeastern part of the country bordering Uganda. This project is still in the exploratory phase. In Nigeria, the company maintains a 50% joint venture with Energy Equity Resources (EER) for lifting and trading Nigerian oil. For the six months ending on 31st August 2021, as reported on 27th November 2023, Efora experienced a significant downturn with revenue decreasing by 95%, and a headline loss of 0.32 cents per share, improving slightly from a previous loss of 25.08 cents. For the subsequent six months ending on 31st August 2022, the company anticipated an improvement in headline earnings per share, projecting a range between 0.68 cents and 0.74 cents, up from a loss of 0.32 cents in the earlier period. However, Efora has faced operational challenges, evidenced by the suspension of its shares since 9th October 2020 due to delays in producing financial statements. Despite announcements made on 31st January that interim and final accounts for 2023 were expected by 28th February 2024, these documents have not been forthcoming, casting further uncertainty on the company’s financial health and operational stability.
JSE:EEL
by PDSnetSA
Our opinion on the current state of GLENCORE(GLN)Glencore, one of the world's largest global diversified natural resource companies, manages over 150 mining, metallurgical, oil production, and agricultural facilities across more than 50 countries. The company's extensive global presence and diverse commodity portfolio make it less volatile compared to more specialized mining houses. Since the commodity cycle uptick in early 2016, Glencore has particularly benefited from owning significant cobalt resources in the Democratic Republic of Congo (DRC), crucial for electric vehicle batteries. However, the DRC government's move to classify cobalt as a "strategic mineral" could lead to higher taxes. Glencore has also been proactive in shareholder returns, initiating a $2 billion buyback of its shares. A strategic move saw Glencore acquiring Anglo American's 33% stake in the Colombian Correjon colliery for $294 million on 28th June 2021, capitalizing on heightened coal prices amid the Ukraine conflict. In a December 2022 investor update, the company announced plans to close half of its coal mines in Australia, South Africa, and Colombia as part of its strategy to reduce its carbon footprint. This decision reflects a significant shift towards more sustainable practices amidst global climate concerns. Financially, Glencore's 2023 year-end results indicated a decline, with revenue down by 15% and earnings per share decreasing by 74%. The company reported an adjusted EBITDA of $17.1 billion and net income attributable to equity holders of $4.3 billion, evidencing robust earnings despite lower commodity prices affecting global energy trade flows. For the first quarter of 2024, Glencore maintained its full-year production guidance, although there were declines in the production of key commodities like copper (down 2%), cobalt (down 37%), ferrochrome (down 26%), and coal (down 1%). Conversely, increases were noted in lead (up 11%), nickel (up 14%), and gold (up 7%). Technically, Glencore's share price movement showed a "descending double top" pattern, a bearish signal where the second peak fails to rise above the first, noted in April 2024. This pattern, coupled with the failure to surpass the January 2023 high of R120, suggests potential challenges ahead. Nevertheless, the share could see further upside potential if it breaks above the R120 resistance level, contingent on broader commodity market trends and Glencore's operational efficiencies.
JSE:GLN
by PDSnetSA
Our opinion on the current state of HARMONY(HAR)Harmony Gold Mining Company Limited (HAR), traditionally considered one of South Africa's most marginal gold mines, has taken significant strides towards enhancing its operational and financial profile. The acquisition and subsequent development of Mponeng gold mine, which is the world’s deepest mine, represent a crucial pivot in its business strategy. This mine, fraught with the challenges of ultra-deep level mining, was purchased in 2021 for R4.2bn, marking a substantial commitment to its future growth. To complement its mining activities, Harmony is also investing in renewable energy, with plans to build a 30 MW solar park in the Free State and an additional 80 MW of green power. These initiatives underscore a broader shift towards sustainability within the mining sector. Tragically, the company has faced significant operational challenges, including the death of four employees at Kusasalethu mine in May 2022. Such incidents highlight the ongoing safety challenges in the mining industry. Expanding beyond South African borders, Harmony acquired the Eva copper project in Australia for R4.1bn in October 2022. This project, which is not expected to commence production for three years, promises to diversify Harmony’s production by adding 260,000 ounces of gold and 1.7 billion pounds of copper to its reserves. The financial results for the six months ending 31st December 2023 were promising, showing a 14% increase in gold production and an 18% increase in the average price received due to an 8% decline in the rand. This resulted in a significant 226% increase in headline earnings per share (HEPS), allowing Harmony to declare a dividend of 147c per share. The company highlighted the approval of the Mponeng extension project, which is expected to extend the mine's life from 7 to 20 years and improve its profitability margins. Further updates for the nine months to 31st March 2024 indicated continued operational success with an 8% increase in recovered underground grades and a 10% rise in gold production. This performance has led to a 26% increase in gold revenue, supported by a 17% rise in the rand price of gold. Harmony's financial position is robust, with a net cash balance of R1.544 billion as of the latest reporting period. Additionally, the recent agreement on a five-year wage deal with all its unions on 3rd April 2024 suggests stable labor relations moving forward. Despite these positive developments, Harmony remains subject to the intrinsic risks and volatilities associated with the gold mining industry, which are closely tied to fluctuations in the international price of gold. The technical analysis suggests that the stock is in a volatile upward trend, emphasizing its nature as a high-risk, high-reward investment opportunity primarily influenced by global commodity prices.
JSE:HAR
by PDSnetSA
Our opinion on the current state of IMPLATS(IMP)Impala Platinum Holdings (Implats), ranked as the world's third-largest producer of platinum group metals (PGMs), has faced numerous challenges over the past seven years, including aggressive union action and legislative uncertainty. The company's strategic focus, as stated by the CEO, is on developing a portfolio of long-life, low-cost, shallow, mechanized mining assets, echoing a shift similar to that of Anglo American Platinum over the past decade. The demand for platinum, particularly in auto catalysts for diesel trucks, has waned recently, contributing to an oversupply in the global market. However, the markets for palladium and rhodium remain robust. In an effort to boost production, Implats is expanding its operations in Zimbabwe with the Mupani shaft expected to increase production by 14% from 2022. Additionally, the company's acquisition of a Canadian operation is anticipated to further increase its output. Recent significant developments for Implats include the acquisition of a 56.52% stake in RB Plats, following a mandatory offer, with Northam opting to sell its 34.5% holding to Implats. This acquisition marks a strategic move to consolidate its position in the industry. Labor relations have shown signs of stabilization with the company reaching a five-year wage agreement with the Association of Mine Workers and Construction Union (AMCU) in June 2022, securing an average annual wage increase of 6.6%. However, the company has also faced severe setbacks, such as the tragic incident at its No. 11 shaft in Rustenburg in November 2023, where 11 people died and 75 were hospitalized, highlighting ongoing operational risks. Financially, Implats reported a decline in its latest results for the six months ending 31st December 2023, with revenue falling by 24.9% and HEPS plummeting by 77.9%. Despite an 18% increase in Group 6E production to 1.9 million ounces and a 12% rise in sales volumes, the substantial drop in PGM prices severely impacted profitability. The company emphasized that while production and sales volumes have seen notable gains and cost controls have been effective, the dramatic decline in PGM prices has significantly affected interim profitability. In the first quarter update of 2024, Implats reported a 16% increase in 6E production volumes but noted that margins remain compressed. The company is actively pursuing measures to ensure each operation is capable of generating sustainable free cash flow throughout the PGM cycle. Technically, the share price of Implats has been in a downward trend since March 2022, driven by the lower PGM prices, rising costs, and challenges related to load shedding. This trend underscores the volatility of the commodity sector and the high-risk nature of investing in PGM stocks like Implats.
JSE:IMP
by PDSnetSA
Our opinion on the current state of ASTORIA(ARA)Astoria Investments Ltd. (ARA) is structured as an investment company with the aim of providing investors access to a diverse portfolio of equities primarily located in developed economies. After a period of suspension from September 2020 to April 2021, the company's shares have resumed trading, albeit at a price significantly below its net asset value (NAV), which is a common situation that can offer potential value to investors if the underlying assets are sound. Astoria has benefited from diverse investments, including a noteworthy venture during periods of civil unrest where it profited from the sale of "non-lethal self-defence" products. The company holds substantial stakes in other enterprises, including one third of Outdoor Investment Holdings and 35.7% in Trans Hex, although it has divested its interest in CNA. The resumption of trading on 19th April 2021 followed the distribution of 51.15 million shares, marking a pivotal point in the company's recent history. For the year ending 31st December 2023, Astoria reported an increase in NAV of 3.4% in rand terms, amounting to 1454c per share. The management highlighted significant growth in USD NAV per share since taking over on 1st December 2020, with an impressive compound annual growth rate (CAGR) of 24.8%, translating into a total ZAR return of 137.6% at a CAGR of 32.4%. However, the first quarter of 2024 presented challenges, as reflected in a headline loss per share of 115.26c, albeit an improvement over the previous period's loss of 125.31c. The NAV as of 31st March 2024 stood at 1385.02c per share, indicating a slight decline from the annual figures reported for 2023. This could be indicative of volatile market conditions or specific challenges faced by the assets within the portfolio. One of the notable issues for potential investors is the liquidity of Astoria's shares, with only about R85,000 worth of shares traded per day on average, and frequent days with no trading activity at all. This low volume can pose significant risks when attempting to enter or exit positions and could contribute to price volatility. Currently, the shares are under a cautionary notice, which typically indicates that there may be significant news forthcoming that could affect the stock's value. This status, combined with the share trading below NAV, suggests that Astoria could represent a good value opportunity, assuming the cautionary notice does not foretell negative developments. Investors considering Astoria should weigh the potential for high returns against the risks of low liquidity and the ongoing uncertainty indicated by the cautionary notice. Monitoring the company’s announcements and understanding the nature of its diversified investments will be crucial for those looking to invest in Astoria.
JSE:ARA
by PDSnetSA
$JSEART - Argent Industrial: The Impulse Road MapSee link below for previous analysis. Argent has had a strong run from the 2015 bottom at 302cps. The advance is unfolding as a five wave Impulse labelled wave (1) to (5); the stock is currently in wave 5 of (3) with wave 4 having terminated at 1101cps. Wave 5 of (3) itself looks to be unfolding as a five wave impulse that is currently in wave {iii}; wave {iii} can extend further from current levels and there is more upside potential with wave {iv} and {v} still to come to complete wave 5 of (3). The completion of wave (3) looks likely to take the stock to new all-time highs; a correction for wave (4) followed by one last advance for wave (5) will complete the five wave sequence. Buy the dips is the logical strategy.
JSE:ARTLong
by Loyiso_BlaqueSoros_Mpeta
$JSEARI - African Rainbow Minerals: The Short-Mid-Term Road MapSee link below for the long-term view. Looking at price action from 14662: The advance to 20300 is a leading diagonal for wave 1. The correction to 15503 is a zig zag for wave 2. The stock is now in the early stages of wave 3 which can only be a five wave impulse. Waves {i to v} in green give the idealized road map for wave 3. 15503 is the secondary invalidation but 14662, as the primary invalidation level, is the level which will lead to the whole invalidation of this bullish outlook should price break below it.
JSE:ARILong
by Loyiso_BlaqueSoros_Mpeta
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VODACOM GROUP (VOD)They are down nearly 40% since its peak in March 2022. This pullback mirrors similar trends observed in other South African Inc stocks. Currently, the share price has retreated to the lower trend line that has been established since 2022, finding support at R86.50. This pullback may potentially position the stock for a rebound. Our Entry: R88.00 There are some concerns to consider: - Upcoming earnings around the 13th of May - Elections scheduled for the 29th of May
JSE:VOD
by MarketMeistersTrading
$JSEARI - African Rainbow Minerals: The Big PictureThis is the first time of ARM. The big picture is one of very volatile swings in price as can be seen by the points and percentage changes in price when the stock is in bear mode. 2005 to 2008 was a great bull market where all one had to do was buy and hold. 2008 to 2016 was a big bear market that unfolded in a three wave zig zag pattern. The advance from 2016 to the all time high in 2023 was very choppy and I am tentatively labelling it as a large leading diagonal for a higher degree wave {1}. With this tentative outlook, I am labelling the sell-off from 31900 to 14662 as wave {2}. The correction for wave {2} is the third largest in points and looking at the V-bottom reversals in history, 14662 could be a significant bottom. This bullish outlook will be invalidated by a break below 14662. ARM has diversified operations in Iron-Ore, Coal, Manganese and Platinum (PGMs) but the fundamental outlook is beyond the scope of this analysis.
JSE:ARILong
by Loyiso_BlaqueSoros_Mpeta
Our opinion on the current state of ANGLO(AGL)Anglo American (AGL) effectively mitigates the typical risks associated with commodity stocks through two main strategies: diverse mineral operations and a strong financial foundation. The company's diversification across different minerals helps buffer against downturns in any single commodity market, while its robust balance sheet provides substantial resilience in turbulent times. Anglo American positions itself as a global mining leader with a broad portfolio of high-quality mining operations and undeveloped resources. Notably, the general trend for commodity prices has been upward since 2016, except for a downturn triggered by the COVID-19 pandemic in March 2020. Since then, there has been a notable recovery, fueled by economic growth in the U.S., Europe, and Asia. This recovery is reflected in projects like the Quellaveco mine in Peru, a massive copper operation where Anglo owns a 60% stake. With a construction cost of $5.6 billion, the mine is expected to pay back its investment within four years, subsequently providing long-term returns over its 30-year operational life. The global economic climate, including factors like the Ukraine conflict, has driven commodity prices, particularly precious metals, due to heavy sanctions on Russia. Despite these positive global market trends, Anglo American faces challenges such as unreliable rail services from Transnet, particularly impacting its Kumba operations. Additionally, the company is moving towards sourcing 100% of its energy needs from renewables in South Africa by 2023, aligning with broader environmental objectives. Financially, Anglo American experienced a decline in its latest annual results, with a 13% drop in revenue and a significant 94% decrease in EPS, as stated in the December 2023 report. This financial pressure is compounded by a $10.6 billion debt load and a comprehensive review of all assets to potentially streamline operations and reduce costs. From a technical perspective, Anglo's stock had shown signs of a bearish head-and-shoulders pattern, breaking down through the neckline at R525, suggesting potential for further declines. However, the dynamic changed with BHP's acquisition offer, which has significantly influenced the stock's trajectory. Initially, Anglo's shares responded positively to the offer, surging from the breakout point in April 2024. Nevertheless, Anglo rejected BHP's initial proposal, where shareholders would receive 0.7097 BHP shares for each Anglo share post-unbundling of Kumba and Amplats. This decision indicates potential for an improved offer, especially if competitors like Rio Tinto or Glencore enter the fray. For investors, Anglo American presents a mix of opportunity and risk, characterized by its strategic asset base and current market dynamics. The company's future stock performance may hinge on further developments in the acquisition talks and its ability to manage operational challenges. Investors should closely monitor these aspects, considering both the strategic value of Anglo's diversified portfolio and the external economic factors influencing commodity markets.
JSE:AGL
by PDSnetSA
Our opinion on the current state of EFORA(EEL)Efora Energy (EEL) is an African oil and gas company that has been a part of the industry landscape since its incorporation in 1993. The company was listed on the Johannesburg Stock Exchange (JSE) in October 1994 and has engaged in various sectors of the oil and gas industry, ranging from production to distribution across several African countries. Efora operates in key regions including Egypt, Nigeria, the Democratic Republic of Congo (DRC), Zimbabwe, and its home base, South Africa. In Egypt, Efora owns the Mena International Petroleum Company, which is focused on developing the Lagia oil field in the Sinai Peninsula. In the DRC, the company holds a significant stake in Semliki, which in turn owns a portion of block III in the northeastern part of the country near the Ugandan border, currently in the exploratory phase. In Nigeria, Efora has a joint venture with Energy Equity Resources (EER) that is centered on lifting and trading Nigerian oil. Africoil, a subsidiary of Efora, plays a critical role in its operations by distributing approximately 45 million liters of oil products monthly through its two depots in Boland and Beitbridge, with the majority of its sales occurring in South Africa. However, Efora has faced significant challenges. The company’s financial performance has shown dramatic fluctuations, as evidenced in the results for the six months ending on 31st August 2021, which were reported on 27th November 2023. These results highlighted a staggering 95% drop in revenue and a headline loss of 0.32 cents per share, an improvement, however, from a loss of 25.08 cents in the previous period. The trading update for the six months to 31st August 2022 projected an earnings turnaround with HEPS expected to be between 0.68 cents and 0.74 cents, contrasting with the loss in the prior period. Despite these efforts at recovery, the company’s shares have been suspended since 9th October 2020 due to delays in publishing its financial statements, reflecting ongoing issues with governance and financial management. On 31st January, Efora announced its intention to produce both interim and final accounts for 2023 by 28th February 2024, signaling potential moves towards resolving its compliance issues. Investing in Efora Energy carries significant risk, largely due to its volatile financial performance, operational challenges, and the overarching regulatory issues demonstrated by the suspension of its shares. Potential investors should exercise caution, keeping an eye on the company’s ability to meet its financial reporting obligations and on any developments that might affect its operational stability and market standing.
JSE:EEL
by PDSnetSA
Our opinion on the current state of FINBOND(FGL)Finbond Group Ltd (FGL) is a company engaged in micro-lending and insurance operations, with a significant presence in both South Africa and the United States. The company has outlined ambitious plans to expand its operations in the US, aiming for 70% to 80% of its income to come from the American market within the next 3 to 5 years. As of the latest reports, Finbond already derives 66% of its income from the US, a market it views as having substantial growth potential. Across both its operational regions, Finbond manages a total of 694 branches. For the six-month period ending on 31st August 2023, the company reported a notable increase in loans advanced by 23.2% and a significant rise in headline earnings per share (HEPS) by 72.4%. However, its net asset value (NAV) saw a slight decline of 2.6%, totaling R1.13 billion. The company attributes the growth in sales volumes to strong performance in both the South African and North American markets, surpassing both the previous corresponding period and the levels seen before the COVID-19 pandemic and regulatory changes in Illinois. Looking ahead, in its trading statement for the fiscal year ending on 29th February 2024, Finbond projected that HEPS would increase by at least 20%, a turnaround from a loss of 15.1 cents in the previous period. This forecast indicates a positive trajectory for the company's earnings, despite previous financial setbacks. From a technical perspective, Finbond's stock has been in a long-term downward trend and has only been drifting sideways since March 2022. Additionally, the trading volume is relatively low, with an average of about R117,000 worth of shares being traded daily. This low liquidity can pose challenges for investors looking to buy or sell large quantities of shares without impacting the price. Given the company's ambitious expansion plans in the US and its significant income generation from that market, Finbond presents certain opportunities for investors interested in a financial services company with growing international exposure. However, the stock's historical performance, the ongoing downward trend, and its status as a penny stock suggest that it may carry higher risks compared to more stable investment options. Potential investors should consider these factors and possibly look for more robust opportunities, especially those seeking less volatility and higher liquidity in their investments.
JSE:FGL
by PDSnetSA
Our opinion on the current state of REINET(RNI)Reinet Investments S.C.A. (RNI) is an investment holding company, with its primary asset being a significant stake in British American Tobacco (BAT), constituting roughly 2.12% of BAT's shares. This stake is valued at approximately $1.8 billion and represents about 31% of Reinet's net asset value (NAV), a substantial decrease from 85% a decade ago. The reduction in the proportion of BAT's contribution to Reinet's NAV is primarily due to the declining share price of BAT, influenced by challenging regulatory environments for tobacco products, particularly in the United States where potential legislative changes regarding menthol cigarettes are being considered. Despite the falling price of BAT shares, Reinet has not shown a strong inclination to divest from BAT, which continues to deliver robust dividend returns, especially from markets in developing countries, even as cigarette sales in developed nations decline. As BAT's share price has dropped, other assets within Reinet's portfolio have grown in relative importance. Notably, Reinet holds a 46% stake in Pension Insurance Corporation (Penscorp), which now accounts for 36.8% of its portfolio. Besides Penscorp, Reinet also manages a diverse array of private equity investments, making up around 15% of its portfolio. As of the fiscal year ending on 30th September 2023, Reinet reported a NAV of 30.89 euros per share, a slight decrease from 31.46 euros in the previous year, reflecting a 1.8% decline. This decrease was attributed to reductions in the fair value of several investments, including its holdings in BAT, Pension Corporation, and the Prescient China funds. On 22nd January 2024, Reinet updated its NAV to 33.47 euros per share, reflecting a total value of 5.734 billion euros with 171.3 million shares outstanding. By 31st March 2024, the company's NAV further adjusted to 3611 euro cents per share. The company's stock performance has been somewhat volatile, especially in response to global events and announcements, such as the BAT's decision to write down the value of its U.S. operations by GBP 25 million (approximately R595 billion), which led to a 10% drop in BAT's share price. This impact on BAT also indirectly affected Reinet's share valuation. Reinet's shares serve as a hedge against the rand's weakness, benefitting from any depreciation in the South African currency. Investors considering Reinet should thus weigh the potential risks associated with its significant exposure to BAT and the broader tobacco industry's regulatory challenges, alongside evaluating the stability and growth potential of its other investments like Penscorp and its array of private equity assets. As always, the future prospects of the rand and its impact on Reinet's performance should be carefully considered.
JSE:RNI
by PDSnetSA
Our opinion on the current state of RENERGEN(REN)Renergen Limited describes itself as an integrated alternative energy business with a focus on investing in renewable energy projects across Africa. Since its listing on the Johannesburg Stock Exchange (JSE) in June 2015, the company has consistently reported financial losses, reflected in a declining share price over the years. Despite these challenges, Renergen has pursued significant ventures, particularly in the liquified natural gas (LNG) and helium sectors. The company successfully secured funding through a R125 million rights issue, fully underwritten, which facilitated access to a R218 million loan facility. Renergen's appeal to investors was further evidenced by its initial public offering on the Australian Stock Exchange (ASX), which was more than two times oversubscribed. A key asset for Renergen is its significant helium reserves, reportedly exceeding 6 billion cubic feet, an element that the U.S. government in 2018 classified as critical to national security, significantly impacting its market value. Noteworthy developments for Renergen include the introduction of an innovative aluminum case designed to maintain vaccine temperatures for up to 30 days, announced on December 10, 2020. This innovation has the potential to be transformative in vaccine logistics, especially in regions with limited cold storage facilities. On June 21, 2021, the company also reported a notable helium discovery in Evander with a 1.1% concentration. Moreover, significant strides were made with a substantial gas find in the Karoo and subsequent sales agreements for helium, marked by a 620% increase in 1P helium reserves announced on November 3, 2021, which notably boosted the company's stock. Despite these advancements, Renergen's financial performance remains a concern. For instance, on June 7, 2023, Renergen secured an additional $750 million funding from Standard Bank and the International Development Finance Corporation for its Virginia Gas project. The project's progress was highlighted in the half-year results to August 31, 2023, where Renergen reported the production of 2,386 tons of LNG and confirmed the approval of substantial senior debt funding. The third quarter of 2023 saw further operational progress with eight wells spudded, including an early successful strike. However, Renergen's financial state continues to be precarious as evidenced by its trading statement for the year ending February 29, 2024, projecting a headline loss significantly wider than in the previous period. While Renergen's ventures in the renewable energy and helium sectors present speculative opportunities for investors, the inherent risks and ongoing financial volatility suggest caution. Potential investors should consider the company's long-term financial health and market conditions. Waiting for a positive shift in the share price trajectory—breaking through its long-term downward trendline—may be a prudent approach before committing to investment. This consideration is essential to mitigate risks associated with the speculative nature of Renergen's business model.
JSE:REN
by PDSnetSA
$JSENTC - Netcare: 1130 Gives Way, Bear Not Over; What Now?See link below for previous analysis. Netcare recently broke below 1130 invalidating the outlook I had that a bottom was in at that level. There's a minor adjustment in the wave count with wave 4 of (C) a flat pattern and wave 5, starting from 1738cps, looks to be taking the shape of an ending diagonal. As to how much lower wave 5 can go is anyone's guess but I will be bearish until i see signs of a reversal.
JSE:NTCShort
by Loyiso_BlaqueSoros_Mpeta