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Brait is ready to launch its rights offer (JSE: BAT)

Up to R1.5 billion will be raised

Brait has announced that the circular for the rights offer will be released on 18 July, which is this week. This will give the market more details on the Brait story, with shareholders asked to put in R1.5 billion in equity.

As part of the balance sheet activities, the convertible bonds are to be partially repaid by R150 million and the exchangeable bonds will be partially repaid by an aggregate reduction of the principal amount of R750 million.

The bond maturities will be extended by three years to December 2027 as part of the transactions.

In further debt news, the Brait Mauritius Limited revolving credit facility will be extended to March 2028, with the limit increasing from R0.6 billion to R1.0 billion.

Christo Wiese is underwriting the rights offer via Titan, his investment company, but shareholders are allowed to apply for excess applications and can trade their nil paid letters. This is somewhat surprising, as they could’ve taken the more aggressive route and not allowed either of these courses of action, thereby allowing Titan to snap up even more shares than would otherwise be the case.

Titan will earn a market-related underwriting fee of 1%. They are underwriting up to R1.5 billion. That’s a nice way to put R15 million in the bank, isn’t it?

Flat sales at Richemont in the latest quarter (JSE: CFR)

Asia Pacific is where the problem lies

Richemont has reported its sales for the three months to June, reflecting the first quarter of the new financial year. Sales growth was a tepid 1% at constant exchange rates. Sales actually fell 1% as reported, with Asia Pacific dragging the team down with an 18% decline at constant rates and a 19% decline as reported. China, Hong Kong and Macau fell 27%, with South Korea and Malaysia in the green and helping to mitigate some of that impact in the Asia Pacific region.

Richemont is quick to highlight that the group number has a tough base effect, with growth in the comparable quarter of 19% at constant rates and 14% as reported. Whilst that is true, it means that the two-year growth stack is nowhere near as impressive as the rates that the market was getting excited about last year.

As the largest region (32% of group sales), Asia Pacific managed to ruin the party seen elsewhere, like 10% growth in the Americas and a whopping 59% in Japan (both constant rates). The result in Japan was driven by domestic demand and tourist spending, with an uptick in tourism in Japan due to the weaker yen. Middle East & Africa rose 8%, with tourist spending in the UAE and Saudi Arabia as the major driver.

If we look by channel, group retail sales were up 2% and wholesale and royalty income fell 5%, both constant currency. Surprisingly, online retail was up 6%, so there’s some positive momentum there. The online happiness certainly isn’t being experienced at YOOX NET-A-PORTER which is an ongoing disaster, presented as a discontinued operation and reflecting a 15% sales reduction.

A view by business area shows that Specialist Watchmakers got the worst of it, with sales down 13% in constant currency. Jewellery Maisons grew 4% and the other category was up 6%.

It’s been a poor week in the headlines for the luxury sector, with Burberry getting particularly smashed out there (down 16.5% in the past week). Richemont’s share price brushed off the weak sales update, holding onto the year-to-date growth of around 9%.

Little Bites:

• Director dealings:
  • A director of a subsidiary of Insimbi Industrial (JSE: ISB) sold shares worth R13.2k.

• Salungano (JSE: SLG) announced that creditors have supported the business rescue plan put forward by the business rescue practitioners for Wescoal Mining, which will continue operations for the benefit of all affected parties.

• Cash shell Trencor (JSE: TRE) released a trading statement for the six months to June. It reflects a drop in HEPS of between 86.1% and 84.6%. This is because of the forex impacts of the cash balances, which have the biggest impact on the results in any given period while the company counts down the time until it can clear out the legacy cash and shut down the shell. Based on the indemnities previously given to other parties, the process to wind up the company should be able to commence after December 2024.

• If you’re curious about Orion Minerals (JSE: ORN) and you want to know more about the company, they are hosting a live investor webinar at 8:30am on Thursday morning. Refer to the SENS announcement for sign-up details.

• Accelerate Property Fund’s (JSE: APF) name is turning out to be incredibly ironic in the context of financial results. They’ve been delayed yet again, with the company now promising to issue them by 21 July.

• Tiny listed company Numeral (JSE: XII) has released results for the three months to May. They reflect revenue of $10k and operating income of $1.7k. No, I don’t appear to be missing any zeroes there.