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Our opinion on the current state of LNFLondon Finance and Investment Group (LNF) is a UK-based entity specializing in management and finance operations across the UK, America, and Europe. The company is publicly traded on the London Stock Exchange (LSE) and is part of the Fledgling division on the Johannesburg Stock Exchange (JSE). In 2021, LNF held significant stakes in various companies, including 43.8% in Western Selection Plc (Western), 4.6% in Finsbury Food, and 11.69% in Northbridge. Western Selection Plc has a diversified investment portfolio in companies dealing in specialist industrial equipment, cosmetics, and toiletries, and holds a 12% stake in Bilby, a company engaged in maintenance and general building services. Finsbury Food Group operates as a manufacturer and supplier of cakes, bread, and morning goods to supermarket chains, marking LNF's involvement in the food industry. In addition to these specific investments, LNF maintains a general portfolio encompassing interests across various sectors, including tobacco, chemicals, food, beverages, and natural resources. This diversified investment strategy reflects LNF's broad approach to asset management and finance. For the six-month period ending 31st December 2023, LNF reported a revenue increase of 4.86%, although its headline earnings per share (HEPS) saw a significant decline of 51.61%. Despite this downturn in HEPS, the company's net assets per share experienced a notable rise of 19.1%, reaching 70.3p at the end of December 2023, up from 59.2p at the end of June 2023. LNF attributes part of this growth to strategic adjustments in its General Portfolio Investments, including additional net cash investments totaling £723,000 and realizing profits of £509,000, leading to an 8% increase in the fair value of its General Portfolio. Despite these financial movements and strategic investments, LNF's shares are described as virtually untraded on the JSE, indicating limited liquidity and practicality for private investors seeking to engage with the company's stock in the South African market. This scenario underscores the challenges and considerations for investors looking at LNF's performance and market activity.
JSE:LNF
by PDSnetSA
Our opinion on the current state of MTNMTN, a prominent mobile operator in emerging markets, serves a vast customer base of 290 million people, including 29 million in South Africa, across 19 countries in Africa and the Middle East. The company's substantial subscriber bases are primarily located in Iran, Nigeria, and South Africa. Like many in the mobile service industry, MTN faces intense competition and a decline in voice revenue, challenges partially offset by a significant rise in data usage. However, the company's operations are deemed particularly risky due to the political instability in Iran and Nigeria. In a strategic move to diversify its revenue streams, MTN is collaborating with Sanlam to introduce insurance products to its clientele, aiming to establish fintech as a core component of its business model. This initiative reflects MTN's ambition to transform into a digital operator with a focus on fintech, digital services, enterprise, and wholesale business areas. The rollout of mobile money services in Nigeria and South Africa, extending to 14 of the 21 countries where it operates, underscores this ambition. With 41.8 million mobile money customers, MTN is targeting an increase to 60 million users. Additionally, MTN's listing on the Nigerian stock exchange marks a significant milestone in its expansion efforts. However, MTN's operations have not been without challenges. On 13th January 2023, the company was hit with a $773 million (approximately R13.3 billion) tax assessment by the Ghanaian tax authorities, an action perceived as a financial shakedown similar to a previous incident in Nigeria. Despite these hurdles, MTN reported a 16.5% increase in service revenue and a 7.1% rise in headline earnings per share (HEPS) for the six months ending 30th June 2023. The subscriber count also saw a modest increase to 291.7 million. The partnership with Mastercard, which involves a R100 billion stake in MTN's fintech business, represents a significant endorsement of MTN's fintech initiatives and its potential for growth. Nevertheless, the company faced challenges in maintaining its performance amidst high inflation rates across its markets, as indicated in the update for the three months ending 30th September 2023, with service revenue up by 9% and a slight increase in total subscribers. Looking ahead, MTN's financial outlook appears pressured, with an estimated 60% to 80% drop in HEPS for the year ending 31st December 2023, attributed to non-operational factors such as hyperinflation adjustments and foreign exchange losses, particularly from naira depreciation. This situation highlights the impact of economic volatility in Nigeria on MTN's overall performance. With a current P:E ratio of 7.06 and a declining share price since March 2022, the recommendation is to monitor the share's trend closely and consider investing only upon a clear upward trendline break, indicating a potential reversal in its fortunes.
JSE:MTN
by PDSnetSA
Our opinion on the current state of NPHNortham, identified by its ticker NPH, stands out as a fully empowered platinum mining entity operating within South Africa's Bushveld complex, navigating through a challenging legislative landscape marked by the introduction of the 3rd mining charter, viewed as less favorable for investments. Despite these hurdles, Northam distinguishes itself as possibly the sole mining house actively acquiring new properties amidst these conditions. It has negotiated a deal with Anglo American to exploit a property adjacent to its Zondereinde mine, recognized as the deepest platinum mine in the country. Additionally, Northam has taken a significant step by purchasing Eland Platinum from Glencore for R175 million, with plans to restart operations at a projected cost of R2 billion. On 29th October 2019, Northam expanded its portfolio through the acquisition of Maroelabult for R20 million, located west of the Eland mine, featuring a similar ore body. This strategic move has expedited the production timeline for Eland with minimal capital expenditure. The acquisition included a concentrator plant capable of processing up to 250,000 tons per month, while in exchange, Glencore secured the rights to market all of Northam's chrome production. Concurrently, Northam has initiated a new smelter to address its backlog of platinum ore, valued at approximately R2.5 billion, enhancing its operational capabilities. Northam operates two primary mines: Zondereinde and Booysendal. Zondereinde, a deep-level mine, faces challenges inherent to deep mining, whereas Booysendal is a shallower, mechanized mine, easier to manage and contributing to the company's profitability. Despite this, the company's empowerment structure results in reported losses due to preference dividends. The completion of Booysendal is anticipated to generate significant cash flows for Northam. The addition of Mcebisi Jonas, a former South African Minister of Finance, and Jean Nel, former CEO of Aquarius Platinum, as non-executive directors, is expected to significantly strengthen the company's board. Northam aims to double its workforce as part of its ambition to become a leading global supplier of Platinum Group Metals (PGMs), with plans to elevate PGM production to 1 million ounces in the upcoming years, positioning it as a favorable investment in the sector. The sale of its Impala shares for R3.1 billion underscores Northam's strategic financial moves. However, Northam reported a 25.5% decline in sales revenue and a 92.5% decrease in headline earnings per share (HEPS) for the six months ending 31st December 2023. The company's financial position has been bolstered by disposing of its investment in RBPlat into the Implats Mandatory Offer for R9.0 billion in cash and over 30 million Implats shares, enhancing its balance sheet and liquidity. The PGM industry faces challenges from depressed PGM prices, high inflation, global geopolitical uncertainties, and local issues such as Eskom load curtailment events, which have impacted the ZAR 4E basket price by a 42.3% decrease. Since April 2021, Northam's shares have experienced a steady decline, reflecting the volatility of commodity shares. Despite these challenges, the long-term outlook for Northam remains positive, suggesting potential for investors willing to wait for a clear upward trend before engaging further.
JSE:NPH
by PDSnetSA
Our opinion on the current state of TRUTruworths, operating under the ticker TRU, is a notable retailer in the clothing, footwear, and accessories sector with a strong presence in Southern Africa and the UK, boasting listings on both the JSE and the Namibian Stock Exchange. A significant portion of its sales, approximately 70%, comes from South Africa and is credit-based, highlighting the importance of its credit management strategies. The retail landscape Truworths navigates is fiercely competitive, with numerous players ranging from Woolworths and Checkers to Pick 'n Pay, the Foschini Group, Mr. Price, Ackermans, and Pep vying for market share. This competition is further intensified by the entry of international brands like Cotton On, making the industry highly susceptible to consumer confidence and spending patterns. Moreover, staying profitable is a challenge due to the necessity for a keen understanding of rapid shifts within the fashion industry. To maintain its market position, Truworths employs a conservative approach while continuously refining its business model. The company operates an extensive network of 767 stores in South Africa, along with 37 stores across the rest of Africa and 132 stores in the UK, Germany, and Ireland. Truworths recently expanded its portfolio by acquiring Barrie Cline, a ladieswear brand that has been a supplier for over three decades. Furthermore, the company is set to launch a new low-cost value chain named "Primark," aimed at competing directly with budget retailers like Mr. Price and Jet. This expansion plan includes the rollout of 15 to 20 new value stores in the coming months. On the 9th of November, 2023, Truworths provided an update indicating a robust performance in the first 17 weeks up to the 29th of October, 2023, with retail sales surging by 10.9% and online sales by 41%, now accounting for 4.7% of total sales. The UK-based Office segment of Truworths saw a remarkable 18.9% increase in sales in Sterling terms to £91.3 million, up from the previous period's £76.8 million, translating to a 38.8% increase in Rand terms to R2.1 billion. Business Day reported that Truworths achieved an 8% sales increase in the six months leading to December 2023. The company anticipates that its HEPS will rise by between 0% and 4% for that period, noting a shift in the composition of Group retail sales with account sales representing 48%, down from 52% the previous year, while cash sales saw a 17.0% increase. The share price of Truworths was notably affected by the COVID-19 pandemic, but analysts suggested a wait-and-see approach until it surpassed its downward trendline. This turnaround occurred on the 4th of September, 2020, with the share price jumping to 3195c and further appreciating to 7757c. Given its current P:E ratio of 8.88, Truworths is considered to be of good value at these levels.
JSE:TRU
by PDSnetSA
$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.
JSE:ARL
by Loyiso_BlaqueSoros_Mpeta
$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.
JSE:RLO
by Loyiso_BlaqueSoros_Mpeta
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.
JSE:MCG
by PDSnetSA
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.
JSE:KAP
by PDSnetSA
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.
JSE:HAR
by PDSnetSA
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.
JSE:CSB
by PDSnetSA
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.
JSE:ARI
by PDSnetSA
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.
JSE:AFE
by PDSnetSA
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.
JSE:SFN
by PDSnetSA
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.
JSE:RCL
by PDSnetSA