ASP Isotopes – a new tech listing is coming
News of a fresh listing is always exciting
Here’s something you won’t see every day in the local market: a new listing! It’s not even a spin-off of something that is already in a listed group, as we saw with the likes of Boxer and WeBuyCars. No, this is something brand new to our market.
ASP Isotopes has been listed on the Nasdaq since 2022 and has a market cap of $400 million. That’s small by US standards, but would make it a decently-sized mid-cap on the JSE.
So, why the JSE? Simply, because 97% of the employees and operating assets are right here in South Africa. This clearly gives the company the ability to use local shares for incentivisation as well as for any potential deals.
Here’s a rather astonishing statistic: 19% of the staff at the company hold PhDs. Talk about a daunting place for a water cooler chat! All these clever people are focused on producing and enriching natural isotopes at three production facilities in Pretoria. They use processes that you can reference at the dinner table to sound impressive, like Aerodynamic Separation Process (hence the name ASP Isotopes I presume) and Quantum Enrichment. Then you have to hope that nobody asks you for further details.
The client base for these products can be found in the medical, semiconductor and nuclear energy markets. With Russia currently producing 85% of stable isotopes in the world, I can already see why this company is in such a juicy geopolitical position at the moment.
Subject to approvals, the listing is expected to take place on the Main Board of the JSE later this year. Exciting!
Delta Property Fund announces another disposal (JSE: DLT)
Slowly but surely, they are making progress
The old joke about eating an elephant one bite at a time is certainly applicable to the debt on the Delta Property Fund balance sheet. They continue to dispose of properties as often as possible, with the intention being to reduce debt. Sadly, these aren’t exactly premium properties, so getting them sold isn’t so easy.
The latest sale is the Chambers of Change building in the Johannesburg CBD. The purchaser is not a related party and the price that they got is R25 million, which is well below the valuation as at the end of February 2024 of R37.7 million. To be fair, with a vacancy rate of 76.2% in this office building, the “value” is a relative term.
The purchaser is paying a non-refundable deposit of R1.25 million and has to come up with the remaining R23.75 million within 45 business days.
Finbond wants to tap the market for capital (JSE: FGL)
Preference shares are the preferred mechanism
Finbond has issued a circular to shareholders that proposes the creation of 1,000,000,000 unlisted preference shares. They are looking to raise capital for “operating capital” – and they aren’t messing around, with a proposed maximum raise of R2 billion.
Although Finbond claims that this is non-dilutive for ordinary shareholders, this really is a sugar-coated view. Sure, issuing preference shares won’t dilute voting rights, but the word “preference” is there for a reason. These shares rank ahead of ordinary shares for things like dividends, or in a liquidation situation.
Finbond’s market cap is just R370 million, so the quantum of the raise is also relevant here. If they get the full raise away (or even a meaningful portion of it), such an issuance would dwarf the existing ordinary equity value.
If you’re a shareholder, I suggest that you very carefully consider this circular.
Implats maintains guidance despite a tough quarter (JSE: IMP)
Production was under pressure, but sales were slightly up
In a production update dealing with the quarter and nine months ended March, Implats noted that they faced production challenges that included maintenance in the South African operations. Despite this, full-year guidance for volumes and unit costs has been maintained, so that’s a decent outcome.
For the nine months, 6E refined and saleable production was up 1% to 2.5 million ounces and 6E sales volumes also increased 1% to 2.55 million ounces. They therefore dug into finished stock in this period, as they sold slightly more than they produced. Notably, although refined and saleable production was slightly higher, group production volumes actually fell by 5%.
Another important point to note is that the momentum in the third quarter was concerning, with sales volumes down 6%. Refined and saleable production was flat for the quarter. If that carries on into the fourth quarter, it will further impact the full-year numbers.
Merafe and Glencore are pulling back on ferrochrome production (JSE: MRF | JSE GLN)
This is far more important to Merafe than it is to Glencore
Glencore operates a vast group across numerous commodities, so a few ferrochrome smelters in South Africa won’t exactly move the dial for them. As for Merafe though, these assets represent their entire business. This is why you’ll find an announcement by Merafe and not by Glencore regarding the decision to suspend operations at two smelters.
The ferrochrome market just isn’t playing nicely at the moment, with Merafe having responded to these issues by initiating a business review process. The outcome of this process is that the Boshoek and Wonderkop smelters will be suspended during May 2025. There is no intended date for lifting of the suspension, unless ferrochrome prices improve.
The Lion smelter will continue with production for the remainder of 2025.
Merafe is one of those stocks that has always been trading on a “cheap” P/E multiple. Cheap is often cheap for a reason, particularly in mining houses with exposure to a single commodity.
Losses widen at Renergen (JSE: REN)
At this stage in the company’s journey, losses are to be expected
Renergen is still in its relative infancy when you consider how much development work still needs to happen to bring the helium dreams to life. Even without the many bumps in the road that we’ve seen in the past couple of years, it’s likely that the company would still be loss-making at the moment.
Those who are bullish on the company are focused on the long-term prospects, not the near-term earnings. Still, it’s never nice to see that the headline loss per share has more than doubled.
The expected range in the trading statement is -R1.52 to -R1.67 per share for the year ended February 2025. The comparable period was -R0.7507 per share.
The Vodacom share price boosted YeboYethu (JSE: YYLBEE)
The earnings in the structure are as volatile as the share price
B-BBEE investment structures like YeboYethu have only one investment, so their earnings (and thus value) are volatile based on how that underlying investment moves. In the case of YeboYethu, the underlying investment is Vodacom.
This volatility comes through clearly in the trading statement for the year ended March 2025, in which YeboYethu expects HEPS to be between R40 and R48, which is a wild swing from a loss of -R40.04 in the comparable period!
The net asset value (NAV) per share has also increased dramatically, up from R31.51 to between R71 and R77.
This has been driven by a 27% increase in the Vodacom share price between March 2024 and March 2025. The reason why this percentage change causes a much larger percentage change in the value of YeboYethu is because of leverage (debt) in the structure. In good times, leverage is your friend. In bad times, it can kill you.
Nibbles:
- Director dealings:
- A director of Italtile (JSE: ITE) sold pledged shares in on-market trades to the value of over R1.5 million.
- It was a smaller trade than usual for Des de Beer this time, with a purchase of Lighthouse Properties (JSE: LTE) shares worth R53k.
- Caxton and CTP Publishers and Printers (JSE: CAT) is proposing an odd lot offer. We regularly see this on the local market, as companies with a long tail of retail shareholders carry a significant cost of compliance and administration for the sake of a small percentage of the overall economics of the company. At Caxton, shareholders with fewer than 100 shares represent 32.3% of total shareholders, yet hold just 0.27% of share capital in aggregate. Credit to Caxton – they are at least executing the odd lot offer at a decent price, being a 20% premium to the 30-day VWAP calculated up to 23rd May. Note that this is being structured as a dividend, so dividend withholding tax of 20% would apply to individual shareholders. Still, I’ve seen a number of companies structure this as a dividend without paying a premium, so this is a much fairer approach to shareholders.
- As a reminder that the mining industry is still a dangerous place for workers, Harmony Gold (JSE: HAR) announced a loss of life incident at Moab Khotsong mine. This happened in a locomotive-related accident. It’s always very sad to read these updates.
- Trustco (JSE: TTO) is still working towards a delisting of the company and has renewed the cautionary announcement in this regard.
