VOD LONG OF 90Vodacom has being holding 90 for a while now Long 0f 90 is a good play we can see target of 108
$JSEARL - Astral Foods: Alternate Wave Count Calls For RecoverySee link below for previous analysis.
I have updated my preferred wave count and it has significant implications.
The new count shows the decline from 33519 to 11079 as a complete zig zag pattern.
Wave (A) is a impulse with distinguishable five waves.
Wave (C) is also an impulse though more simple in structure.
I am looking at the advance from 11079 to 22166 as a leading diagonal and the correction to 13176 as a zig zag, however it is possible that this correction is still unfolding.
The key level to watch for the bullish outlook is 11079 as a break below this level invalidates the bullish forecast.
$JSERLO - Reunert: Loss of Momentum But Still Pushing UpSee link below for previous analysis.
The triangle outlook has been invalidated but prices has continued upwards as forecasted but with much reduced momentum compared to wave .
The support trendline is firmly intact but price action has been very choppy from 5370.
It is likely that the stock is forming an ending diagonal for wave .
I am always cautious when a stock is trading in its fifth wave so I will be neutral to slightly bullish at this juncture.
$JSEFSR - FirstRand: Consolidating In A Contracting TriangleFirst Rand has been consolidating since making a new all time high in March 2022.
The consolidation pattern seems to be unfolding as a contracting triangle.
Triangles are tricky as they can breakout on either side or evolve into a more complex pattern.
I will remain neutral and wait for price action to lead the way.
SLMFriday 01-March-2024, 06h30 | Sticking with SLM Sanlam, the price action is also in line with yesterday morning’s pre-market reading via the Tactical Trading Guide which looked for a re-test of the 50-day EMA followed by a rebound. See chart + reading below:
AGLLarge and Liquid: Reading from my TTG
Trading Time Frames:
Short Term (1 to 10 days)
Medium Term ( 2 to 4 weeks)
Long Term (5 to 8 weeks)
Readings subject to change, based on the development of price action.
The readings assume no existing position held by the trader.
SBKLarge and Liquid: Reading from my TTG
Trading Time Frames:
Short Term (1 to 10 days)
Medium Term ( 2 to 4 weeks)
Long Term (5 to 8 weeks)
Readings subject to change, based on the development of price action.
The readings assume no existing position held by the trader.
$JSENED - Nedbank: Still Consolidating SidewaysSee link below for previous update.
Nothing much has changed, price still contained in what looks like a contracting triangle.
I remain neutral as to the direction of the breakout so I will sit on my hands for now.
Our opinion on the current state of MCGMultiChoice Group (MCG) is a preeminent player in the African entertainment sector, operating as one of the world's fastest-growing pay-TV broadcast providers. With a significant subscriber base spread across 50 countries, the company enjoys a robust presence in the market. The division of its 90-day subscriber base, with a substantial portion outside South Africa, highlights its widespread appeal and market penetration.
Since being spun off from Naspers and listed on the Johannesburg Stock Exchange (JSE) in February 2019, MultiChoice has been identified as an attractive investment, particularly for private investors. Its business model, characterized by annuity income primarily from debit orders and a highly diversified client base, affords it a stable financial footing. The company's operational model, which minimizes the need for large inventories and relies on a skilled workforce, further underscores its efficiency and potential for sustained growth.
The landscape of pay-TV in Africa, while promising, faces challenges from emerging technologies such as 5G internet access and the proliferation of free online content platforms. Regulatory considerations, such as those proposed by the Independent Communications Authority of South Africa (Icasa) to enhance market competition and potentially alter dominance rules in sports broadcasting, could impact MultiChoice's stronghold, particularly concerning exclusive sports content.
The COVID-19 pandemic, with resultant lockdowns, temporarily boosted the home entertainment industry, benefiting companies like MultiChoice. Strategic partnerships and agreements, such as those with Sky News and NBC Universal to bolster its Showmax service, demonstrate MultiChoice's commitment to maintaining and expanding its market dominance in Africa.
For the six-month period ending on 30th September 2023, MultiChoice reported a slight decline in revenue and headline earnings per share (HEPS), with a noted contraction in its overall subscriber base, partly due to the adverse effects of extensive load shedding in South Africa. Despite these challenges, the company's Rest of Africa operations exhibited growth, affirming its expansive market reach.
The recent increase in Canal+'s stake in MultiChoice to over 35%, triggering a mandatory offer at R105 per share, represents a significant development. MultiChoice's rejection of the offer as undervalued and the subsequent ruling by the Takeover Regulation Panel (TRP) requiring a mandatory offer for the remaining shares highlight the ongoing corporate dynamics and the perceived value of MultiChoice.
From a technical analysis standpoint, MultiChoice's share performance has shown resilience amidst market fluctuations, with a notable recovery following a break through the 65-day exponential moving average in December 2023. This recovery, along with the company's solid fundamentals and strategic initiatives to enhance its service offerings, positions MultiChoice as a compelling investment option, albeit with considerations for the evolving competitive landscape and regulatory environment.
Our opinion on the current state of KAPKAP International Holdings is a diversified industrial entity in South Africa, with a portfolio that spans timber production, chemical manufacturing (including PET and related chemicals), bedding, automotive parts, and logistics. The company's strategic acquisitions, such as Safripol and Hosaf, have been consolidated into its polymers business, strengthening its market position in the chemicals sector. Despite facing challenges in the automotive parts division, KAP has seen robust growth in its bedding division, buoyed by new investments in infrastructure and manufacturing capabilities.
The full divestiture by Steinhoff, which previously owned 43% of KAP, marks a significant shift in the company's shareholder structure. The extension of the government's Automotive Production and Development Programme (APDP) until 2035 is expected to positively impact KAP's automotive parts manufacturing business, offering long-term support and growth prospects.
KAP's timber division has shown resilience and growth post-lockdown, with sustained demand for its products. However, the automotive components division experienced significant challenges due to the lockdown, with a slow recovery post-restriction lifting. The bedding division, on the other hand, maintained operation throughout the lockdown, catering to medical and agricultural needs, showcasing the diversity and adaptability of KAP's business model.
The flooding in Natal in April 2022 caused temporary operational and supply chain disruptions for KAP's operations in the region, highlighting the environmental and logistical challenges the company faces.
For the six-month period ending on 31st December 2023, KAP reported a slight decrease in revenue by 2% and a significant reduction in headline earnings per share (HEPS) by 36%. Despite these challenges, the company's net asset value (NAV) saw a slight increase of 1% to 478c per share. The decline in EBITDA and operating profit, particularly within the Safripol division, alongside a 20% increase in finance costs due to rising interest rates, underscore the financial pressures confronting KAP.
From a technical analysis perspective, KAP's share price has experienced volatility, reaching a low in March 2020, followed by an uptrend until April 2022, before entering a downward phase. The increased load shedding has further impacted the company's operational efficiency and profitability.
Considering the current market dynamics and KAP's diversified industrial portfolio, the company may offer value at its current price levels. However, potential investors should carefully assess the impact of external factors such as load shedding, interest rate fluctuations, and the overall economic environment on KAP's future performance and growth trajectory.
Our opinion on the current state of HARHarmony Gold Mining Company Limited (HAR) stands as a notable example of a marginal gold mine within South Africa's mining landscape. The nature of marginal mines—where the cost of extraction is closely aligned with the prevailing gold price—renders Harmony particularly sensitive to fluctuations in the rand price of gold. This sensitivity often results in a volatile share price, reflecting the inherent uncertainties and the narrow operational margins that limit the company's flexibility in managing cost increases or declines in gold prices.
Looking ahead, Harmony's strategic focus shifts towards the development of the Wafi-Golpu mine in Papua New Guinea, a venture shared equally with Newcrest Mining. This project, backed by a memorandum of understanding with the Papua New Guinean government, sets a definitive timeline for the mine's development, which is poised to significantly impact Harmony's financial and operational dynamics. The estimated cost of developing Wafi-Golpu and its associated processing plant stands at around US$2.8 billion, a substantial investment that poses a considerable financial challenge for Harmony, given its requirement to fund approximately R20 billion of the total cost.
In addition to its international ventures, Harmony has made significant local investments, including the acquisition of the Mponeng gold mine in 2021 for R4.2 billion. Mponeng, recognized as the world's deepest mine, introduces complex challenges associated with ultra-deep level mining. Moreover, Harmony's commitment to sustainability and cost efficiency is evident in its investment in renewable energy, notably the construction of a 30mw solar park in the Free State, with plans to expand its green power capacity by an additional 80mw.
Recent operational developments have underscored the risks and challenges inherent in Harmony's operations. Notably, the tragic loss of four employees at the Kusasalethu mine in May 2022 and the acquisition of the Eva copper project in Australia in October 2022 highlight the company's ongoing efforts to diversify its portfolio. The Eva project, which marks a significant shift towards copper, is expected to commence production in three years, contributing significantly to Harmony's gold and copper reserves.
Harmony's performance in the six months to 31st December 2023 has shown positive signs, with a 14% increase in gold production and an 18% increase in the average price received, attributable to an 8% decline in the rand. This led to a substantial 226% increase in HEPS and the declaration of a 147c per share dividend. The approval of the Mponeng extension project, which extends the mine's life and enhances profitability, alongside the strong performance of the Hidden Valley mine, underscores Harmony's potential for generating significant operating free cash flow.
Despite these developments, Harmony remains a high-risk investment, largely due to its exposure to the volatile gold market and the substantial financial commitments required for its expansion projects. However, the company's strategic diversification and recent operational successes suggest potential for significant transformation and growth, making it a noteworthy contender for investors closely monitoring the precious metals and mining sectors.
Our opinion on the current state of CSBCashbuild, recognized as the leading retailer of building materials and related hardware in Southern Africa, focuses on the home improvements market. Given the economic downturn in Southern Africa, the company's strategy for growth has largely been centered around the expansion of its store network. This approach indicates Cashbuild's preparation for enduring the current market challenges and positioning itself to capitalize on any potential upturn in the region's economic climate.
For the six-month period ending on 24th December 2023, Cashbuild reported a modest revenue increase of 2%, whereas its headline earnings per share (HEPS) saw a significant decrease of 20%. Furthermore, the company's net asset value (NAV) experienced a notable decline of 16% to 7757c per share. The revenue from stores operating before July 2022 (312 pre-existing stores) saw a slight increase of 1%, with the addition of nine new stores contributing another 1% to the growth. Despite maintaining gross profit levels, the gross profit margin percentage decreased from 25.3% to 24.7%, influenced by a selling price inflation of 3.2% at the end of December 2023 compared to the previous year.
From a technical perspective, Cashbuild's share price has seen significant fluctuations. After a steady decline starting in March 2018, the share price found its low at R120 in March 2020. It then experienced a notable rally to R337 by February 2021 before entering another downward trend. Currently trading at R131.58, with a price-to-earnings (P:E) ratio of 10.77 and a dividend yield of 4.45%, Cashbuild demonstrates the characteristics of a well-managed entity with a strong potential for growth, particularly if the Southern African economic landscape improves.
Despite its commendable management and strategic positioning within a challenging and competitive industry, the valuation still seems somewhat steep given the current market conditions. Potential investors might consider this aspect carefully, weighing the company's growth prospects against the backdrop of the broader economic environment and industry competition. Cashbuild's future performance will likely hinge on its ability to navigate the economic recovery of Southern Africa and leverage its expansion strategy to drive further growth.
Our opinion on the current state of ARIAfrican Rainbow Minerals (ARI), under the leadership of Patrice Motsepe, is a diversified mining company with interests spanning across a wide range of minerals including platinum group metals (PGM), iron ore, manganese, chrome, coal, and copper. Additionally, it holds a significant stake of 12.2% in Harmony Gold. The speculation around a possible acquisition, particularly with Harmony's Wafi-Golpu copper and gold resource, co-owned with Australian mining company Newcrest, highlights ARI's strategic positioning. Given Harmony's search for financial partners to cover the development costs estimated at around R21 billion for Wafi-Golpu, ARI could potentially play a key role in this venture, aligning with its interest in expanding into "green metals" that are pivotal in climate change mitigation efforts.
For the fiscal year ending on 30th June 2023, ARI reported a 21% decrease in headline earnings per share (HEPS) and declared a final dividend of R12 per share. The company's performance was notably affected by logistical challenges that impacted the volumes of iron ore, manganese ore, and thermal coal. Additionally, the production costs have been under significant pressure due to reduced production volumes coupled with above-inflation increases in the costs of explosives, diesel, electricity, consumables, and maintenance.
Looking ahead to the six months ending on 31st December 2023, ARI anticipates a substantial decline in HEPS, estimated to fall between 40% and 50%. This forecast is primarily attributed to a 43% decline in the average US dollar price of 6E platinum group metals (PGM) and lower thermal coal prices, reflecting the volatile nature of commodity markets and their impact on mining operations.
The share price of ARI has been on a downward trend since the beginning of 2023, influenced by declining commodity prices. This trend underscores the inherent risks associated with the mining sector, particularly for companies like ARI that are exploring potential investments in new ventures such as Wafi-Golpu. While such investments could offer long-term benefits, especially in aligning with global efforts to combat climate change through the production of green metals, they also introduce significant financial commitments and risks.
In conclusion, African Rainbow Minerals presents as a potentially strong player in the mining sector, benefiting from its diversified portfolio. However, the company's future performance and stock valuation may be influenced by its strategic decisions, including potential acquisitions and investments in new mining ventures. Investors considering ARI should be mindful of the risks associated with the volatile commodity market and the implications of the company's strategic investments on its financial stability and growth prospects.
Our opinion on the current state of AFEAECI (AFE), a prominent player in the production of chemicals and explosives, has established a significant presence both within South Africa and internationally. Catering to a diverse range of industries including mining, water treatment, animal health, food and beverages, and the broader industrial sector, AECI has managed to spread its operational footprint across Australia, North America, Europe, Asia, and Africa. The company's workforce spans 7,600 employees in 22 countries, underscoring its global scale and reach. Additionally, AECI encompasses a property division known as "Acacia," further diversifying its business operations.
The company's strategic focus on diversification has proven effective, with 40% of its total revenue now originating from outside South Africa. This international expansion, coupled with a successful acquisition strategy, has enabled AECI to enhance both its turnover and profitability, mitigating the risks associated with over-reliance on the South African market.
For the fiscal year ending on 31st December 2023, AECI reported a revenue increase of 5.4%, although headline earnings per share (HEPS) experienced an 11.7% decline. The company attributed these results to the challenging operational environment, marked by high inflation and interest rates, supply chain and logistics disruptions, and declining commodity prices. Despite these hurdles, AECI's core division, AECI Mining, played a pivotal role in steering the company's performance. Moreover, the company has demonstrated effective management of its net debt, which improved to R4,338 million from R5,345 million in 2022, reflecting stringent net working capital management throughout the year.
Currently, AECI is trading at a price-to-earnings (P:E) ratio of 8.31 and offers a dividend yield (DY) of 1.85%. These financial metrics suggest that the share price may face further decline. From a technical analysis perspective, AECI's share price has exhibited a sideways trend over the past decade. However, recent patterns indicate that the share might be nearing the bottom of its current downtrend, potentially setting the stage for a recovery phase.
Given AECI's diversified business model, international presence, and strategic focus on managing its financial health, the company presents an interesting proposition for investors. Those with a keen eye on the chemicals and explosives sector, especially within the context of global operations, may find AECI's potential for recovery an opportunity worth monitoring, particularly if the company continues to navigate the challenging economic landscape effectively.
Our opinion on the current state of SFNSasfin, a banking group with a focus on providing finance solutions for small businesses and high net-worth individuals, has been a part of the Johannesburg Stock Exchange (JSE) since 1987. The bank has made significant investments in digital platforms and acquisitions to enhance its offerings and reach. However, the share has been on a downward trend, which was advised to be monitored for an upside break through its long-term trendline as an indicator for potential investment. The anticipated upward break has been delayed, in part due to the impact of COVID-19, but recent developments suggest signs of recovery.
On 16th October 2023, Sasfin announced a significant strategic decision to divest its capital equipment finance and commercial property finance businesses to African Bank Limited, which triggered a sharp increase in its share price. This move is indicative of Sasfin's strategic repositioning and focus on core operations that offer the greatest potential for growth and profitability.
For the fiscal year ending on 30th June 2023, Sasfin reported a total income increase of 7.31% but a decrease in headline earnings per share (HEPS) by 19.42%. The net asset value (NAV) of the company saw a growth of 4.49% to 5122c per share. The rise in total costs was primarily attributed to increased expenses within its Business and Commercial Banking division, as well as costs associated with investigating financial misconduct by former employees.
More recently, on 27th February 2024, Sasfin disclosed receiving a civil summons from the South African Revenue Services (SARS) for a substantial damages claim amounting to R4.782 billion, plus interest and penalties. This claim is related to income tax, value-added tax (VAT), and penalties allegedly owed by former foreign exchange clients of the bank. Such a development poses a significant challenge for Sasfin, potentially impacting its financial stability and investor confidence.
Given the relatively low volume of shares traded daily, around R55,000 on average, Sasfin's stock is considered fairly thinly traded. This characteristic can lead to higher volatility and may affect the liquidity for investors looking to buy or sell shares.
In light of these developments, potential investors should carefully consider Sasfin's current financial health, the implications of its strategic decisions, and the potential impact of the SARS claim. While the disposal of certain business units may streamline operations and focus on more profitable segments, the legal challenge from SARS introduces uncertainty that needs to be weighed carefully before making investment decisions.
Our opinion on the current state of RCLRCL Foods, a significant player in the South African food, sugar products, and chicken market, is predominantly owned by Remgro with an 80.4% stake. The company boasts an array of renowned local brands, including 5 Star maize meal, Farmer Brown poultry, and Yum Yum peanut butter, positioning it as a key competitor against foreign imports across its product lines. However, challenges such as the listeriosis outbreak have adversely affected the market for processed meats, imposing estimated costs of around R158m on the company. Moreover, RCL has faced pressures from a sluggish economy, diminished consumer spending, and high unemployment rates.
In response to these challenges, particularly in the poultry sector, RCL, via the South African Poultry Association, has lobbied the International Trade Administration Commission (ITAC) for a substantial increase in tariffs on imported chicken, advocating for an 82% rise to protect its market.
For the fiscal year ending on 30th June 2023, RCL reported a revenue increase of 17.3% alongside a notable decline in headline earnings per share (HEPS) by 42.4%. This downturn in earnings was largely attributed to unrecouped cost pressures within its Rainbow chicken division, despite a solid underlying performance in its core Value-Added Business, which saw underlying EBITDA rise by 10.8%. This juxtaposition of achievements and challenges underscores the company's resilience and effective management in navigating a particularly tumultuous year.
Looking ahead, RCL offered an optimistic outlook in its trading statement for the six months ending 31st December 2023, projecting an increase in HEPS of between 41% and 45.9%. This positive forecast follows significant corporate actions, including Remgro's increased investment in RCL through the acquisition of 100 million shares at R8.05 each on 2nd December 2020, and the strategic sale of Vector Logistics for R1.25 billion announced on 29th March 2023.
Despite these developments, RCL's share price has experienced a period of stagnation and decline since reaching a peak on 9th February 2022. Given this trend, a cautious approach is advised, with a recommendation to wait for a decisive upward shift through the long-term downward trendline before considering investment. This strategy aims to ensure that investors can capitalize on the company's well-regarded management and potential market recovery, aligned with improving economic conditions and successful strategic moves.
Our opinion on the current state of MTHMotus (MTH) was spun off from Imperial Holdings and made its debut on the Johannesburg Stock Exchange (JSE) on 22nd November 2018. As a standalone entity, Motus operates a comprehensive motor vehicle business, with its activities spanning across South Africa, the United Kingdom, and Australia. The company is organized into four main divisions: import and distribution, retail and rental, motor-related financial services, and aftermarket parts. It has an impressive portfolio, importing and selling over 80,000 vehicles annually, managing 356 dealerships, and operating 134 rental outlets under the Tempest and Europcar brands. Additionally, it provides vehicle finance and fleet management services to approximately 730,000 clients in South Africa and retails parts and accessories for older vehicles through 720 franchised outlets. With a 20% market share in the South African retail vehicle sector, Motus is a significant player, selling around 100,000 vehicles per year and serving as the importer for notable brands such as Hyundai, Kia, Mitsubishi, and Renault.
The company's leadership, under CEO Osman Arbee, has committed to distributing generous dividends, supported by robust cash flow generation. Despite generating the majority of its turnover (65%) and operating profit (93%) from its South African operations, Motus has demonstrated its capability to expand and operate successfully internationally. This is evidenced by the acquisition of FAI Automotive in the UK for R550 million on 1st October 2021.
For the six months ending on 31st December 2023, Motus reported an 11% increase in revenue, although headline earnings per share (HEPS) decreased by 27%. This period saw the South African operations contributing 55% to revenue and 66% to EBITDA, with the international operations making up the balance. The company's vehicle businesses across all regions retailed 64,076 new units and 43,747 pre-owned units during this timeframe.
The share price experienced a significant dip from its initial listing price of R95 to around R34 in the aftermath of COVID-19. However, it subsequently emerged from this downturn, forming an "island" formation before entering a new upward trend. Currently trading at a price-to-earnings (P:E) ratio of 4.69, Motus presents itself as a reasonably priced investment. This positioning, alongside its status as a well-established blue-chip company, suggests its potential for good returns, especially with improvements in the economy and assuming challenges such as loadshedding can be effectively managed.
Our opinion on the current state of GNDGrindrod (GND) is an international freight and financial services company operating in twenty-eight countries. In mid-June 2018, Grindrod unbundled and separately listed its loss-making shipping division, Grinship (GSH), which explains the significant drop in share price at that time. Post-unbundling, Grindrod has concentrated on its two core divisions: freight and financial services. The company owns strategic infrastructure such as the North-South railway line from Beitbridge to Victoria Falls and port terminals in Richards Bay, Natal, Walvis Bay, Namibia, and Maputo, positioning it advantageously in the logistics and transportation sector.
The financial services division, constituting about 30% of the business, is seen as a growth area, especially in retail banking focused on small and medium-sized enterprises. However, challenges such as the conflict in northern Mozambique and the flooding in Natal, which temporarily suspended operations at five sites, have impacted the company.
For the first half of the fiscal year ending on 30th June 2023, Grindrod reported a 32% increase in revenue and a 26% rise in headline earnings from core operations. The company's net asset value (NAV) also saw a 10% increase to 1333c per share. This performance is attributed to strong demand for Grindrod's logistics solutions, leveraging its extensive cargo terminals infrastructure and complementary logistics services.
Looking forward, Grindrod anticipates a significant increase in headline earnings per share (HEPS), projecting a rise of between 33% and 39% for the year ending 31st December 2023. The technical analysis suggests a positive outlook for the share; after completing a rising triple-bottom formation, it has embarked on a new upward trend. The recommendation to wait for an upward break through its long-term downward trendline before buying proved prudent, with the share price surging 270% from 340c to 1260c in just over three-and-a-half years since the break on 15th July 2020.
Given the recovery in the global economy and the steady increase in international trade, Grindrod is well-positioned to benefit. Despite its impressive growth, the share is still considered to offer value, indicating potential for further gains.
UPDATE: MTN Diamond Break down and heading to R60.65This has been a long winded analysis.
We sent out this one on 22 Dec 2023, which gave a Conservative entry from the Dimaond Breakdown.
And now the momentum is picking up to the downside.
We also have an Reverse Inv Cup and Handle which is rare but also effective.
The Nature is still High probability as the Price is below BOTH 20MA and 200MA.
Target easily still to R60.65
Our opinion on the current state of AELAllied Electronics Corp, or Altron (AEL), is an information and communications technology company which was started by Bill Venter in 1965. It has recently been re-focusing on its core business and has sold its 80% stake in Powertech and its 100% subsidiary, Altech UEC (a developer of set-top boxes). Powertech was also sold to a BEE consortium. Altron is in the process of selling CBI Telecom Cables. Altron operates in six African countries as well as the UK and Australia. The company said it had "...secured key wins in both the public and the private sector...", including the Gauteng Broad Band Network phase 2 contract and FNB's data and analytics contract. Netstar won the e
Thekwini 3-year contract for vehicle tracking for 7000 vehicles. Bytes, in the UK, which has now been unbundled and separately listed both in the UK and in an inward listing on the JSE, won a 5-year contract for Windows 10 from the NHS (UK). Altech aims to re-structure its debt to reduce its interest bill and has resumed paying dividends. They acquired Phoenix Software in the UK for R698m.
On 17th December 2020, the company announced the successful listing of its subsidiary Bytes Technology on the London Stock Exchange (LSE) at a price of GBP2.70. This unlocked considerable value into the hands of Altron shareholders but resulted in a "cliff" in the Altron share price chart. We believe that this share will continue to perform well going forward.
In its results for the six months to 31st August 2023, the company reported revenue up 4% and headline earnings per share (HEPS) up 19%. The company said, "Altron Group results were impacted by provisions and impairments (collectively referred to as the 'Non-Cash Adjustments') raised in two non-core subsidiaries, namely Altron Nexus of R334 million, in relation to the restructuring of Altron Nexus due to the loss of the Gauteng Broadband Network contract and the City of Tshwane exposure, and Altron Document Solutions of R95 million. This includes the goodwill impairment raised at Altron Group level of R33 million in relation to Altron Nexus."
In a trading statement for the year to 28th February 2024, the company estimated that HEPS would increase by between 16% and 24%. The company said, "Normalising for the sale by Altron Managed Solutions of its ATM Hardware and Support Business (the 'ATM Business'), which was effective 1 July 2023, the Group's Continuing Operations are delivering year-to-date revenue growth, with double-digit growth in EBITDA and Operating Profit."
Technically, the share has been moving sideways between 750c and 1330c since December 2020. At its current price, it is trading below its net asset value (NAV).
Our opinion on the current state of CAACA Sales listed on the JSE on 27th June 2022 and traded 34 deals on the day, opening at 505c and closing at 745c. The company supplies food, health, alcohol, and fast-moving consumer goods (FMCG) to a wide range of companies. It is involved in warehousing, distribution, marketing, and point-of-sale. In its results for the six months to 30th June 2023, the company reported revenue up 22.5% and headline earnings per share (HEPS) up 21.5%. The company said, "Revenue growth was driven by organic growth, acquisitions, expansion into new regions as well as the on-boarding of new clients to the group’s portfolio. As a result, gross profit increased by 25.9% to R786.8 million (H1 2022: R625.2 million)."
In a trading statement for the year to 31st December 2023, the company estimated that HEPS would increase by between 23% and 28%. The company said, "HEPS increased due to good organic growth from all the operations as well as the successful onboarding of new clients." This is one of the only new listings on the JSE in 2023 and, after an initial period of sideways movement, the share price has been rising steadily. We added it to the Winning Shares List on 25th August 2023 at a price of 775c. By 26th February 2024, it was trading for 1140c - a gain of 47% in six months. We believe it will continue to perform.
Our opinion on the current state of ELIEllies (ELI) is a fledgling electronics company which imports and distributes electrical products and supplies solar power solutions. From its heyday in 2013 when the share traded at almost R10 a share, it has fallen to just 2c. Technically, the share has been in a strong downward trend. It is a fairly thinly traded penny stock with only about R100 000 worth of shares changing hands every day on average. On 2nd March 2020, the company announced the commencement of section 189 proceedings in terms of the Labour Relations Act, to retrench 183 staff. This is a company that will probably benefit directly from any improvement in the South African economy and the share does look cheap at current levels. The company is trying to reduce its reliance on Multichoice and the installation of DSTV dishes in a move towards solar energy.
On 26th September 2022, the company announced that it was beginning a section 189 procedure which comes before retrenchments. This caused the share price to fall by almost 20%. In its results for the year to 30th April 2023, the company reported revenue down 7,7% and a headline loss per share of 10,78c compared with a loss of 713c in the previous period. In the six months to 31st October 2023, the company estimated that it would make a headline loss per share of between 12,8c and 13,66c compared to a loss of 4,34c in the previous period. Technically, the latest results and news hammered the share down to 1c. On 31st January 2024, the company announced that it had entered business rescue.
Our opinion on the current state of JBLJubilee Metals Group (JBL) is a diversified metals recovery company which re-processes mine waste and surface materials. It is listed both on the London AIM market and on the JSE's Alt-X. It has operations in South Africa, the UK, Madagascar, and Australia - and it is involved in a joint venture in Zambia to produce lead, zinc and vanadium. The company primarily produces platinum group metals (PGM) and chrome, and its primary asset is a 63% stake in the Tjate project, which is assessed to include the world's largest undeveloped block of platinum ore with an estimated potential of 65m ounces on the Western limb of the Bushveld Igneous Complex. However, in recent years the company has "...pivoted towards a smelting and beneficiation strategy as a cashflow survival strategy."
Jubilee is currently spending about R154m to consolidate its PGM retreatment business by buying a reprocessing plant and some dumps. The R154m is being used to buy a chrome processing operation and 1,8m tons of tailings from PlatCro Minerals. It is a low-cost producer, but subject to the vagaries of the platinum and base metals markets. In its results for the six months to 31st December 2023, the company reported revenue up 18,4% with PGM production up 11,2% and chrome production up 7,4%. The company said, "Zambian copper operations continue to show strong growth, driven by the investment in the expansion projects with an expected further sharp increase on completion of the upgrade to the Roan copper concentrator."
In our view, this share is probably one of the better options in the mining sector but remains highly volatile and risky. On 12th December 2023, the company announced that it had secured one of the largest dumps of copper waste on the surface in Zambia. This caused the share price to jump 19%. We suggest waiting for a break up through the share's long-term downward trendline before investigating further.
