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Our opinion on the current state of AECI(AFE)AECI (AFE) is a leading producer of chemicals and explosives in South Africa. It supplies products for the mining industry, water treatment, animal health, food and beverages, and the industrial sector. It has businesses in Australia, North America, Europe, Asia, and Africa and employs 7600 people in 22 countries. AECI also has a property division called "Acacia." This company has successfully diversified away from its exposure to South Africa (40% of total revenue) and shown its ability to make acquisitions that boost turnover and profits. In its results for the six months to 30th June 2024, the company reported revenue down 4% and headline earnings per share (HEPS) down 57%. The company said, "Sales volumes of mining chemicals are expected to improve on the back of an anticipated recovery in mining activity in South Africa." In an update on the ten months to 31st October 2024, the company reported revenue down 4% and profit from operations down 29%. The company said, "While the Group faced challenges in the Mining segment, including declining domestic volumes and ammonia prices, our international contracts in Asia-Pacific have helped mitigate these pressures." On a P:E of 11,62 and a dividend yield (DY) of 1,03%, we believe that the share may fall further. Technically, the share has been trending sideways for most of the last ten years and is now at a cycle low. It appears to be approaching the bottom of a downtrend and may be ready for some recovery. The challenges in the mining segment have weighed heavily on its performance, but the company's geographical and sector diversification offer some resilience. Investors should closely monitor the anticipated recovery in South African mining activity and any updates on its international operations for signs of turnaround potential.
JSE:AFE
by PDSnetSA
Our opinion on the current state of SPAR(SPP)Spar (SPP) runs a chain of supermarkets across Southern Africa with 2402 stores. It also operates the Build-It chain in hardware and building materials and the Tops Liquor chain. It has operations in Southern Ireland under the name "BWG," which operates through 1392 stores, and the Spar chain of 388 stores in Switzerland. As a group, Spar is a very serious competitor in the South African retail industry, making extensive use of franchising to expand its network. The development of the new Polish enterprise has been frustrated by COVID-19. Its diversification into Ireland and Switzerland gives it a solid rand-hedge component which does not appear to be reflected in its multiple. In its results for the year to 30th September 2024, the company reported turnover up 4% and headline earnings per share (HEPS) up 11,1%. The company said, "...gross profit margin for SPAR South Africa, including SPAR, Tops and Build it, decreased from 8.7% to 8.5%. BWG Group saw a slight increase in its overall gross profit margin from 15.1% to 15.2%, driven by a more favourable category mix. Improved margin management within the wholesale and TopCC cash and carry business saw SPAR Switzerland's gross margin improve from 17.8% to 18.3%." In our view, the share remains underpriced at current levels and represents something of a bargain. We originally advised waiting for a break up through its long-term downward trendline - which happened on 12th June 2024 at a price of 11065c. It has subsequently moved up to 14031c. On 4th September 2024, the group said that it would pay an estimated R2,7bn to settle the debts of its Polish operations in order to sell them to a local retailer for R185m. At the time, the once-off cost caused the Spar share price to drop sharply. However, this move to exit the Polish market could refocus the group's efforts on more profitable ventures, potentially supporting a recovery in the share price over the long term.
JSE:SPP
by PDSnetSA
PPE.JSE Purple Group 3 Year Trend Cloud & FIB Study.Purple Group has disappointed many Shareholders. This is a 3 Year Study. I'm not Brave enough to call this Long yet, and will rather wait for more definitive Price Action above R0.90 However the Stock is way oversold, at the 7th Wave down. 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:PPE
by hitchcoxg
5
Our opinion on the current state of ANGLO(AGL)Anglo American (AGL), the risk normally associated with commodity stocks is mitigated in two ways. Firstly, the company has diversity of different minerals which reduces the impact of any one mineral entering a bear trend. Secondly, the traditional mechanism to avoid risk is to have a very strong balance sheet with plenty of headroom. That way, if things turn bad, you can ride out the storm. Anglo has such a balance sheet. Anglo describes itself as a globally diversified mining company with a portfolio of world-class mining operations and undeveloped resources. It is true that commodity prices as a group tend to move in trends, and since the beginning of 2016, that trend has been steadily upward until the coronavirus caused markets to fall into a new downward trend in March 2020. The upward trend has now resumed, with a strong recovery already taking place. An Anglo project is Quellaveco in Peru which is a massive copper mine in which Anglo owns 60%. It will have a very rapid payback period now that it has begun producing. It is costing $5,6bn to build which should be recovered in about 4 years - and then the mine has a life of 30 years. We believe that the boom in commodity prices is continuing, and that COVID-19 is substantially behind us. Commodity prices will be driven on by the economic expansion which began in America and spread to Europe and the East. Of course, the conflict in Ukraine is pushing commodity prices up, especially precious metals, because of the heavy sanctions on Russia. So, if you are looking for an investment which is likely to be more exciting than buying one of the big banks or property REITs, and which will benefit directly from the growth in the world economy, you could do worse than to consider Anglo American. One of the factors holding the company back has been the poor availability of Transnet’s rail service, especially at Kumba. The company plans to get 100% of its energy needs from renewables in South Africa by 2023. In its results for the six months to 30th June 2024, the company reported earnings before interest taxation depreciation and amortisation (EBITDA) of FWB:5BN - with reduced costs offsetting a 10% drop in its basket of commodity prices. Iron and copper contributed $3,5bn of the EBITDA. Debt was $11,1bn, and headline earnings per share (HEPS) fell to 42c from 135c (US) in the previous period. The company, "...delivered steady volumes and a 4% improvement in unit costs, while still facing weak cyclical markets for PGMs and diamonds." In an update on the third quarter to 30th September 2024, the company reported copper production down 4% and iron ore up 1%. PGMs were down 7%, diamonds down 21%, and manganese down 45%. Anglo remains a commodity share linked to the international prices of various commodities. Its restructuring will leave it with Kumba and its manganese interest in South Africa. On 11th September 2024, Anglo announced that it had sold 13,94m shares in Amplats for R7,2bn as part of an accelerated bookbuild. On 27th November 2024, the company announced that it had raised R9,6bn as a result of its accelerated book-build of 17,5m Amplats shares (6,6% of its issued share capital). The objective is to reduce its exposure to platinum group metals (PGM). The share has broken up through its long-term downward trendline, but it remains a volatile commodity play.
JSE:AGL
by PDSnetSA
Our opinion on the current state of ARGENT(ART)Argent (ART) is a manufacturer and beneficiator of steel and aluminium products supplying a wide range of businesses in South Africa. It also has operations in the US and the UK. Many of Argent's products are well-known in South Africa, such as Xpanda and Jetmaster. It also supplies bulk steel products and beneficiates to suit specific needs. For example, it sells tube, sheet coil, and plate steel. It modifies these products with bending, slitting, and cutting to length. The company is the largest distributor for Hulamin and offers a full range of aluminium products. It manufactures ladders, castors, and storage bins. It also produces paint and a range of steel cupboards, desks, filing cabinets, and other office furniture. Additionally, it manufactures and markets a variety of steel fencing and gates. Most of these businesses are directly impacted by the state of the South African economy, so the current conditions have forced the company to restructure substantially. In its results for the six months to 30th September 2024, the company reported revenue down 3,3% and headline earnings per share (HEPS) up 3,7%. The company's net asset value (NAV) increased 13,4% to 3265,9c per share. The company said, "The optimism in South Africa surrounding the Government of National Unity has resulted in the recent strengthening of the Rand, which created an accounting write-down of 9.7 million in the group’s cash and cash equivalents, whereas the previous period had a write-up of 11.7 million. Overall, the group showed a resilient performance with revenue declining after a 15% strengthening of the Rand." The average daily value traded in this share is about R874 000, which means that it is viable for private investors. This company is trading on a very low multiple of 6,39 - which we think makes it good value. The share has been rising since its low of 1416c on 8th May 2023. We regard this as a good investment at current levels. Obviously, it will benefit directly from any improvement in the economy. On 19th August 2022, the company announced that it had acquired 100% of the UK company, Standmode, for R159,3m.
JSE:ART
by PDSnetSA
Our opinion on the current state of BRIKOR(BIK)Brikor (BIK) is a company that manufactures bricks, roof tiles, and clay pipes. It was listed on the Alt-X in August 2007 and describes itself as "...a diverse manufacturer and supplier of building and construction materials across a broad spectrum of the market from low-cost housing, residential to commercial, industrial, civil engineering and infrastructure projects and has a brick and coal segment through its subsidiary, Ilangabi Investments." The company is trying to improve its BEE status. The share was suspended on the JSE from the end of July 2013 to 31st July 2020 at 9c per share. Since it resumed trading, it shot up to 199c before settling back to 15c. In its results for the year to 29th February 2024, the company reported revenue up 12,4% and headline earnings per share (HEPS) of 1,3c compared with a loss of 0,1c in the previous period. The company's net asset value (NAV) increased 7,8% to 13,9c per share. The company said, "Revenue in the Bricks segment increased by 6,8% to R226,0 million (F2023: R211,6 million). The increase in revenue was a direct result of inflationary increases in selling prices of bricks with sales quantities being in line with the previous reporting period." In a trading statement for the six months to 31st August 2024, the company estimated that HEPS would fall by between 56% and 63%. The average value of shares changing hands each day has fallen to around R7 700, which makes it impractical for private investors. The patchy revival of the construction sector since 2021 has been a positive factor. Selling bricks is a tough business in South Africa, and this company seems to have survived COVID-19, which speaks volumes for its management.
JSE:BIK
by PDSnetSA
Our opinion on the current state of BRIMSTON(BRT)Brimstone (BRT) is a black-controlled investment holding company with a diverse portfolio of holdings. It owns: 1. 54,2% of Sea Harvest, which is a listed fishing company and has a market capitalisation of just over R4,5bn. 2. 100% of Lion of Africa, a loss-making insurance company, which decided in November 2018 to cease operations and close its doors. 3. 100% of House of Monatic, a loss-making clothing manufacturer. 4. 24% of Oceana, the largest fishing company in South Africa with a market capitalisation of R8,6bn. Brimstone is increasing its shareholding by buying 8m shares from Tiger Brands, which will take its holding to 22,9%. 5. 6,1% of Grinrod. 6. 18% of Aon Re Africa. 7. 25% of South African Enterprise Development. 8. 49,8% of Vuna Fishing company. 9. 12,8% of Milpark Education. 10. 25% of Obsidian (a black-owned investment holding firm positioned to benefit from the roll-out of the NHI) which, in January 2020, it increased to 80% for R35,7m. It also holds a variety of other smaller shareholdings in property, healthcare, 3,9% of Long4Life and 5,3% of Stadio. The company has been selling down its stakes in Life Healthcare, Lion of Africa, House of Monatic, Equites, Multichoice, and Phuthuma Nathi. It has used the proceeds to pay down R1bn of its debt. In its results for the six months to 30th June 2024 the company reported revenue down 39% and headline earnings per share (HEPS) up 110%. The company's intrinsic net asset value (NAV) fell 5,7% to 1143,6c per share. The company said, "Despite the operating environment, the Group reported headline earnings per share of 71.9 cents (2023: 34.2 cents), up 110% over the comparative period. This was mainly due to fair value gains of R76.2 million compared to fair value losses of R40.3 million in the prior period, and the increase in Brimstone’s share of profits of associate, Oceana, from R94.9 million in the prior period to R187 million in the period under review." The company disposed of its entire stake in Milpark, and part-stakes in Phuthuma Nathi, MTN Zakhele Futhi, and Equites. Both ordinary and "N" shares are thinly traded, but the ordinary shares are worse. We regard the ordinary share as too thinly traded for private investors and, unless they begin to unbundle the portfolio, the extra value is likely to remain locked in. On 27th November 2024 the company announced that its intrinsic net asset value (NAV) had declined by 9,6% in the 3 months to 30th September 2024.
JSE:BRT
by PDSnetSA
Our opinion on the current state of NAMPAK(NPK)Nampak (NPK) is Africa's largest packaging company with interests in South Africa and ten other African countries. About 60% of its turnover comes from South Africa, but only 36% of its trading profit. The rest of Africa accounts for 59% of trading profit and only 31% of turnover. The company also has small interests in the UK and Ireland. It produces four kinds of packaging products - plastics, metals, paper, and glass. The great preponderance of its trading profits come from metals - which consists mainly of beverage cans. Nampak has been able to remove R3,5bn (US$265m) of surplus cash from Zimbabwe, Nigeria, and Angola. Importantly, management appears to have the ability to re-patriate profits from the various African countries where it operates. It has halted its strategy of expanding into Africa after writing down its businesses in Angola and Nigeria by R3bn. COVID-19 and the fall in the oil price have impacted on its results in Nigeria and South Africa. It is also benefiting from the news that it will not need to sell assets or do a rights issue to pay back debt of just under R6bn. The announcement that it would raise R1,35bn through a rights issue to reduce debt caused the share to fall 30%. The rights offer was reduced from R2bn to R1,5bn and shareholders finally gave permission to raise up to R1bn on 30th June 2023. On 20th April 2023 the CEO, Eric Smuts, resigned with immediate effect and was replaced by Phil Roux. In its results for the six months to 31st March 2024 the company reported revenue up 7% and headline earnings per share (HEPS) of 5 393.9c per share compared to headline loss of 11 027.3c in the previous period. The company said, "Despite declines in revenue in DivFood and Bevcan Angola, Metals recorded a 6% increase in revenue boosted by growth achieved with Bevcan South Africa, while Plastics and Paper posted 9% and 10% increases in revenue respectively." In an update on 1st October 2024 the company said, "In September 2024 the group successfully concluded the refinancing of the group, utilising a significantly simplified funding structure, inclusive of only a minor foreign debt component. The Standard Bank of South Africa financed the transaction in full." On 16th May 2024 the company announced that it had sold its entire Nigerian operation for $68,5m. In a trading statement for the year to 30th September 2024 the company estimated that HEPS would be between 3100c and 3500c compared with 39004,6c in the previous period. This caused the share price to drop sharply. The share remains in an upward trend, but it is a volatile commodity share.
JSE:NPK
by PDSnetSA
Our opinion on the current state of PURPLE(PPE)Purple Group (PPE) is a dynamic player in the financial services industry, offering accessible trading and asset management services with a focus on affordability for private investors. Its three core divisions: 1. Easy Equities: Known for democratizing access to the stock market, it allows small investments at minimal costs, such as just 64c for a R100 transaction. This division has attracted a significant base of first-time investors, with 150,000 active accounts. 2. Emperor Asset Management: This segment provides professional fund management services for clients seeking a managed investment approach. 3. GT247: A platform focused on derivatives trading, catering to more experienced or specialized traders. In May 2023, Purple Group completed a rights issue to raise R105m, offering shares at a substantial discount to their recent trading price. This move was supported by key shareholders and aimed at strengthening the company’s capital base. The financial results for the year ended 31st August 2024 showed impressive growth, with a 45.1% increase in revenue and a recovery to headline earnings per share of 1.77c, from a previous loss of 2.05c per share. Key performance metrics included: - A 24.8% increase in client assets to R58.2 billion. - A 10.4% rise in active retail clients to nearly 1 million accounts. - Revenue growth of 51.5% in the Easy Equities segment. The share has been well-traded, with over R1 million worth of shares changing hands daily on average. Technically, the share price had declined after forming a "double top" at 340c in early 2022, but began a strong rally in March 2024. A breakout through its 65-day moving average on 4th March 2024 at 66c marked the start of its upward momentum, reaching 113c recently. This suggests continued potential for further growth. Given your investment interests, do you want further insights on Purple Group’s market positioning, or would you like guidance on technical or fundamental analysis? Let me know how I can assist you further!
JSE:PPE
by PDSnetSA
Our opinion on the current state of STEFSTOCK(SSK)Stefanutti (SSK) is a South African construction company which offers roads and earthworks, marine construction, concrete structures, bulk pipelines, piling, geotechnical services, open pit contract mining, affordable housing, mine residue disposal, and other services. It operates in sub-Saharan Africa and the United Arab Emirates (UAE). The company is considering further down-sizing to match its falling order book, and this will mean retrenchments. The share price has fallen from its high of 2650c in November 2007 to current levels around 56c. The company is not paying dividends. Construction is always a risky investment in South Africa. Much will depend on the progress of the South African economy and the availability of construction work from the government. This share is probably going to continue its long-term downward trend for the foreseeable future. We consider it to be a poor investment even as a speculation. In July 2020, Stefanutti was accused by Eskom of being overpaid R1bn for work done on Kusile - which the company denies. In a restructuring plan, the company is selling non-core assets and plant and equipment and trying to obtain further funding of R430m to counter the impact of COVID-19. The company is engaging in a restructuring plan which involves the sale of non-core assets, securing additional short-term funding of R430m, and cutting costs. The company is technically insolvent, and we think that this company may well be following many of its peers in the construction industry into consolidation or business rescue if the current restructuring does not work. In its results for the six months to 31st August 2024, the company reported revenue up 2% and headline earnings per share (HEPS) of 13,23c compared with a loss of 22,41c in the previous period. The company said, "Capital repayments of R13 million and R37 million were made in March 2024 and July 2024 respectively, reducing the loan to R947 million. The loan bears interest at prime plus 3,7%." Technically, the share entered a new upward trend in June 2024 and was added to the Winning Shares List (WSL) on 22-6-24 at 146c. It has subsequently risen to 467c.
JSE:SSK
by PDSnetSA
Our opinion on the current state of M&R-HLD(MUR)Murray and Roberts (MUR) is a large South African construction company which has suffered from the sub-prime crisis and then the slump in construction spending following the 2010 World Cup. This brought the share down from a massive double-top formation at around R100 per share to a low below R5 in May 2020. The company has been consolidating and reducing costs. It has transformed itself into a "...multinational engineering and construction Group focused on the natural resources market sectors..." with three primary business platforms - underground mining, oil & gas, and power & water. On 27th March 2023, the company announced that it had sold its Australian operations (65% of Insig Technologies) for A$1, disposing of A$7m in liabilities. On 8th December 2023, the company reported that it would be able to reduce its debt from R2bn in April 2023 to R350m as a result of "Cementation Canada Inc's recently renewed banking facility agreement with a Canadian bank will provide for Cementation Canada to pay CAD40 million." In its results for the year to 30th June 2024, the company reported revenue of R13,5bn, up from the previous year's R12,5bn, and an attributable loss of R138m. The company's net asset value fell to 350c per share, down from the previous year's 407c. The company said, "Reduced diluted continuing headline loss per share 24 cents (FY2023: 71 cents loss) - Net cash, including advance payments and working capital improvements R0,4 billion (FY2023: R0,3 billion net debt)." In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would fall by at least 20%. This announcement caused the share price to enter a new downward trend. MUR remains a relatively risky penny stock with high debt levels. On 15th July 2024, the company announced that it had won a $200m multi-year contract in Latin America. However, on 22nd November 2024, the company's board of directors stated that the company met the Companies Act definition of being "financially distressed" and that the best way forward was to enter into business rescue. Accordingly, trading in the company's shares has been suspended on the JSE.
JSE:MUR
by PDSnetSA
Our opinion on the current state of NOVUS(NVS)Novus (NVS) is South Africa's largest printing company with 11 printing plants. Until recently, it had the monopoly contract to do all of Media24's printing. With effect from 1st April 2018, that contract was reduced to roughly 58% of Media24's printing, and the price paid by Media24 for printing was also reduced. The company appointed a new CEO, Neil Birch, who has decided in the short term to abandon the company's acquisitions and focus on consolidating the business and improving its operating performance. The board may also look to sell the company's tissue business. The company has a level 4 BEE status but will need to improve that to become more competitive. On 12th August 2022, the company announced that it would acquire 75% of Pearson South Africa. In its results for the six months to 30th September 2024, the company reported revenue up 3,3% and headline earnings per share (HEPS) of 59,36c compared with 28,77c in the previous period. The company said that the improved profits were due to "...an improvement in the profitability of the Print Segment and profits from derivative instruments held in Mustek Limited ("Mustek"), within the Packaging Segment." Technically, the share price fell steadily since listing in March 2015 until March 2021. Then it began to move up, and it currently trades just above its NAV (728,27c). We suggested waiting for a convincing break up through a 65-day moving average before investigating further. That happened on 8th October 2020 at 88c, and the share has since moved up to 760c. The share trades about R1,5m worth of shares a day, which makes it practical for private investors. The share was added to the Winning Shares List (WSL) on 5th June 2024 at 524c. It has subsequently moved up to 760c.
JSE:NVS
by PDSnetSA
Our opinion on the current state of VISUAL(VIS)Visual International Holdings (VIS) is a small, cash-strapped property development company operating in the Cape Town area. The company announced on 2nd July 2018 that publication of its financial results would be delayed. At that time, it was anticipated that the financials would be published before the end of July 2018. As a result of this delay, trading in the share was suspended by the JSE. Visual's flagship asset is the Stellendale Development near Kuilsriver, consisting of 2000 residential units. It is in the process of negotiating the sale of Stellendale. In its results for the six months to 31st August 2022, the company reported revenue unchanged and a headline loss per share of 0.72c compared with 0.95c in the previous period. The company has a negative net asset value (NAV) of -3.63c per share. In its results for the year to 29th February 2024, the company reported revenue down 0.6% and headline earnings per share (HEPS) of 3.3c compared with a loss of 1.78c per share in the previous period. In a trading statement for the six months to 31st August 2024, the company estimated that it would make a headline loss of 0.93c per share compared with a loss of 0.63c in the comparable period. In our view, this share is of little or no interest to private investors, and there are far better property shares available on the JSE. However, it is interesting to see how the shares are faring now that they have resumed trade. At best, this is a very thinly traded penny stock whose 3c price can only be based on the value of its remaining assets and its listing.
JSE:VIS
by PDSnetSA
Our opinion on the current state of LESAKA(LSK)Previously known as Net1 UEP Technologies, Lesaka is listed on the Nasdaq and the JSE (LSK). It is a provider of fintech products in a number of countries. Its universal electronic payment system (UEPS) uses biometrically secure smart cards that operate in real-time but offline, which allows users to enter into transactions at any time. In its results for the year to 30th June 2024, the company reported revenue up 11% and a net loss of R326.1m compared with a loss of R629.2m in the previous period. The company said, "Fundamental earnings per share (a non-GAAP measure) of $0.06 (ZAR 1.06), improved ZAR 3.72, compared to a fundamental loss per share of $0.15 (ZAR 2.66) in FY 2023. Merchant Division revenue increased 12% in ZAR to $498.3 million (ZAR 9.3 billion), and Segment Adjusted EBITDA increased 4% in ZAR to $33.4 million (ZAR 624.1 million)." In an update on the 1st quarter to 30th September 2024, the company reported revenue of R2.6bn and a loss of 126c per share. The company said, "Net loss, including $1.7 million (ZAR 30.0 million) of one-off Adumo transaction costs, improved 23% in ZAR, to a net loss of $4.5 million (ZAR 81.0 million) in Q1 2025." The share trades R69,000 worth of shares on average every day, and there are days when there is no trade at all. On 5th December 2023, the company announced that Chris Meyer would step down as CEO in February 2024. On 6th February 2024, the company announced that it had acquired Touchsides, a distributor of alcohol to shebeens and informal taverns. On 2nd October 2024, the company announced the acquisition of the fintech company, Adumo, for R1.67bn in cash and shares. On 20th November 2024, the company announced that it had acquired the prepaid electricity submetering and payments business, Recharger, for R507m.
JSE:LSK
by PDSnetSA
Our opinion on the current state of AMEAfrican Media Entertainment (AME) is a company which specialises in running radio stations and whose revenue comes principally from advertising on those stations. It has four divisions: (1) Algoa, which broadcasts from the Garden Route to the Wild Coast, (2) OFM, which broadcasts in the Free State, North-West province, Northern Cape, Southern Gauteng, and Northern Natal, (3) United Stations, which sells and creates advertising material for the radio stations, and (4) Radio Heads, which offers media planning and buying, creative strategy and copy-writing, and syndicated programming. AME acquired Moneyweb and a share of Classic FM. The company said, "On 30 September 2019 Classic FM South Africa (Pty) Ltd was placed under voluntary business rescue." In its results for the year to 31st March 2024, the company reported revenue up 8% and headline earnings per share (HEPS) up 63%. The company said, "The group generated cash from operating activities of R64,9 million (March 2023: R43,5 million), paid tax of R15,3 million (2023: R11,6 million), spent R5,4 million (2023: R6,3 million) on capital expenditure and paid dividends of R33 million (2023: R28,7 million) to its equity holders and non-controlling interest holders. The group also repurchased 212 600 shares (2023: 701 775 shares) during the period which resulted in a cash outflow of R6,9 million." In a trading statement for the six months to 30th September 2024, the company estimated that HEPS would increase by between 16% and 25%. The share trades an average of R43,000 per day, which makes it barely practical for a small investment. Its portfolio of radio stations has relatively small, specialised audiences. Moneyweb has battled for years to produce significant profits.
JSE:AME
by PDSnetSA
Our opinion on the current state of MOMMET(MTM)Momentum Metropolitan (MTM) is a JSE- and Namibian-listed insurance company, formed through the merger of Momentum and Metropolitan in December 2010. The company provides a wide range of short- and long-term insurance products and financial services. It was the first insurance company to achieve level 1 BBBEE status. However, it has been scaling back its African operations by closing its businesses in Mozambique, Mauritius, Zambia, Tanzania, and Swaziland. At the time of the merger, the combined entity held 24% of South Africa's life insurance market. This has since declined to 17%. The company faced substantial challenges during the COVID-19 pandemic, paying out nearly R4 billion in death claims in Q1 2021 due to the second wave—three times the expected amount. In response to the pandemic, it has also reduced its office space requirements, adapting to the increased prevalence of remote work. Recent Developments: 1. Leadership Change: Jeanette Marais assumed the role of CEO on 30th September 2023, succeeding Hilgard Meyer. 2. Results for the Year to 30th June 2024: - Headline earnings per share (HEPS): Increased by 39%. - Return on embedded value: Achieved 13.3%. - Operating profit: Rose 31%, from R2.755 billion to R3.608 billion. - Momentum Retail saw a decline in operating profit due to lower market variances and increased expenses. 3. Update for the 3 Months to 30th September 2024: - Recurring premium income: Up 8%. - Assets under management (AUM): Increased 17% to R280 billion. - Operational performance was supported by satisfactory new business performance across most units. Improving economic indicators have started to positively affect business results. Technical and Valuation: - The share began its upward movement in May 2024, and it was added to the Winning Shares List (WSL) on 24th July 2024 at 2402c. It has since risen to 3000c. - It trades on a price-to-earnings (P:E) ratio of 10.05 and offers a dividend yield (DY) of 3.33%. - The share appears reasonably priced at current levels and is likely to benefit from further economic improvements and strong operational performance. Momentum Metropolitan is well-positioned for growth, with improving business fundamentals and an attractive valuation. Its gradual recovery in market share and increased operational efficiency under new leadership make it a compelling long-term investment.
JSE:MTM
by PDSnetSA
Our opinion on the current state of REINET(RNI)Reinet (RNI) is an investment holding company with its main asset being a 2.12% stake in British American Tobacco (BAT), valued at approximately $1.8 billion, which constitutes about 31% of its net asset value (NAV). This is a significant reduction from 85% a decade ago, primarily due to the decline in BAT's share price as the tobacco industry faces increasing regulatory challenges, particularly in the US. The US Food and Drug Administration's potential regulatory changes on menthol cigarettes and the global trend of declining cigarette sales in developed markets have contributed to BAT's declining valuation. However, BAT continues to deliver solid dividends, driven by growth in emerging markets where tobacco demand remains relatively strong. Diversification and Portfolio: 1. Pension Insurance Corporation (Penscorp): Reinet holds a 46% stake in Penscorp, now representing 36.8% of its portfolio. This has grown in prominence as BAT's contribution has declined. 2. Private Equity Investments: Private equity holdings now account for around 15% of Reinet's portfolio, contributing to its diversification strategy. 3. Compound Growth: Since March 2009, Reinet's portfolio has achieved a compound annual growth rate of 8.8%. Financial Performance: - For the six months ending 30th September 2024, Reinet reported an NAV of 3625 euro cents per share, up from 3089 euro cents a year earlier. - The company stated that it has no direct exposure to geopolitical risks such as Russia, Ukraine, or the Middle East and has been minimally affected by interest rate fluctuations or inflation. Technical Performance: - The share price fell sharply from its high of R343 in February 2020, hitting lows in January 2021. - A clear upward break through its long-term downward trendline occurred on 16th September 2019 at R270 per share. - The share has since recovered strongly and is now trading at R480.31. Outlook: - The BAT announcement of a GBP25 million write-down on its US operations recently impacted Reinet, reflecting BAT's ongoing challenges. However, Reinet's diversification into other asset classes, particularly Penscorp, has helped offset BAT's declining value. - As a rand-hedge investment, Reinet is sensitive to fluctuations in the rand. Prospective investors should assess the rand's future trajectory before investing. Reinet remains a diversified holding with a steady track record and benefits from its balanced exposure to high-dividend assets like BAT and growth-focused assets like Penscorp and private equity investments. However, its reliance on BAT, despite diversification, makes it partially exposed to the challenges in the tobacco industry.
JSE:RNI
by PDSnetSA
Our opinion on the current state of NASPERS-N(NPN)Naspers (NPN) is Africa's largest company and an international giant in social media, gaming, and IT. Its primary asset is a 73% stake in Prosus (PRX), which owns 26% of Tencent, a Hong Kong-listed company providing social media services and gaming in China. Tencent dominates the Chinese market with 10 of the top 20 mobile applications, reaching over 1.1 billion users. Key Developments and Structure: 1. Capital Structure: Naspers' archaic dual-share structure gives significant control to the 907,128 unlisted "A" ordinary shares, each carrying 1,000 times the voting power of the 438.3 million listed "N" shares. This structure remains a major concern for institutional investors, contributing to the discount in the share price relative to its intrinsic value. 2. Key Investments: Aside from Tencent, Naspers has interests in e-commerce and operates in 120 countries. Key investments include: - Letgo: Acquired an additional $500 million stake, cementing its presence in the American classifieds market. - South African Operations: Retained Takealot, Mr. D Food, PayU, and Autotrader. 3. Listing of Prosus: In 2019, Naspers listed Prosus on Euronext in Amsterdam to house its international assets. This move reduced Naspers' rand exposure and established Prosus as Europe's largest consumer internet company. 4. Growth Drivers: Tencent continues to be the main revenue driver, especially during the pandemic when online gaming surged. Naspers has also seen growth in its e-commerce businesses. Financial Performance: - For the year ending 31st March 2024, Naspers reported: - Revenue up 8%. - Core headline earnings up 88% to $2.1 billion, driven by improved e-commerce profitability and Tencent's performance. - Headline earnings from continuing operations increased by $1.2 billion to $1.4 billion. - Debt Position: - Net debt: $737 million. - Cash and equivalents: $14.6 billion. - Interest-bearing debt: $15.4 billion. - Undrawn revolving credit facility: $2.6 billion. - Trading Update: - For the six months to 30th September 2024, Naspers estimated HEPS to increase by 125%-132% due to improved profitability and lower impairment charges. Technical Analysis: - Since October 2022, Naspers' share price has staged a recovery. Between March 2023 and April 2024, it moved sideways but then broke to new highs. - It has surpassed its all-time high of R4090 reached on 21st November 2017, signaling strong upward momentum. Outlook: - Naspers is under-priced at current levels, considering its robust growth, strong financial position, and dominance in key markets like Tencent. However, its dual-share structure and exposure to regulatory risks in China remain points of concern. - The company's diversification through Prosus and consistent growth in e-commerce offer long-term upside potential.
JSE:NPN
by PDSnetSA
Our opinion on the current state of PPCPPC is a major producer of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa, with a production capacity of 11.5 million tons across eleven cement factories in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia. It also operates the Mooiplaas quarry, the largest aggregates producer in South Africa, and has twenty-six batching plants in South Africa and Mozambique. Key developments: 1. Financial Resilience: PPC has successfully re-negotiated its lending agreements, avoiding the need for a highly dilutive rights issue. However, it has not paid dividends for five years. It recently announced a special dividend of 33.5c per share following the sale of its 51% stake in Cimerwa, its Rwandan operation. 2. Carbon Tax Impact: The carbon tax introduced in 2019 costs PPC between R100m and R120m annually, potentially reducing its competitiveness against foreign imports unless tariffs are increased. 3. Geographic Diversification: PPC is focusing on growth in other African markets to offset challenges in the South African construction sector, which has suffered from a lack of government projects. 4. Government Support: PPC is benefiting from South Africa's "localisation" policy, mandating government projects to purchase locally produced cement. 5. Cost Management: In its results for the six months to 30th September 2024, PPC reported revenue down 4.2% but a modest improvement in HEPS to 22c from 20c in the previous period. The company attributed this to strong cost discipline and price growth despite lower sales volumes. 6. Debt Reduction: PPC has reduced its debt by 20% and conducted a R200m share buy-back program, bolstering its financial position. Outlook: PPC's focus on cost control, debt reduction, and localisation policies should provide a buffer against industry challenges. The company is well-positioned to benefit from South Africa's government of national unity (GNU), which is expected to stimulate infrastructure projects, as well as from falling interest rates. Technical Analysis: Since October 2022, PPC shares have been in an upward trend, driven by improved financial performance and investor confidence. This trend is expected to continue as the company capitalizes on local and regional growth opportunities. However, the over-supply in the cement industry remains a challenge.
JSE:PPC
by PDSnetSA
Our opinion on the current state of PROSUS(PRX)Naspers (NPN) spun off Prosus (PRX) on 11th September 2019, listing it on the Euronext in Amsterdam to hold its international assets, including Tencent, Mail.Ru, and other internet brands. Naspers retains a 73% stake in Prosus, while 25% is free float. This listing mitigates rand risk, making Prosus a rand-hedge investment that benefits from rand weakness. As Europe’s largest consumer internet company, Prosus's primary asset is a 26% stake in Tencent, a Hong Kong-listed company with over 1.1 billion users across its top 10 mobile applications in China. Tencent, however, remains exposed to Chinese regulatory challenges, particularly in gaming. Prosus operates across classifieds, payments, fintech, food delivery, e-tail, and travel, serving 1.5 billion people in 89 markets. The company has been diversifying its revenue streams while managing risks associated with its heavy reliance on Tencent. Recent developments include: - May 2022: Tencent announced a sharp decline in profits, adversely affecting Prosus shares. - June 2022: Prosus launched an open-ended share buyback program, funded partly by selling Tencent shares. This move boosted the share price. - October 2022: Prosus shares fell after Chinese President Xi Jinping’s re-election, raising concerns over regulatory pressures. In its March 2024 results, Prosus reported an 11% increase in revenue and an 84% rise in core headline earnings, highlighting the impact of its share repurchase program, which reduced the free-float share count by 21% and generated $30 billion in value for shareholders. In its September 2024 trading statement, Prosus estimated a 112% to 122% rise in headline earnings per share (HEPS), attributing the growth to improved profitability and lower impairment charges. Technical Analysis: Since November 2023, the Prosus share has been trending upwards. It remains undervalued at current levels, with robust financial performance and a strong buyback program contributing to investor confidence. The share's rand-hedge characteristics and diverse portfolio further strengthen its appeal. However, investors should remain cautious of Chinese regulatory risks tied to Tencent.
JSE:PRX
by PDSnetSA