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Our opinion on the current state of NORTHAM(NPH)Northam (NPH) is a fully empowered platinum mining company operating in the Bushveld Complex. In the current difficult legislative environment, where the third mining charter is regarded as unfriendly from an investment point of view, Northam stands out as the only mining house actively acquiring new properties. It has come to an arrangement with Anglo American to exploit a property adjacent to its Zondereinde mine, which is the deepest platinum mine in South Africa. Additionally, it has purchased Eland Platinum from Glencore for R175m, with plans to re-start operations at a cost of R2bn. On 29th October 2019, the company announced the acquisition of Maroelabult for R20m. This property, located west of the Eland mine with an analogous ore body, has accelerated the production timeline for Eland and required minimal capital. With the Eland acquisition, Northam also gained a concentrator plant capable of processing up to 250 000 tons a month. In return, Glencore secured the right to market all of Northam's chrome. To further enhance its processing capabilities, Northam recently commissioned a new smelter to address its platinum ore backlog, estimated to be worth about R2,5bn. Zondereinde is a deep-level mine that faces challenges typical of mining at depth, whereas Booysendal is a shallow, mechanised mine that is easier to manage. Both mines are profitable; however, Northam consistently reports losses due to the preference dividends that must be paid under its empowerment structure. Once Booysendal is complete, the company is expected to generate strong cash flows. The appointment of Mcebisi Jonas (former South African Minister of Finance) and Jean Nel (previous CEO of Aquarius Platinum) as non-executive directors strengthens the board significantly. The company has expressed its intention to double its workforce as it aims to become a major global supplier of PGMs. With plans to increase PGM production to 1 million ounces in the coming years, Northam is seen as one of the better options in the industry. It has also sold its Impala shares for R3,1bn, bolstering its financial position. The PGM industry is currently facing challenges, including depressed PGM prices, high inflation, global geopolitical uncertainties, and Eskom load curtailment events in South Africa. In its results for the year to 30th June 2024, Northam reported revenue down 22,2% and headline earnings per share (HEPS) down 81,6%. However, in a production update for the six months to 31st December 2024, refined PGM production was up 3,7%, and chrome production increased by 7,5%. The company noted, "PGM production from Zondereinde remains on target, despite a stoppage during November as a result of a failure of a primary Eskom feed substation. Chrome concentrate production has benefitted from increased UG2 milling and further incremental improvements in chrome recovery." Since April 2021, the share has experienced a steady decline, falling substantially. Despite this, Northam has a promising long-term future but remains a volatile commodity share. Investors are advised to wait for a clear break above the downward trendline before considering further action.
JSE:NPH
by PDSnetSA
Our opinion on the current state of THARISA(THA)Tharisa (THA) is a mining company that mines and beneficiates platinum group metals (PGMs) and chrome. The company is listed in London and on the JSE. The Tharisa mine on the south-west limb of the Bushveld Igneous Complex (BIC) is an open-pit operation with an estimated life of 17 years. The company owns a subsidiary, Arxo Metals, which beneficiates chrome to produce high-grade chrome concentrates. The company is planning to expand into the Great Dyke area of Zimbabwe. In our view, this is one of the best mining investments on the JSE with a cost of production that is well below current metals prices and some good options for expansion. The company has been involved in the Vulcan Plant, which will improve chrome recovery to 82% from 65% and cost $54,2m. The target is to reach 200 000 ounces of PGMs (platinum group metals) and 2 million tons of chrome ore production using a proprietary technology. The open-pit operation is relatively low-cost and does not have the problems associated with underground operations. The company is planning to build a 5MW furnace that will enable it to produce iron alloys rich in platinum group metals, which would sell for a far better price. On 27th March 2023, the company announced that it had raised $130m (about R2,3bn) in finance from ABSA and Soc Gen. In its results for the year to 30th September 2024, the company reported PGM production up 0,3% and chrome production up 7,6%. Revenue was up 11%, and headline earnings per share (HEPS) were down by 0,7%. The company said, "Other operating expenses increased by 15.9% to US$66.6 million (2023: US$57.4 million). The largest cost component of other operating expenses was employee-related expenses of US$33.7 million, which contributed 50.7% to total other operating expenses. EBITDA totalled US$177.6 million (2023: US$136.8 million), a 29.8% increase primarily due to the strengthening of chrome prices and despite the decrease in the PGM basket price." In a production report for the first quarter to 31st December 2024, the company reported PGM production of 29,9koz—down from 37,1koz in the previous quarter. The company said, "PGM prices averaging at US$1 381/oz for the quarter (Q4 FY2024: US$1 370/oz) - Average metallurgical grade chrome concentrate prices at US$271/t for the quarter (Q4 FY2024: US$314/t) - Group cash on hand of US$175.1 million (30 September 2024: US$217.7 million), and debt of US$86.1 million (30 September 2024: US$108.8 million)." Technically, the share is well-traded, with over R200 000 worth of shares changing hands on average each day. The share has been falling since July 2024 due to declining commodity prices. The share remains a risky commodity counter dependent on the international prices of the commodities it produces.
JSE:THA
by PDSnetSA
Our opinion on the current state of REINET(RNI)Reinet (RNI) is an investment holding company whose main asset is a holding of roughly 2,12% of British American Tobacco (BAT) worth about $1,8bn, which now accounts for 31% of its net asset value (NAV)—down from 85% ten years ago. This decline from a year ago is because the price of BAT shares has fallen. Most of this reflects the more difficult legal environment for tobacco, especially in the US, where the Food and Drug Administration is considering changing the laws on menthol cigarettes. In our view, Reinet shows no great urgency to divest itself of the BAT stake, which continues to contribute good dividends from growth in third-world countries, while cigarette sales in first-world countries fall. As the price of BAT has fallen, the other assets in the Reinet portfolio have become more significant. The largest of these is its 46% stake in Pension Insurance Corporation (Penscorp), which now represents 36,8% of its portfolio. Aside from Penscorp, the company also owns a spread of private equity investments, which account for around 15% of the portfolio. The company has a compound growth rate of 8,8% per annum since March 2009. In its results for the six months to 30th September 2024, the company reported a net asset value (NAV) of 3625 euro cents per share—up from 3089c a year earlier. The company said, "Reinet has no direct exposure to Russia, Ukraine, or the Middle East through its underlying investments or banking relationships and has not experienced any significant direct impacts in respect of interest rate fluctuations or inflation." The share is obviously a rand-hedge and, although it fell from its high of R343 in February 2020 to lows in January 2021, we advised waiting for a break up through its long-term downward trendline. That break came on 16th September 2019 at R270 per share. It is now trading for R480.31. It obviously took a hit as a result of the BATS announcement that it was writing the value of its US operation down by GBP25m (R595bn), resulting in a 10% fall in the BATS share price. This share benefits from any weakness in the rand, and investors should consider the rand's future prospects before buying. On 13th January 2025, Reinet announced that it had sold its entire holding of BATS, which was 24% of the value of its total portfolio, for GBP 1,221bn.
JSE:RNI
by PDSnetSA
Momentum-shift for Sephaku Holdings signals buyers' interest. Sephaku Holdings Limited had a taste of gravity in April 2015 when it tumbled from highs of R10.22 and went headfirst to smell lows of 23c by June 2020. The stock consolidated to close the week of the 11th of October 2021 at R2.06. From this point we saw interested buyers closing the coming weeks in a “cup and handle pattern”, effectively printing a higher swing low and closing higher than R2.06 in September 2024 at R2.64. Price is currently in the handle of the pattern, trading in a steep flag above the 49 Week EMA, currently resting at R1.68. After closing the week of 02 December 2024 at R1.94, we expected the stock to pullback and retest the R1.68 zone before moving higher and that was achieved now in Jan 2025. Recommended BUY positions can be initiated by using limit orders, or waiting to see a bullish reaction at the 49 Week EMA. Entry – R1.68 Stop Loss: R1.56 Target 1: R2.99 Target 2: R3.63 Target 3: R4.08 A Weekly close above R4.65 could see the stock reach R5.24 and R6.42. Below R1.55 the stock will call sellers to have a party and may plumet to 38c.
JSE:SEPLong
by Source_Sailor
MTN Group Ltd MTN Group Ltd (JSE: MTN) has been in a downtrend since September, failing to break the resistance around 96.00. A bullish falling wedge is forming, suggesting a potential breakout with a target around 95.00. The current price is testing a key support zone at 81.70, which has held in 3 out of the last 4 tests. RSI and MACD indicators are showing signs of bullish momentum, with the RSI potentially breaking its downtrend line, similar to past upward movements. Watch for a breakout above the wedge and RSI trend line for confirmation of a bullish shift. Target: 88.50 (initial) and 95.00 (major).
JSE:MTNLong
by MarketMeistersTrading
KIO (Kumba Iron Ore) 1M Chart AnalysisKIO (Kumba Iron Ore) 1M Chart Analysis Building on the previous analysis, the KIO monthly chart shows a large falling wedge. If the price finds support at the lower trendline (4), it could rebound toward the upper trendline, with an initial target around 495. RSI supports a potential bounce, maintaining a trendline that has held since 2017. Confirmation of support at these levels could signal a bullish reversal. Key risks: China's Economy: Stimulus efforts face challenges from weak housing markets and high debt, which could limit iron ore demand. Geopolitical Tensions: Trade tensions add uncertainty to market stability. Iron Ore Market Dynamics: Analysts predict that China's iron ore imports could reach a record high of up to 1.27 billion tons in 2025, driven by abundant supplies from top producers. However, steel demand is expected to decline by 1.5% in 2025, following a 4.4% decrease in 2024, due to a prolonged property crisis. This scenario suggests potential downward pressure on iron ore prices, with forecasts ranging from $75 to $120 per ton in 2025.
JSE:KIOLong
by MarketMeistersTrading
Sasol Ready to Reverse TrendWe have previously detailed the short position on Sasol (see linked idea), now we analyze the bullish case, Sasol price has diverged from Brent, brent is seeking a daily cycle high while Sasol is seeking a cycle low. Here we see a Hammer candle forming at the point of the 0.50 retracement of downtrend. This area is also a support level set by price as it moved out of COVID low while RSI is showing a double bottom. Indications are that price will move upwards, it is in pursuit of a yearly low. The brent chart shows price bouncing on 200 week moving average support that forms a falling wedge with the resistance. If this move plays out Sasol bulls will be happy to accumulate at current level, the implication for inflation due to sharp rising oil will be something to watch. * Risk accepting investors can buy based on reversal Hammer candle. * Risk averse investors are best to wait for full confirmation that the cycle has turned when price closes above the blue trendline as well as the 10 week moving average (also blue).
JSE:SOLLong
by runyamhere
6
Our opinion on the current state of BELL(BEL)Bell (BEL) is a manufacturer and distributor of heavy equipment, earth-moving equipment to the mining, construction, agriculture, and waste management industries. As such, it has been directly impacted by the slowdown in construction since 2008 and the collapse of the mining industry. Bell's articulated dump trucks are exported worldwide from South Africa and Germany. Bell also has dealerships for a number of other global manufacturers, giving it a product range of over 120 products. Roughly 60% of its business comes from outside South Africa. The company employs 3200 people, of whom 88,6% are in South Africa. The CEO of Bell, Gary Bell, has indicated to *Business Day* that the company would consider delisting with 1A Bell making an offer to minorities (but he did not disclose at what price). Some of those minority shareholders are now saying that the board has a fiduciary duty to put the company up for sale to the highest bidder. On 18th February 2021, the company announced that a deal had been struck for 1A Bell to buy a further 31,4% of Bell, giving it a 70% stake at R10 per share—a 13% discount to the share price. In its results for the six months to 30th June 2024, the company reported revenue up 6% and headline earnings per share (HEPS) down 6%. The company said, "Demand for ADTs in the USA remained surprisingly strong and despite high inventory levels across the entire industry, which made for a significantly more competitive environment, we were successful in improving our market share position over the period in this strategic market. Certain southern hemisphere markets for our ADT product, including South Africa and Zambia where demand is traditionally driven by mining, proved more resilient than the northern hemisphere market across Europe and the UK." In a trading statement for the year to 31st December 2024, the company estimated that HEPS would fall by at least 40%. The company said, "The expected decrease in earnings for the year ending 31 December 2024 is mainly due to these weaker conditions in most of the markets that the group is active in." The share trades over R3m worth of shares on average each day, making it suitable for a private investor. There was an on-balance-volume (OBV) buy signal on 7th September 2023 at 1752c per share. Since then, the share has moved up to 4200c. On 15th July 2024, the company announced that the Bell family had made a firm offer to buy out the 30% of Bell which it did not own at R53 per share—which is an 82,3% premium to the 30-day volume-weighted average price (VWAP) of the price of 11th July 2024 (3100c). The offer was not accepted by a general meeting of shareholders held on 12th September 2024, causing the share price to fall heavily. Since then, it has been drifting down. On 23rd October 2024, Bell announced a restructuring plan aimed at consolidating operations and reducing costs in underperforming segments, particularly in the northern hemisphere markets. While management remains optimistic about maintaining a foothold in key markets, the overall market conditions have presented significant challenges, causing some hesitation among investors.
JSE:BEL
by PDSnetSA
Our opinion on the current state of GEMFIELDS(GML)The Gemfields Group (GML) (previously Palinghurst Group) is a mining group that has two major projects: (1) Kagem, the world's largest producer of emeralds (in Zambia) and rubies (at Montepuez in Mozambique); (2) Jupiter Mines, a South African producer of manganese. The group is led by Brian Gilbertson, previously the CEO of BHP Billiton. Gilbertson identified that the semi-precious stones market was under-developed and offered an opportunity for consolidation and professional management—hence the Gemfields operation. Jupiter was listed on the Australian Stock Exchange (ASX) in April of 2018 and in the process, Gemfields disposed of 60% of that company in line with its decision to cease being a diversified mining company and to focus purely on gemstones. The share is fairly well-traded with approximately R5m worth of shares changing hands on average every day. Like all commodity shares, it is risky, and its fortunes depend on the prices of emeralds and rubies on the international market—as well as the risks associated with mining in third-world countries. It appears to have found a niche for itself where there is very limited competition, and it should do well as the world economy recovers. On 24th October 2022, the company announced that operations have resumed at MRM and key personnel had returned following an insurgent attack on a mine about 12km away on 20th October 2022. On 7th August 2023, the company announced that it would construct a new processing plant that would triple its output from the Montepuez ruby mine. In its results for the six months to 30th June 2024, the company reported revenue of $128m, down from $153,6m in the previous period. Headline earnings per share (HEPS) fell 25%. The company said, "Gemfields is working through a complex year, balancing the availability of cash with the considerable investments we're making at the Kagem emerald mine ("Kagem") in Zambia, the Montepuez ruby mine ("MRM") in Mozambique and our development assets." Technically, the share rose off an island formation and entered a strong new upward trend which lasted until July 2023 when the trendline was broken. We recommend waiting until the new downward trendline is broken—which has not yet happened. On 11th June 2024, the company announced the appointment of Bruce Cleaver as Chairman. In a report on 19th June 2024, the company said that in June 2024 auctions, it had sold $68,7m worth of rubies at an average price of $316,95 per carat. In a strategic update on 23rd December 2024, the company said that lower revenue from recent auctions was due to (1) oversupply of Zambian emeralds by a competitor (2) lower production of premium rubies at Montepuez and (3) weaker luxury and gemstone market. This share tends to be volatile for a variety of reasons, but mostly because of the volatile nature of the product which it sells.
JSE:GML
by PDSnetSA
Our opinion on the current state of KIBO(KBO)Kibo (KBO) is an African-oriented energy exploration company listed on the AIM (Alternative Investment Market) of the London Stock Exchange and on the Alt-X (Alternative Exchange) of the JSE. The company began exploration activities in Tanzania, holding 100% of the Mbeya project in coal and other minerals, which has been disappointing. It has since expanded to have interests in Mozambique (65% of the Benga coal power station, which they announced was progressing well on 30th January 2019 and again on 9th May 2019) and Botswana (85% interest in the Mabasekwa coal power project). In its results for the six months to 30th June 2024, the company reported revenue of GBP202,258 and a loss of GBP492,055. The company said, "...a material uncertainty exists which may cast significant doubt on the Group’s ability to continue as a going concern." On 7th June 2024, the company announced a partly conditional fundraise with gross proceeds of £500,000 raised at a placing price of 0.015p. Mohammed Ashraf was proposed to join Kibo as Executive Director and Chief Executive Officer. On 23rd December 2024, the company announced its financial results, including the consolidated results of MAST Energy Developments Plc. Total revenues were £341,207 (2022: £1,036,743), while the operating loss was £5,518,089 (2022: £10,570,952 loss). The main problem with this share is that it is extremely thinly traded or untraded, which precludes it for private investors. It is also in one of the riskiest areas of investment—energy exploration—and it is running at a loss. We see no benefit in buying this penny stock unless you are prepared to speculate.
JSE:KBO
by PDSnetSA
Our opinion on the current state of LABAT(LAB)Labat (LAB) is a 57% black-owned investment holding company which listed on the JSE in 1999. The company buys and improves subsidiaries and then sells them for a profit. At the moment, Labat has two operations - South African Micro-Electronic Systems (SAMES) and Labat Logistics. On 14th April 2020, the company announced that it had acquired 70% of Biodata, an East London-based company focused on cannabis healing. The acquisition is to be paid for in shares. The market for cannabis in South Africa in 2020 was expected to be worth around R27bn. On 5th May 2020, the company issued a profit forecast for the years 2021 and 2022, stating it was raising R112m through the issue of shares and projecting profits of R60m in 2021 and R162.3m in 2022, resulting in headline earnings per share (HEPS) of 10,9c and 29,9c respectively. On 8th May 2020, the company announced that it had decided to put Force Fuel into business rescue due to a drop in volumes as a result of COVID-19. In its results for the six months to 30th November 2023, the company reported revenue of R36,6m compared with R24m in the previous period. Headline earnings per share (HEPS) were 0,78c compared with a loss of 1c in the previous period. The company said, "Group revenue for the year increased by 152% to R36.7 million (2022: R24.1 million) compared to the prior year. This increase was driven mainly by the 13 new retail wellness stores that were opened during the year." The company's shares were suspended on the JSE in October 2023 but may now commence trading with the publication of the interim results to 30th November 2024. Even when trading, this is a volatile, often loss-making penny stock, so investors should probably leave it alone.
JSE:LAB
by PDSnetSA
Our opinion on the current state of GRINDROD(GND)Grindrod (GND) is an international freight and financial services company which operates in twenty-eight countries. In mid-June 2018, Grindrod unbundled and separately listed its loss-making shipping division (Grinship - GSH). This accounts for the "cliff" in the share price at that time. The company is now focused on its two remaining divisions - freight and financial services. Grindrod owns the North-South railway line from Beitbridge to Victoria Falls as well as port terminals at Richards Bay, Natal, Walvis Bay, Namibia, and Maputo. The company is positive on the growth of its financial services division which is about 30% of the business. The company is focused on getting its retail banking division involved with small and medium-sized businesses. The conflict in northern Mozambique is a problem for this share. The flooding in Natal caused five of their sites to be suspended for several weeks. In its results for the six months to 30th June 2024, the company reported revenue down 1% and headline earnings per share (HEPS) flat. The company said, "Port of Maputo grew its own handled volumes by 18% to 6.9 million tonnes underpinned by strong demand for chrome. Grindrod's dry bulk terminals handled 8.4 million tonnes. Richards Bay volumes rebounded to 1.6 million tonnes for the period, reflecting a 20% growth on prior period. Ships agency and clearing and forwarding businesses achieved strong headline earnings growth of 38% on the back of a higher customer base and port calls. This growth was, however, dampened by the continuing negative impact of logistics constraints on the container handling depot throughput and transport resulting in the overall logistic earnings growth of only three percent." On 6th November 2024, the company reported that it had closed down all its rail, port, and terminal operations in Mozambique because of the closure of the Lebombo border post due to violence on the Mozambique side. A few days later on 8th November 2024, the company reported that the restrictions at Lebombo had been lifted - but the event showed Grindrod's vulnerability and exposure to unrest in Mozambique. In a pre-close trading update on 19th December 2024, the company reported that the average price of its dry bulk commodities had fallen by 28%, but chrome, copper, and manganese were up 10%. The company said, "Gross debt as at 30 November 2024 was R3.1 billion (2024 June: R2.9 billion), an increase of R0.2 billion deployed mainly on bulk infrastructure and rail." Technically, the share made a descending triple top between July and October 2024 and then began a sharp downward trend. There may be support at around 930c, but for now, it is better to stay out of this share.
JSE:GND
by PDSnetSA
Our opinion on the current state of NEPIROCK(NRP)Nepi-Rockcastle (NRP) is a R124bn real estate investment trust (REIT) which operates more than 56 shopping malls in 9 central and eastern European countries, mostly in Poland (24%), Romania (35%), Slovakia (9%), Bulgaria (8%), Croatia (5%), and Hungary (11%). The share fell with the rest of the Resilient group (as a result of the 360ne report in January 2018) from its high of R217 in December 2017 to as low as R99 in November 2018. Then the COVID-19 pandemic took it down further to under R55 in March 2020. Since then, it has staged a recovery to around R103,06. The company's total portfolio is worth 6,3bn euros (R124bn), ranking it as the largest property share on the JSE. On 1st February 2022, the company announced that it had to pay 30m euros in a civil judgement by the Arbitral Tribunal in Poland. In its results for the six months to 30th June 2024, the company reported net income up 13,5% and headline earnings per share (HEPS) up 3,56%. The vacancy rate was 2,7%, and the loan-to-value (LTV) was 32,2%. The company said, "Property operating expenses decreased by 3.3% between H1 2023 and H1 2024, driven by lower energy costs and operational efficiencies. The recovery rate increased from 93% to 94%. - The Group had a strong liquidity position of almost €1.3 billion on 30 June 2024, consisting of cash and cash equivalents of €672 million and undrawn available credit facilities of €620 million." In an update on the first 9 months to 30th September 2024, the company reported net operating income up 12,3% and tenant sales up 9%. Footfall increased 1,4%, and the average basket size increased 8,3%. The company said, "Our strong leasing activity contributed to reducing the vacancy rate to 2.3%, which, combined with rental uplifts and improved cost recovery, ensured that NOI continues to grow at very healthy rates." Technically, the share recovered convincingly from the pandemic and has been in a strong upward trend since 1st November 2023. We still regard it as good value at current levels and expect the upward trend to continue. On 18th October 2024, the company announced that it had raised 300m euros through the sale of 41,7m ordinary shares (6,2% of its issued share capital) at 7,191 euros (R137,85) per share, a discount of 4,36% to the closing price on 17-10-24 (R144,13). In a pre-close update on 19th December 2024, the company estimated that operating income would rise by 13% in 2024 and reported occupancy of 97,9% at 30th November 2024. The company said, "At mid-December 2024, the collection rate for the first 11 months of the year was 98% (and 99% for the period January-September 2024). By the end of October 2024, year-to-date (YTD) cumulative tenant sales were 9% higher than for the comparable period in the prior year, on a like-for-like (LFL) basis." Technically, the share remains in an upward trend.
JSE:NRP
by PDSnetSA
KIO.JSE Kumba Iron Ore. High Risk / High Reward.Kumba Iron Ore is currently Trading above Recent Lows. Single Commodity Tickers are always inherently a High Risk / High Reward Scenario. They are the current Market Price Takers. Should the China Stimulus result in Positive result's , not just hype, then I expect the Demand for Steel and Iron Ore to increase and hence this Tickers Stock Value. I've Charted the Recent Lows and Highs for your Perusal. As always, please get a few outside Expert's Advice before taking Trade or Investment Decisions. Should you appreciate my Chart Studies, Smash That Rocket Boost Button. It's Just a Click away. Regards Graham.
JSE:KIOLong
by hitchcoxg
Our opinion on the current state of MARSHALL(MMP)Marshall (MMP) says the following about their business: "Based in the UK, with strategically located offices globally, Marshall Monteagle PLC is a diversified investment holding company. The company provides procurement, logistics, and trading in various hard and soft commodities, industrial raw materials, consumer food and non-food products. Other non-operational investments include Commercial & Industrial Properties and listed equities.” In its results for the year to 31st March 2024, the company reported revenue down 13% and headline earnings per share (HEPS) of 5,8c compared with a loss of 4,4c in the previous period. The company said, "Net assets per share attributable to shareholders are US$2.46 (2023 – US$2.38). The increase is primarily as a result of the sale of US investment property. At 31 March 2024, cash balances were US$41,794,000 (2023 - US$23,225,000)." In a trading statement for the six months to 30th September 2024, the company estimated that HEPS would be 6,2c (US) compared with 2,2c in the previous period. This share can be relatively thinly traded, and there are days when it does not trade. This can make it more risky for private investors.
JSE:MMP
by PDSnetSA
Our opinion on the current state of LABAT(LAB)Labat (LAB) is a 57% black-owned investment holding company which listed on the JSE in 1999. The company buys and improves subsidiaries and then sells them for a profit. At the moment, Labat has two operations - South African Micro-Electronic Systems (SAMES) and Labat Logistics. On 14th April 2020, the company announced that it had acquired 70% of Biodata, an East London-based company focused on cannabis healing. The acquisition is to be paid for in shares. The market for cannabis in South Africa in 2020 was expected to be worth around R27bn. On 5th May 2020, the company issued a profit forecast for the years to 2021 and 2022, stating it was raising R112m by the issue of shares and that it would generate a profit of R60m in 2021 and R162,3m in 2022, resulting in headline earnings per share (HEPS) of 10,9c and 29,9c respectively. On 8th May 2020, the company announced that it had decided to put Force Fuel into business rescue because of a drop in volumes as a result of COVID-19. In its results for the year to 31st May 2023, the company reported revenue up 114,96% and a headline loss per share of 7,14c compared with a loss of 7c in the previous period. The company's net asset value (NAV) fell by 89,74% to 1,58c per share. The company's shares were suspended on the JSE in October 2023 and will remain suspended until the company appoints new auditors and produces interims for the six months to 30th November 2023. Even when trading, this is a volatile, loss-making penny stock, so investors should leave it alone.
JSE:LAB
by PDSnetSA
Our opinion on the current state of ARCINVEST(AIL)African Rainbow Capital (AIL) is a BEE investment company that was formed in 2015 and listed on the JSE in September 2017. Since it was formed, AIL has invested in more than forty listed and unlisted investments in a wide range of industries from telecommunications to mining, construction, energy, property, agriculture, insurance, asset management and banking. ARC Investments is 44.4% effectively owned by African Rainbow Capital Proprietary Limited (ARC), which in turn is 100% owned by Ubuntu-Booth Investments Proprietary Limited (UBI). UBI effectively owns 51.2% of ARC Investments. AIL is thus owned through Ubuntu-Botha Investments by the Motsepe family through their trusts. In the South African context, it has a significant advantage in finding suitable companies in which to invest because it can offer them a solid, reliable BEE shareholder. AIL has benefited from an investment by Sanlam and owns a stake in the Sanlam subsidiary, Santam. The company acquired 100% of TymeDigital which has launched a digital bank in partnership with Pick 'n Pay. It offers digital banking, especially for those who cannot afford normal banking, via their phones, and had the distinction of being the only bank in South Africa not to charge transaction fees. It competes with other new banks in South Africa like Discovery Bank and Bank Zero. AIL has taken a hit on its investment in EOH (which may now be improving) but has done well in most other areas. Roughly half of the AIL portfolio is in what it describes as "early lifestyle stage businesses" such as Tymebank, Rain and Kropz. These investments are seen as disruptive in their sectors, but will take time to mature. It also owns 7% of Afrimat having reduced its stake from 18,4%. If there is a criticism of this investment holding company, it must be its lack of focus. It appears to be invested in a very diverse range of industries without significant synergies or economies of scale. The need of most South African companies to have a stable BEE partner gives it an edge in finding and negotiating good deals, but its lack of focus may eventually become a problem. The share trades at a fraction of its intrinsic NAV. It was 59% of its NAV after falling about 25% in the last six months to 2023. The discount makes it good value and may result in "unbundling" some of that value into the hands of shareholders in due course. The directors have said that they will consider delisting from the JSE if the discount persists because the listing cannot be used to raise further capital at current share prices. On 21st November 2023 the company announced a rights issue to raise R742,35m. Shareholders will get 11,06579 new shares for every 100 shares that they hold at a 7,32% discount to the volume-weighted average price on 10th November 2023. In its results for the year to 30th June 2024 the company reported that its intrinsic net asset value (NAV) increased by 8,5% to 1238c per share while Tymebank and Linebroker achieved break-even. Rain which is 26% of the total portfolio is the most preferred network in South Africa. The total value of listed and unlisted investments was R20,2bn. In an update on 10th December 2024 the company said, "Rain has reported a successful quarter marked by significant growth in mobile customers. Kropz continues making progress at both Kropz Elandsfontein and Cominco. The Bluespec Group continues to be a strong performer within the business process outsourcing (BPO) pillar of the ARC Fund. Consumer Friend, the biggest business unit in the Upstream Group, took two prestigious awards at this year's Debt Review Awards. The Agri portfolio's overall financial performance remains in line with projections. Tyme Group continues its strong growth trajectory, with 14.4 million customers across TymeBank (10m) and GoTymeBank (4.4m) as of September 30, 2024." The share still trades for 62% of it NAV. Technically, the share has been falling since March 2023. We recommended applying a 200-day moving average and waiting for a clear upside break before investigating further. That break came on 26th April 2024 at 544c per share. Since then the share has moved up to 767c.
JSE:AIL
by PDSnetSA
Our opinion on the current state of TRANSCAP(TCP)Transaction Capital (TCP) is a South African company with two primary divisions: minibus taxis and risk services, following the unbundling and separate listing of WeBuyCars (WBC). Its subsidiary, SA Taxi, is deeply integrated into the minibus taxi industry, offering financing, repairs, insurance, and vehicle sales. This vertical integration enables SA Taxi to dominate the value chain associated with minibus taxis, a vital mode of transport for over 69% of South African households, facilitating more than 15 million trips daily. The industry, being non-discretionary, is traditionally defensive and less susceptible to broader economic downturns. However, in recent years, SA Taxi faced severe challenges due to rising interest rates, elevated fuel prices, increased costs of maintenance, and declining commuter volumes amid economic pressures. To mitigate losses, SA Taxi halted the financing of new Toyota minibus taxis, focusing instead on refurbished second-hand vehicles. This shift in strategy follows a R1.8bn bad debt provision and the decision to scale back from financing 600 new vehicles per month to selling around 200 refurbished taxis monthly. As of 2023, SA Taxi was owed R17bn by taxi owners, many of whom were struggling to meet repayments due to increased operating costs and reduced passenger numbers. The Transaction Capital Risk Services (TCRS) division operates in South Africa and Australia, specializing in debt collection. The company sold its Australian holdings in Nutun for A$58.3m to strengthen its balance sheet. The company has undergone significant leadership and structural changes. CEO David Hurwitz resigned effective 31st December 2023, and the successful listing of WeBuyCars allowed TCP to return R5.2bn to shareholders and raise an additional R1bn. Despite these moves, the company remains under significant pressure. In its results for the six months ending 31st March 2024, TCP reported revenue of R981m, down from R1.295bn, and a headline loss of 164.9c per share, improving slightly from the 224.6c loss in the previous period. The full-year trading statement for 30th September 2024 estimates a headline loss of 279.6c to 302.2c per share, compared to a restated loss of 231.9c in 2023. On a positive note, the balance sheet reflects minimal debt and a R100m net cash position at year-end. Outlook Much of TCP’s future depends on the recovery of the South African economy following the 2024 elections and the anticipated growth from the Government of National Unity (GNU). While the company is working to stabilize its operations, particularly in SA Taxi, and strengthen its balance sheet, the share remains highly risky and challenging to evaluate, given the uncertain economic landscape and the evolving challenges within its core markets.
JSE:NTU
by PDSnetSA
Our opinion on the current state of ITLTILE(ITE)Italtile (ITE) is a franchisor specializing in tiles, sanitary ware, flooring, and home finishing products, which it manufactures and wholesales through its integrated supply chain. The company is controlled by the Ravazotti family and operates 206 physical stores alongside six online web stores. Additionally, Italtile owns a property portfolio of retail and industrial properties valued at approximately R4.3 billion. The company's manufacturing business includes a 95.47% stake in Ceramic Industries and a 71.54% stake in Ezee Tile Adhesive Manufacturers. These acquisitions complement its retail operations by providing a consistent and high-quality supply chain, enabling better stockholding management and working capital efficiency. Italtile has benefitted from increased demand for home improvement products as people continue to work from home, leading to increased "share of wallet." The company has also taken proactive steps to strengthen its financial position, including a share buyback program totaling around R240 million and the addition of between 10 and 15 new stores annually. However, disruptions such as civil unrest and COVID-19 closures have impacted some of its operations, including the destruction of two stores in Orange Farm and Spruitview and temporary closures in Natal and other regions. In its results for the year to 30th June 2024, the company reported flat turnover and a 7% decline in headline earnings per share (HEPS). Despite these challenges, its net asset value (NAV) increased by 10% to 707.5 cents per share. The company noted a stronger performance in the second half of the year, recovering market share after earlier challenges. In a sales update for the five months to 30th November 2024, retail turnover grew by 2.2%, while combined manufacturing sales from Ceramic Industries and Ezee Tile showed a smaller decline of 1.6% compared to a 5.9% drop in the prior comparable period. **Technically**, the share remained range-bound for two years before dropping sharply to around R10 during the COVID-19 pandemic. It broke upward through its long-term downward trendline on 28th June 2024 at a price of 1107 cents and has since risen to 1426 cents. Italtile stands to benefit from anticipated new building activity associated with the formation of a new Government of National Unity (GNU) in South Africa. This positions the company as a potential investment opportunity, especially as demand for home improvement and building materials continues to grow.
JSE:ITE
by PDSnetSA
Our opinion on the current state of RMBH(RMH)Rand Merchant Bank Holdings (RMH) is a company which used to own 34,1% of Firstrand and, since 2016, has been investing in property. RMBH was started 41 years ago by GT Ferriera, Laurie Dippenaar and Paul Harris and listed on the JSE in 1992 and split off and separately listed Rand Merchant Investment Holdings in 2011. RMH Property was formed with the acquisition of 27,5% of Atterbury, 34,1% of Propertuity and 40% of Genesis. After the sale of its 34% stake in FNB, RMH is now essentially a property company. On 9th April 2021, the company announced a special dividend of 80c per share resulting from its failure to implement the Bucharest development. The company recently changed its financial year-end from March to September. In its results for the year to 30th September 2024, the company reported negative revenue of R57m and a headline loss per share of 10,5c compared with a loss of 1,4c in the previous period. The company said, "Since June 2020, RMH has returned R3.557 billion in cash to shareholders through special dividends as part of its monetisation efforts. Notably, RMH’s market capitalisation on 24 June 2020 was R2.4 billion, demonstrating the effectiveness of its value realisation strategy. The combination of the cash distributions to shareholders and the current share price has yielded shareholders a return of 73% since 24 June 2020." Technically, the share has been difficult to assess because of its recent divestments, but it has entered an upward trend. The share price remains well below the company's NAV, so we still think it represents good value at current levels. The company's ongoing strategy of monetisation and its focus on property investments are likely to provide some long-term stability. However, the recent negative revenue and headline losses underline the challenges it faces in achieving sustainable profitability. Investors should watch for further developments in its property portfolio and any updates on its monetisation strategy to evaluate future prospects.
JSE:RMH
by PDSnetSA