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Who’s doing what this week in the South African M&A space?

Marylou Greig
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Who’s doing what this week in the South African M&A space?

Exchange-Listed Companies

South32 is to acquire a 19.9% stake in American Eagle Gold (AEG), a TSXV-listed Canadian copper explorer. AEG holds an option to acquire the Nakinilerak exploration project located in the Lake Babine Nation region and within the Babine copper-gold porphyry district in central British Columbia. South32 will acquire the stake at C$29,16 million ($22 million) at C$0.875 a share, representing a 15% premium to the five-day volume-weighted average trading price. For South32, the investment aligns with its strategy to build on its portfolio of transformation and exposure to its next generation of base metal mines.

Europa Metals has completed its C$7 million disposal of Europa Metals Iberia to Denarius Metals. The company is now a cash shell and has six months to make an acquisition. The company is currently in reverse takeover discussions with Viridian Metals around its Tynagh re-cycling and reclamation project in Ireland.

Shareholders of Capital & Regional plc have voted in favour of the scheme of arrangement which will see NewRiver REIT acquire the group. Shareholders were offered 31.25 pence in cash and 0.41946 new NewRiver for each C&R share held. Growthpoint Properties holds a 69% stake in C&R and will receive £101,4 million, £50,7 million in cash and a 14% stake in NewRiver’s share capital. The trading of Capital & Regional shares on the JSE will be suspended E on 10 December 2024. The longstop date is 20 April 2025.

On 11 December 2024, Workforce shareholders will vote on the R1.65 offer by Force. The offer, which represents a 16% premium to the 30-day VWAP, is to minorities holding just 2.76%. Force currently has a 45.63% interest in Workforce and shareholders excluded from the offer represent a further 51.61% stake. If accepted, Workforce’s listing on the JSE will terminate on 18 February 2025.

Unlisted Companies

Private equity firm Sanari Capital has announced a R87,5 million investment in Energenic Holdings, a group of companies providing a range of energy generation products and solutions. Energenic operates in 32 African countries providing reliable cost-effective energy solutions to key growth sectors including telecommunications, tourism and general commerce. The capital injection will be used to fund the scaling of the business both within South Africa and across the rest of the continent.

Global specialty chemical group Vishnu Chemicals has signed an agreement with Volclay South Africa to acquire Bonmerci Investments 103, the holding company of Batlhako Mining, owner of the Ruighoek Chrome Mine, situated in the western bushveld of the country. The consideration payable will not exceed US$7,25 million for the mine and $2,75 million for the acquisition of the processing plant and associated mining and infrastructure assets.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Weekly corporate finance activity by SA exchange-listed companies

Marylou Greig
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Weekly corporate finance activity by SA exchange-listed companies

Diversified healthcare REIT Assura plc is to take a secondary listing on the Main Board of the JSE from 21 November 2024. The UK REIT will list 3,250,608,887 shares, via the fast-tracking process introduced by the JSE in 2014, with a market capitalisation of c.£1,3 billion. As at end September, Assura had a portfolio of 625 properties with a total value of £3,15 billion across the UK.

Details of the Boxer Retail listing have been announced. The IPO, with an offer price of between price R42.00 and R54.00 per share, is due to close on 22 November 2024. Up to 202,380,953 shares will be issued (40.3%) with an overallotment of up to 11,9 million shares. On 28 November, Boxer will list 477,083,334 shares in the Food Retailers & Wholesalers sector reflecting a market capitalisation of between R20 and R25 billion. This compares with Pick n Pay Stores’ current market cap of R19,4 billion, The Spar’s R24,7 billion and Choppies’ R1,2 billion.

Transaction Capital has advised that it has changed the name of its wholly owned subsidiary TransCapital Investments to Nutun Investments. The name change has been placed on file by the Companies and Intellectual Property Commission and accordingly the name change is effective immediately.

Trustco, which currently has primary listings on the NSX and JSE and is quoted on the OTCQX Best Market in the US, has applied for a primary listing on the Nasdaq Stock Exchange. Trustco intends to maintain a secondary listing on the JSE and NSX – having traded on these exchanges for 15 and 18 years respectively.

This week food and quick delivery company Swiggy, in which Prosus with a 25% stake is the largest shareholder, listed on India’s NSE and BSE valuing the company at US$11,3 billion. Prosus sold shares worth more than $500 million as part of the IPO. The listing represents the second largest in India in 2024.

This week the following companies repurchased shares:

Hammerson plc continued with its programme to purchase its ordinary shares up to a maximum consideration of £140 million. The sole purpose of the buyback programme is to reduce the company’s share capital. This week the company repurchased 776,312 shares at an average price per share of 287 pence.

South32 announced in its annual financial statements released in August that it would increase its capital management programme by US$200 million, to be returned via an on-market share buy-back. This week 705,788 shares were repurchased at an aggregate cost of A$2,59 million.

In line with its share buyback programme announced in March, British American Tobacco this week repurchased a further 464,875 shares at an average price of £27.44 per share for an aggregate £12,76 million.

Prosus and Naspers continued with their open-ended share repurchase programmes. During the period 4 – 8, November 2024, a further 4,287,973 Prosus shares were repurchased for an aggregate €167,65 million and a further 303,554 Naspers shares for a total consideration of R1,27 billion.

Two companies issued profit warnings this week: MultiChoice and Sable Exploration and Mining.

During the week, three companies issued cautionary notices: Tongaat Hulett, TeleMasters and PSV.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Who’s doing what in the African M&A and debt financing space?

Vanessa Aitken
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Who’s doing what in the African M&A and debt financing space?

DealMakers AFRICA

Varun Beverages is looking to acquire 100% of SBC Beverages Tanzania (SBCBT) and SBC Beverages Ghana (SBCBG). The Tanzanian transaction is valued at US$154,5 million and the Ghana deal is at an equity value $15,06 million. SBCBT has five manufacturing facilities in Tanzania and SBCBG has one manufacturing facility in Accra. Both firms manufacture and sell a variety of PepsiCo franchised brands.

Mergence Investment Managers has acquired the remaining 51% stake in Lesotho’s Sanlei Premium Trout, an integrated aquaculture producer of sushi-grade trout, for an undisclosed sum. Mergence acquired an initial stake in Sanlei back in 2019.

Agventure, a Kenyan company that works with non-irrigated farms with a focus on enabling Sustainable Conservation Agriculture practices, has received a US$9,5 million mezzanine loan from specialist agricultural investor AgDevCo.

Sahel Capital has approved a US$1 million term and working capital loan from its Social Enterprise Fund for Agriculture in Africa facility for Uganda’s Sukuma Commodities, an enterprise that specialises in the supply and processing of exportable green coffee for European traders and roasters.

Kua Ventures has invested an undisclosed sum in Kenya’s Olerai Schools to support its expansion and growth.

The Emerging Africa & Asia Infrastructure Fund (EAAIF), the Dutch entrepreneurial development bank (FMO) and the Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG) have provided €84 million in debt funding to AXIAN Energy to finance a 60MW solar energy and 72MWh energy storage system in the Senegalese region of Kolda.

Egyptian interior design startup Efreshli has announced that Dina Elhaddad has joined Heba Elgabaly as co-founder and that Efreshli has raised an undisclosed sum of seed funding. The round was led by Algebra Ventures and included 500 Startups, Dar Ventures and some angel investors.

DealMakers AFRICA is the Continent’s M&A publication
www.dealmakersafrica.com

M&A trends: SA is going through a profound transformation

Tholinhlanhla Gcabashe and Cathy Truter
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M&A trends: SA is going through a profound transformation

M&A activity was tepid in South Africa (SA) in the first half of 2024, which proved to be a challenging business environment, though it did not stop buyers from pursuing opportunities where they saw value.

However, SA is undergoing a profound transformation. After the general election, the formation of a Government of National Unity (GNU) has ignited a wave of optimism. This has coincided with an environment where inflation has begun receding, interest rates have been reduced, and efforts in the energy sector have started to bear fruit. The longest uninterrupted period without load-shedding since 2020 has sparked predictions of additional growth.

Progress has been made in addressing economic challenges through the intentional drive of government-private sector collaboration, with improvements in electricity supply and freight rail and port operations. Significant contributions have been made by the private sector, including financial support, technical expertise and CEO pledges.

Operation Vulindlela, which aims to create a more conducive environment for investment and development, has successfully completed almost all of its initial reforms, including the auction of digital spectrum, regulatory changes for private electricity generation, and improvements in water licences, rail, ports and visa regimes.

These changes are collectively anticipated to spur a recovery in M&A activity over the remainder of the year.

Artificial intelligence (AI)

The focus on AI in M&A discussions has been notable, and economists differ on its ultimate impact on economies and equity capital markets. Some say AI will amplify the division between the first world (which will benefit from increased productivity and innovation) and emerging economies, which are constrained by infrastructure challenges, less research and development (R&D), and slow diffusion.

Others argue that AI will be the ultimate equaliser, enabling emerging economies to capitalise on younger populations, with fewer barriers to social acceptance and the injection of supplemental skills.

All agree that it will lead to disruption and opportunities. Whether this plays out through corporate diversification and other hedging strategies, restructurings or simplification remains to be seen.

From a transactional perspective, companies are starting to negotiate the allocation of risk, particularly regarding data, AI governance and compliance.

Foreign direct investment (FDI)

Notwithstanding some of the more recent disposals, there has been evidence of inbound M&A activity with foreign companies looking to invest in SA assets, reaffirming the country’s position as an attractive market and strategic entry point into the continent.

A recent PwC1 report indicated that net FDI into South Africa has been consistently positive since the global financial crisis (2007–2009). In 2023, FDI inflows into South Africa amounted to R96,5bn, equivalent to 1.4% of South Africa’s GDP.

In other parts of Africa, there has been a notable uptick in FDI from countries like Saudi Arabia, the United Arab Emirates and Qatar.

International expansion

African companies are continuing to pursue international expansion for geographic diversification, fuelled by a recovering global economy and improved macroeconomic conditions.

Geographic expansion has its challenges, and corporates are assessing their strategies. According to KPMG’s second quarter Global Economic Outlook2, economists are predicting an adjustment to supply chains with corporates bringing production back to regions where products are sold, or countries with similar values. There are considerations pertaining to ongoing global disruption and political uncertainty as the year of elections continues.

Recent proposed reforms to SA exchange controls aim to encourage high-growth private equity (PE) funds and companies in technology, media, telecommunications, exploration and research and development (R&D) to establish offshore entities from a domestic base. It remains to be seen if these draft reforms will be implemented, and if they will have the desired effect.

Fund managers’ reactions to recent regulatory changes empowering pension funds to independently invest offshore have, in some cases, dampened fund support of local companies’ overseas ventures, now that they can make these investments themselves.

African trade

The African Continental Free Trade Area (AfCFTA) is expected to further drive M&A activity from within Africa and globally. The World Bank predicts3 AfCFTA will lead to an 80% increase in intra-regional trade, reaching US$450bn by 2035.

SA’s first shipment and preferential trading under AfCFTA took place in January 2024. More than half of the African countries have ratified AfCFTA and are set to implement rules of origin soon.

Also notable is the United States’ preliminary agreement with African nations to extend preferential trade access for another decade under the African Growth & Opportunities Act (Agoa), pending Congress approval. Agoa aims to allow over 30 African countries to continue exporting goods to the US market duty-free, focusing on increased manufactured exports and modernising the current trade accord. Also notable is the agreement between the US and SA to revive the bilateral trade and investment framework agreement and the expansion of BRICS.

Further trends

Restructuring to avert business distress and unlock value has been pervasive. Unbundlings and the divesting of non-core assets to streamline operations and reduce debt have increased.

The increase in significant shareholder-driven changes underscores the active role of investors in corporate governance, with increased scrutiny on executive pay and a rise in environmental, social and governance (ESG) activism playing out in the boardroom.

There is an increasingly programmatic approach to M&A, with companies regularly engaging in M&A as core to their growth strategies by pursuing a series of smaller to mid-sized acquisitions over time, instead of occasional large, transformative deals.

Opportunities for PE firms are emerging in infrastructure, energy and digital infrastructure, with PE expected to play a significant role in the M&A rebound, driven by a need to divest ageing assets and a substantial amount of available capital.

Success factors

Key deal success factors are linked to valuations, financing and the management of the regulatory environment (competition and sector-specific). There has been an uptick in ESG due diligence and warranties, and a greater focus on the negotiation of the transitional services agreement and interim period undertakings, and supply-side risk mitigation.

These developments bode well for a healthy investment environment in SA and across Africa in the future.

1 https://www.strategyand.pwc.com/a1/en/press-release/south-africa-economic-outlook-april-2024.html
2 https://assets.kpmg.com/content/dam/kpmg/za/pdf/2024/Global%20Economic%20Outlook.pdf
3 https://openknowledge.worldbank.org/server/api/core/bitstreams/ef1aa41f-60de-5bd2-a63e-75f2c3ff0f43/content

Tholinhlanhla Gcabashe is Head of Corporate/M&A and Cathy Truter is Head of Knowledge| Bowmans South Africa.

This article first appeared in DealMakers, SA’s quarterly M&A publication.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Is South African merger control raining on private equity’s Dezemba?

Chris Charter
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Is South African merger control raining on private equity’s Dezemba?

By all accounts, investor sentiment is trending positively. In principle, this should provide a shot in the arm for South African private equity (PE), which has been languishing somewhat.

There are compelling arguments for why a dynamic private equity sector is good for an economy. PE funds compete at two levels – for investors’ funds and for opportunities to invest in sectors with upside – and both of these imperatives drive investment innovation. Successful investors need to bring something extra to the table to ensure that portfolio companies grow quickly, to realise a demonstrable return and enhance the fund’s reputation in subsequent rounds, to secure funding and be the preferred bidder. As far back as 1890, English economist Alfred Marshall developed the notion of “knowledge spillover”, and recent studies of data across the OECD have revealed that when there is private equity intervention in an industry, there is an overall increase in employment, productivity, capex and profitability, as peers react to the competitive innovations introduced by PE and venture capital1.

In the USA, PE has developed a bad rap for loading investee companies with debt and then driving short-term operational improvements by effectively “looting” their investee companies – at the expense of workers and long-term sustainability.

Although South Africa has had the odd leveraged buyout scandal, for the most part, our approach to PE (particularly, home-grown funds) is decidedly less venal. It has to be: progressive labour laws, aggressive unions and merger control rules make retrenchments difficult, and so returns cannot be based on driving “synergies” as a euphemism for job-cuts. Our economy is not as vast as the US’s and cannot absorb the odd failing firm without contaminating whole industries. Just as a rising tide lifts all boats, they go down with the ebb, and PE funds in South Africa surely know that in an emerging market, overall growth is an imperative. PE firms here have become adept at fundamentally improving businesses, not hollowing them out. Amid current challenges, they provide access to capital where many businesses would otherwise struggle to find it. In the South African environment, PE is becoming well versed in matters such as ESG, supplier and enterprise development, and all manner of socio-economic imperatives that go with responsible investing in this country.

The sector also has tremendous potential for transformation. Although still under-indexed, black fund managers are becoming more prevalent, and many young, driven, black professionals and entrepreneurs see PE as an exciting space. But private money demands results, and like any PE, black-owned PE can succeed only where it develops a track record of enough successful investments coupled with successful exits to ensure repeat business from investors.

Finally, South African PE is also a valuable conduit for foreign investment and local pension funds (many funds have an offshore component and a local fund to cater for both sources).

So, if a strong PE sector contributes so significantly to the economy, should we not be doing all we can to foster and support PE firms as they endeavour to inject capital, innovation and growth into various industries? This brings into focus the policy decisions of a key gatekeeper for investment in South Africa: the competition authorities.

While no-one would deny the importance of merger regulation to avoid substantial anticompetitive outcomes or significant risks to the public interest, it would be regrettable if regulation operates to trammel activity that raises no such concerns. And yet the murmur from boardrooms in South Africa and abroad increasingly suggests that merger control is a major factor in deciding whether to invest or not.

While some big M&A transactions can price in the challenges and take a long-term view, PE is disproportionately hit by overzealous merger regulation, as a successful PE model involves making serial investments in circumstances where frictionless exits in relatively short order are as important as closing the investment in the first place.

In PE, trips to the Competition Commission are a regular headache, not a once-off ordeal. There are a number of factors that PE firms need to manage when devising an investment case:

• The Commission’s public interest guidelines for mergers emphasise that all mergers should result in increased levels of worker ownership, with the introduction of an employee share ownership plan (ESOP) a typical quid pro quo for approval. However, PE typically seeks to deploy growth capital and stimulate reinvestment in the business. This often eliminates dividend flow, which makes an ESOP ineffective.

• The Commission’s public interest policy also drives HDP ownership commitments. While this may aid black fund managers at the point of entry, it complicates exit as maintaining the same level limits the pool of potential buyers. The notion that a black fund manager’s stake is less liquid could affect the ability to seed the funds.

• Perversely, this reduces any incentive to introduce higher BEE ownership at or after the investment, as this will create a bigger issue to be solved for on exit, as a reduction in HDP ownership is considered to be contrary to the public interest.

• In practice, many firms are exploring ways to avoid triggering a merger, introducing complex structures or a need to avoid any controlling stake or minority investor protections that could give rise to control. This reduces the amount of capital that can be deployed, and also stunts the prospect of meaningful new strategies to grow and disrupt industries.

• The Commission’s approach to small mergers could chill PE and venture capital support for startups, as valuations that exceed large merger thresholds, even if the business is fledgling, attract merger scrutiny. While these measures were designed to police big tech “killer acquisitions”, the size of many private equity funds means they are also caught.

• Many of the most attractive industries for private equity investment (such as healthcare, renewables and other infrastructure and technology) are also focus sectors for the Commission, resulting in investigatory delays.

• A lack of understanding of fund structures and management means that larger funds face complicated filing disclosures to identify potential cross-shareholdings, even across separate funds, fueling unfounded information exchange concerns. This erodes the proposition that PE investment is less risky for competition than trade buyers.

There is hope that the competition authorities will begin to consider that its policy should not make PE investment in a difficult economic climate more difficult, as this leaves valuable growth and foreign investment money on the table. By the same token, investors need to be sanguine about the reality of the regulatory environment, which means factoring in merger control law and policy at an early stage of developing a deal strategy.

1 Aldatmaz and Brown Private equity in the global economy: Evidence on industry spillovers, Journal of Corporate Finance, Feb 2020, 10524)1

Chris Charter is a Director, Competition | Cliffe Dekker Hofmeyr.

This article first appeared in Catalyst, DealMakers’ quarterly private equity publication.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

PODCAST: MAGAnomics – Trump and the global economy

The Finance Ghost
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PODCAST: MAGAnomics – Trump and the global economy

Listen to the podcast here:

What impact will Trump’s presidency have on the global economy and emerging markets? Tune in to the latest episode of the No Ordinary Wednesday podcast for insights from Investec experts, Annabel Bishop (SA) and Ellie Henderson (UK). 

Hosted by seasoned broadcaster, Jeremy Maggs, the No Ordinary Wednesday podcast unpacks the latest economic, business and political news in South Africa, with an all-star cast of investment and wealth managers, economists and financial planners from Investec. Listen in every second Wednesday for an in-depth look at what’s moving markets, shaping the economy, and changing the game for your wallet and your business.

Also on Spotify and Apple Podcasts:

GHOST BITES (Brait | Dipula Income Fund | Emira | Ethos Capital | Southern Sun)

The Finance Ghost
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GHOST BITES (Brait | Dipula Income Fund | Emira | Ethos Capital | Southern Sun)

Virgin Active has injected some energy into Brait (JSE: BAT)

Membership numbers and pricing are up at the gym group

Virgin Active represents 61% of Brait’s total assets. The other really important stake is Premier (JSE: PMR), which you can invest in directly on the JSE. Premier just released excellent numbers showing growth in HEPS of 34%, so that set the scene for Brait to hopefully come out with a decent story at Virgin Active.

Sure enough, memberships at Virgin Active grew 6% year-on-year and pricing was up 9%, so that’s 16% revenue growth excluding Kauai. Add in the growth at Kauai (my favourite takeaway option) and you’re at 23%. All territories grew solidly, with the UK the lowest at 11% and Singapore the highest at 34%.

With this kind of growth and a fixed cost base, the revenue drops to the bottom line beautifully. There’s been a more than fourfold increase in EBITDA!

As Brait has been valuing Virgin Active based on their estimate of maintainable EBITDA, there’s actually no valuation uptick here. The carrying value on the investment came down slightly if you can believe it, despite debt being reduced. It just shows how daft the valuation approach has been, which is why the market ignores the Brait net asset value per share and conducts its own valuations.

If you’re wondering about New Look, the fashion retailer in the UK that comprises 5% of Brait’s total assets, I’m afraid that it isn’t good news. Revenue fell 3.5% and EBITDA was down 22.7%. We’ve seen really mixed numbers out of UK fashion retailers recently, with Truworths doing well there and TFG struggling. New Look has always been a poor cousin to those businesses, so I’m not surprised to see the numbers down.

The share price closed 5.5% on the day. The chart this year looks like a pretty decent gradient profile on a spinning bike:

Property costs are hurting Dipula Income Fund (JSE: DIB)

Distributable earnings per share is down 4%

Dipula Income Fund holds a portfolio of property assets across various property types in South Africa. Even though they have really painful exposure like a government-tenanted office portfolio, they still achieved 7% growth in revenue for the year ended August 2024.

Alas, there was a 15% increase in property expenses, driven by issues like municipal tariff hikes and maintenance – you know, all the things that make property an unattractive asset class in many cases. Net property income therefore only increased 2%.

To make it worse, net finance costs were up 3%, so distributable earnings ended up decreasing by 4%. At least the net asset value per share increased by 5.2%, so there’s something to make shareholders feel better. Another small highlight is that the loan-to-value ratio has been quite stable, coming in at 35.48% vs. 35.18% the prior year.

Unsurprisingly, the best uptick in value is in the retail portfolio, up 8.3%. At the other end of the spectrum, we find the office portfolio down 2.0%.

The group pays out 90% of distributable earnings per share as a dividend. This puts the share price on a trailing dividend yield of almost exactly 10%.

A slight increase in the Emira dividend (JSE: EMI)

The office sector is still facing difficulties

Emira isn’t shy of doing deals and building an unusual portfolio. For example, they have the residential portfolio inside Transcend Residential Property Fund. They also have exposure to the US and Poland. Remember, complications are usually a negative rather than a positive, as time has shown us on the JSE.

The dividend for the six months to September has increased by just 1.1% to 62.39 cents. This is despite distributable income being 6.9% higher. Whilst you would immediately assume here that this must be due to more shares being in issue, that isn’t actually the case at Emira. The difference is due to the adjustment for the equity-accounted investments in the US, with a new approach of simply paying out 95% of distributable income rather than actual dividends received.

The loan-to-value ratio has improved from 42.4% to 42.0%. I would argue that this is still on the high side, although we are at least in a decreasing interest rate cycle now.

The net asset value (NAV) per share increased by 12.3% to R19.455. The share price is R11.01, so as usual the market cares much more about the dividend yield than the theoretical NAV.

I must also note that the office sector remains difficult. Emira holds a high quality portfolio and although vacancies continued to decline (down from 10.9% to 9.4%), negative reversions worsened from -6.3% to -9.6%. In other words, there’s still pricing pressure on landlords.

Ethos Capital saw NAV grow in the past three months on an adjusted basis (JSE: EPE)

And yes, you do need to adjust for the Ethos unbundling

When an investment holding company unbundles part of its portfolio to shareholders, it is literally making itself smaller. You therefore need to adjust for this when comparing the net asset value to the previous period, otherwise it will look as though the value decreased when the reality is that some assets were simply passed upwards to shareholders.

This is the case at Ethos Capital, which unbundled R121.3 million worth of Brait shares in July this year. It was a busy period of other corporate actions, with R73.3 million of Brait exchangeable bonds sold to Brait, the sale of Synerlytic for R286.4 million and the sale of Adumo for R55.9 million. This is why net debt has come down to R234 million as at the end of September and R180 million based on subsequent repayments.

Thanks to valuation gains in Optasia which more than offset some pressure in the unlisted asset portfolio, the net asset value per share is up 5.6% on a like-for-like basis since June 2024. The NAV per share is R6.95 and the current share price is R5.00.

Southern Sun tightens up its earnings guidance (JSE: SSU)

This has been an excellent period for the group

Southern Sun released a preliminary trading statement back in mid-September, dealing with the six months ended September. They initially guided for an increase in earnings of at least 20% – the vaguest disclosure allowed under JSE rules. When you see that, there’s always a great chance that the move could be a lot higher.

Indeed, a further trading statement confirms growth in HEPS of 33% to 39% and adjusted HEPS of 33% to 44%. Either way, that’s excellent.

Even more encouragingly, the group notes that trading in the month of September was a highlight, so the exit velocity in this period sets them up very nicely for the busy summer.

Interim results are due to be released on 21 November. With the share price up 60% year-to-date, there will be many interested parties.

Nibbles:

  • Director dealings:
    • An entity associated with the Sassoon family has sold R37.6 million worth of shares in Sasfin (JSE: SFN) to Wiphold.
    • An associate of Michael Georgiou, the man who put together Accelerate Property Fund (JSE: APF), was forced to sell R25 million worth of shares pursuant to a lending arrangement. This is what happens when shares are put up as security and things don’t go well. Together with previous similar sales, this means that RMB now holds 6.99% in the company, based on lending arrangements being settled with shares.
    • There’s another sale by the director of CMH (JSE: CMH) who has been selling shares recently, this time to the value of R3.2 million.
    • Dr Christo Wiese and an associate of the Collins family each bought shares in Collins Property Group (JSE: CPP) worth R313k (so a total of R626k).
  • The Capital & Regional (JSE: CRP) deal with NewRiver REIT has been strongly supported by shareholders. This means that the scheme of arrangement will go ahead and Capital & Regional will soon disappear from the JSE.
  • Lighthouse Properties (JSE: LTE) has noted potential tax changes in Spain that would eliminate the benefit of SOCIMI structures. Although Spain is 42% of Lighthouse’s assets, they further note that even if the tax change goes ahead (and it’s by no means a guarantee), it won’t have a material impact on distributable earnings. Interestingly, Vukile (JSE: VKE) noted the same potential issue but wasn’t prepared to make a statement on materiality.
  • Workforce Holdings (JSE: WKF) is trying to head for the exit, releasing the circular detailing the offer by Force Holdings. Force Holdings has 45.63% of shares in issue and concert parties to the offer have another 51.61%, so the shares eligible to participate in the scheme represent just 2.76% of issued shares. Despite such a narrow voting class, the scheme consideration is a premium of just 16% to the 30 day VWAP. Irrevocable undertakings have been obtained from holders of 32.71% of the shares eligible to vote, so they actually have a long way to go here and I’m not sure the premium is juicy enough for such a small voting class. Time will tell.
  • Universal Partners (JSE: UPL) released its quarterly earnings. The net asset value per share has decreased by 0.8% in the past year in GBP. You simply won’t find a more varied portfolio than this, ranging from a dental group in the UK down to the company that always makes me laugh: Propelair, which claims to have reinvented the toilet. The fact that Propelair is always behind on its business plan suggests that perhaps the toilet didn’t need to be reinvented?
  • Montauk Renewables (JSE: MKR) releases its 10-Q each quarter and doesn’t add any management commentary on SENS, making it painful to try and follow the company. That’s a real pity, as earnings per share have almost doubled year-on-year for the nine months to September, driven by a decent increase in revenue.
  • Burstone Group (JSE: BTN) has completed the transaction that puts in place a strategic partnership with Blackstone in Europe.
  • Europa Metals (JSE: EUZ) has completed its disposal of the Toral Project in exchange for shares in Denarius Metals. This effectively turns Europa Metals into a cash shell under AIM rules on the London exchange, with the planned reverse takeover by Viridian Metals set to address that issue.

GHOST BITES (AVI | Bidcorp | Mantengu Mining | Metair | MultiChoice | Powerfleet | Premier | Quantum | Santam)

The Finance Ghost
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GHOST BITES (AVI | Bidcorp | Mantengu Mining | Metair | MultiChoice | Powerfleet | Premier | Quantum | Santam)

AVI flags difficult trading conditions (JSE: AVI)

Consumers still aren’t out of the woods

As we hope for a strong peak season for retailers in South Africa, AVI has given a sobering update on sales for the four months to October. Interest rates and other issues like unemployment remain a problem despite all the GNU excitement.

For the four months, revenue was 3.4% higher year-on-year. That suggests little or no growth in volumes, with the group focusing instead on gross profit margin and other initiatives to extract as much value as possible from the difficult sales environment. This is something that AVI is particularly good at.

I&J remains under pressure from low fishing catch rates. The abalone business is also being impacted by lower prices in Asian markets.

There’s all to play for as we head into December.

Bidcorp impacted by the strong rand (JSE: BID)

The underlying business remains solid

Bidcorp is one of the best rand hedges on the JSE, boasting an exceptional international business. When the rand strengthens, this impacts the translation of the international earnings into rands. Thankfully for Bidcorp shareholders, the rand doesn’t strengthen very often.

For the four months to October, the constant currency results at Bidcorp show 10% growth in trading profit, which is solid. Constant currency HEPS is up 8%, a particularly strong result in a period when inflation has been only 2% for the group. They reckon the stronger rand has had a negative impact of 300 basis points on the numbers, so HEPS as reported would be more like 5% growth.

This growth has been achieved at a time when consumers are still quite weak, with retailers enjoying a period in which consumers are eating more at home and less at restaurants. Bidcorp is focused on the restaurant and hospitality sector, so that makes things harder for them.

Despite major weather and other disruptions, Europe (up 10% constant currency) and the UK (up 8% on the same basis) were the main winners. Emerging markets grew 5%, with South Africa noted as a performance highlight – perhaps a surprising outcome given some of the other comments around consumers by South African companies. Australasia grew revenue by only 3%.

Margins are a concern, as inflationary pressures on costs exceed the underlying inflation in food i.e. the basis on which Bidcorp can increase prices. EBITDA margin is slightly higher year-on-year, driven by better gross profit margin that more than offset the operating cost pressure.

And of course, Bidcorp is never far from a bolt-on acquisition. They’ve already completed three this year with an aggregate value of R1.2 billion.

This remains an exceptional business.

Mantengu Mining swings into the green (JSE: MTU)

The ramp-up in production shows what’s possible

Mantengu Mining has released results for the six months to August. The year-on-year moves will make you dizzy, with revenue up from R13.1 million to R115.9 million as production was ramped up. Gross profit jumped from R1.5 million to R53 million and as you can imagine, this did wonderful things for profitability. HEPS came in at 2 cents per share vs. a loss of 10 cents per share in the prior period.

Notably, there’s still no dividend here as the company is in an expansionary capex phase. They are also busy with acquisitions, like Blue Ridge Platinum and Sublime Technologies, while looking for other opportunities in the mining, mining services and energy sectors.

Although the balance sheet is extremely light on cash as at the reporting date, they have access to various funding lines including a share subscription facility agreement with GEM Global Yield.

And yes, I’m still scratching my head about the $100k acquisition price for Sublime Technologies despite the financials of that business. It makes absolutely no sense to me.

Metair is closer to breathing a sigh of relief (JSE: MTA)

Turkish competition approval is out of the way

Metair is in the process of disposing of its business in Turkey. If you’ve been following the company’s fortunes, you’ll know that this disposal is absolutely critical in their lives.

Thankfully, the Turkish Competition Board has confirmed that its consent is not needed for the deal, so that’s essentially a deemed approval for legal purposes.

This means the remaining condition relates to a financing agreement. If that can be achieved, Metair will unlock capital to fix its balance sheet that has suffered terribly from recent performance.

MultiChoice is losing subscribers at a rapid rate (JSE: MCG)

I’m really not sure how this ends if the Canal+ deal doesn’t go through

MultiChoice has released results for the six months to September. Having suffered through an unwatchable feed of the Springboks game on my DStv Stream TV app, I’m afraid that my sympathy is low. They lost a spectacular 1.8 million subscribers in the past year, or 11% of their base.

They lost 5% of their subscribers in South Africa and 15% in the Rest of Africa. Considering the sheer amount of money that Rest of Africa has swallowed up, it’s particularly worrying that they are losing subscribers at such a rate there. If there’s any silver lining, it’s that Showmax grew 30% year-on-year.

Despite shedding subscribers at this pace, revenue was up 4% excluding forex and M&A impacts. Revenue was down 10% on a reported basis, with forex pressures playing an important role here. You can’t ignore the forex issues here, so focus on the reported numbers without forex adjustments, like the 46% decline in trading profit.

The cash cows in the group (South Africa and Irdeto) generated cash flow of R3.3 billion. The group invested R1.8 billion into Showmax and experienced a R0.9 billion outflow in the rest of Africa.

MultiChoice now has a negative equity position of R2.7 billion. They generated adjusted core headline earnings of just R7 million (yes, with an “m” not a “b”) for this period.

At this point in time, I struggle to see any positive outcomes unless the Canal+ deal goes through. Engagements with regulatory authorities are underway.

Powerfleet is growing faster in the lower margin side of the business (JSE: PWR)

But major cost savings more than made up for it

Powerfleet (which acquired MiX Telematics) has released results for the first half of the 2025 financial year. This means there are two quarters worth of results that include the MiX numbers.

The year-on-year stuff is therefore not hugely useful, but I will highlight that product revenue was up 13% and service revenue was just 5% higher. Considering that product revenue adjusted gross margin is 35% vs. 63.7% in services, investors will want to see those growth rates swap around over time.

The group has already realised $13.5 million in annual cost synergies from the MiX deal, so they are halfway to the two-year target. This led to adjusted operating expenses decreasing by 5%. In turn, this drove a 41% increase in adjusted EBITDA.

The MiX deal is actually old news for the company, with the focus now on the Fleet Complete acquisition and generating growth from the acquired relationships as soon as possible.

Premier turns modest revenue growth into juicy profits (JSE: PMR)

This is the shape you want to see on an income statement

For the six months to September, revenue at Premier Group only increased by 3.7%. That’s not exciting at all, yet HEPS grew by 32.4%! How does a shape like this happen?

It all comes down to operating leverage, which talks to the extent of fixed costs in the cost base. Even small increases in revenue can lead to large increases in profits when there are many fixed costs. Notably, a decrease in revenue therefore also drives a much larger drop in profits, so these business models can be volatile.

When they work, they work really well though. At Millbake for example, revenue was up 2.6% and EBITDA was up 15.8%. This was strong enough to improve group EBITDA by 100 basis points to 11.9%, despite the International business seeing EBITDA decline 2.1% even though revenue was up 9.7%.

Thanks to repayments on debt, the EBITDA increase translated into an even better HEPS increase because net finance costs were down 18.2%. Remember, finance costs are shown below EBITDA, which stands for Earning Before Interest, Tax, Depreciation and Amortisation.

Cash generated from operations increased by 13.5%, exactly in line with EBITDA growth. This talks to strong cash quality of earnings.

The group intends to declare a dividend when full-year results are released in June 2025.

A Quantum leap in earnings (JSE: QFH)

A further trading statement has tightened the range

Quantum Foods has released a further trading statement for the year ended September. Things are way better in the poultry industry, as evidenced by these numbers.

They expect to swing from a headline loss of 17.4 cents to HEPS of between 78.7 cents and 82.1 cents. Detailed results are expected to be released on 29 November.

It sounds like things are good at Santam (JSE: SNT)

There’s decent growth and underwriting results within target range

Santam has released an operational update for the nine months to September 2024. The important point to highlight is that underwriting results were within the 5% to 10% target range, despite all the competition in this space and the usual major weather events.

The conventional insurance business achieved net earned premium growth of 8%. Due to underlying performance in the various insurance lines, the impact of R960 million (net of reinsurance) from weather-related and other significant losses was offset.

Another important point to highlight is that the investment return on the group’s capital portfolios were ahead of expectations. These returns are an important component of overall returns to shareholders in insurance companies.

With much progress having been made on the risks in the property book, Santam is painting a bullish picture.

Nibbles:

  • Director dealings:
    • An associate of PJ Mouton bought shares in Curro (JSE: COH) worth R20.1 million.
    • A director of Mondi (JSE: MNP) bought shares in the company worth £118k.
  • MTN (JSE: MTN) and MTN Zakhele Futhi (JSE: MTNZF) announced that all conditions for the extension of the MTN Zakhele Futhi scheme have been fulfilled. The scheme will now mature on 23 November 2027, giving the MTN share price time to (hopefully) improve.
  • Hot on the heels of a capital markets day for debt investors, Discovery (JSE: DSY) appears to have hosted a day for institutional equity investors as well. The entire presentation (all 177 pages of it) is available here. And no, I don’t think you earn any Vitality points for reading it.
  • Just when you thought things couldn’t possibly get any spicier at Trustco (JSE: TTO), the company has decided to upgrade its American Depositary Receipts program to a full Nasdaq listing. This is the same company that had plenty to say about how painful the JSE regulations are. The US is even stricter and vastly more expensive in terms of professional fees like lawyers. Trustco plans to move its primary listing to the Nasdaq, so they will be fully regulated by US requirements – including quarterly reporting etc. Interesting.
  • Sable Exploration and Mining (JSE: SXM) released a trading statement dealing with the period ended August. They expect a headline loss per share of between 8 and 9.7 cents, which is much better than the comparable headline loss per share of 72.65 cents.
  • Zeder (JSE: ZED) recently announced a 20 cents per share special dividend. In an early update during the day, they noted that approval by the SARB had not yet been obtained. Later in the day, they got the approval, so the payment date for the dividend is 25 November.
  • In case you are a shareholder in Visual International (JSE: VIS), be aware that the circular convening the general meeting for the specific issue of shares for cash has been sent out.

GHOST BITES (Boxer | Harmony | Life Healthcare | Omnia | Raubex | Stor-Age | Sibanye | Vodacom | Woolworths)

The Finance Ghost
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GHOST BITES (Boxer | Harmony | Life Healthcare | Omnia | Raubex | Stor-Age | Sibanye | Vodacom | Woolworths)

Boxer’s pre-listing statement has been released by Pick n Pay (JSE: PIK)

22 years of turnover growth have brought Boxer to this point

Boxer is without a doubt in the jewel in Pick n Pay’s broken crown. In the latest interim period, it grew turnover 12.0% or 7.7% is on a like-for-like basis. The two-year store roll-out compound annual growth rate (CAGR) is 14%, so they are expanding at pace. It’s the right time to get the market excited about the story and willing to pay up for it, injecting some desperately needed capital into the Pick n Pay balance sheet.

The first few weeks of the new financial period have seen 5.2% like-for-like growth at Boxer, admittedly against a very strong base.

Boxer appears to have a huge growth runway ahead of it, with 4.2% market share of the formal grocery market. You do need to be careful though, as the group makes no effort to win market share in higher income brackets. They have 68% of the discount grocery retail market, which is substantial. Thankfully, as more South Africans move from informal retail into formal retail, their market is growing. Based on expansion into areas where there is currently no Boxer Superstore, they reckon they have the potential to triple current revenue levels over the long term.

Despite the obvious expansion potential, they intend to pay 40% of headline earnings as a dividend.

The offer price range for the listing is R42 to R54 per share. If they get a price at the mid-point, there will be 477 million shares in issue, suggesting a market cap of R22.9 billion. Boxer generated headline earnings of R1.4 billion for the year ended February 2024. That’s an outdated number of course, but it implies a mid-teens Price/Earnings multiple for the group at the mid-point.

I suspect there will be a bit of a feeding frenzy over these shares, with institutions getting in at a juicy price and the share price popping to over 20x P/E when it starts trading. Let’s wait and see.

Harmony’s results look strong, but production was flat (JSE: HAR)

The gold price is doing the heavy lifting here

The gold sector is having a fabulous time at the moment. In Harmony’s latest quarterly results, they show a 21% increase in the average gold price received and a 23% increase in gold revenue. This more than makes up for a 14% increase in all-in sustaining costs, driving operating cash flow 60% higher! Lovely.

Production was only flat year-on-year though, so that’s the obvious area where things could’ve been better. The South Africa underground high-grade operations saw production up 15% thanks to Mponeng. The South African underground operations saw production dip 10%, so that’s where the difficulties were experienced. Production was steady at the South African surface operations and down 11% in the international business.

Although uranium is still a small part of the overall story, it’s a useful by-product of the gold extraction process at Moab Khotsong. Uranium production decreased by 10%, but the price was up 39%. Uranium revenue was R199 million for the quarter.

Mines constantly have to invest to keep their operations ticking over. Capex was up 17% in this period, which looks fine in the context of such strong operating cash growth.

Life gets a huge boost from LMI (JSE: LHC)

The hospital business is delivering the usual single-digit growth

Life Healthcare has released a further trading statement dealing with the year ended September. There’s a jump in HEPS from continuing operations of between 55.9% and 60.9%, which certainly isn’t the stuff we are used to seeing from a hospital group.

As expected, a further read shows that there’s a major once-off boost here: income of $36 million from the sub-licensing arrangement of one of Life Molecular Imaging’s (LMI) early-stage novel radiotherapeutic and radio diagnostic products. That’s legitimate and exciting income, but certainly not an indication of the kind of growth rates that can be maintained.

The dose of realism is that paid patient days grew 1.6% in the acute hospital business and fell 2.6% in the complementary business. Overall volume growth was thus 1.2%, with a boost in revenue per paid patient day taking the southern Africa revenue up by between 7.5% and 7.9%. That’s pretty good actually, although dwarfed by LMI with revenue growth of 180%.

Another important point is that the repayment of international debt (thanks to the sale of Alliance Medical Group) brought interest costs down by 66%. This is why HEPS from continuing and discontinued operations looks even better, up by between 69.4% and 77.3%.

Margins up at Omnia, but not much HEPS excitement (JSE: OMN)

And the issue is on the tax line, not the finance costs line

When you see a company with decent operating profit growth but a disappointing HEPS outcome, it’s usually because finance costs have gone up and the bankers are getting the uptick in performance. Not so at Omnia, where a dispute with the Zimbabwean Revenue Authority means that an operating profit increase of 17% has translated into HEPS growth of just 2%!

This isn’t Omnia’s first tax rodeo, either. They are still sorting out a dispute with SARS going back to the 2014 to 2016 tax years.

Tax weirdness aside, investors can at least feel good about operating margins expanding from 6.5% to 7.3%. Group working capital was down slightly despite the growth in revenue, so they are also managing the business efficiently from a cash perspective.

The Agriculture segment saw revenue dip by 4%, but operating profit increase by 27% thanks to commodity prices and operational improvements over the period. In Mining, revenue was up 15% and operating profit 18%, so that’s a good story from top to bottom. Chemicals, sadly, is a completely different situation – although revenue was up 6%, there was an operating loss of R23 million after an operating profit of R5 million in the prior period. I don’t understand enough about the chemicals market, but it has severely hurt Sasol and the same seems to be happening at Omnia.

The share price is up just 2% year-to-date, reflecting the subdued movement in HEPS.

Raubex posts a banging set of numbers (JSE: RBX)

They are the clear winners in the construction sector

Raubex is a wonderful example of the power of stock picking. At a time when the narrative in most of the construction sector is subdued, this company has delivered spectacular returns in the past year. The best part is that the earnings are backing up the share price growth, so this isn’t just a case of improved sentiment.

For the six months to August, Raubex grew revenue by 29.7% and operating profit by 34.7%. Not only is that excellent growth, but also an improvement in margins. It gets better as you move down the income statement, with HEPS up 49.8%.

The cash story may well be the biggest highlight of all, with cash from operations up 111.5%! This means they had no problem increasing the interim dividend by 49%, in line with HEPS.

If there’s anything to put even the tiniest blemish on these numbers, it’s that the order book reduced from R25.55 billion to R24.50 billion. Management sounds bullish on increases to the order book going forward, with a robust pipeline particularly in South Africa.

If we look deeper at the segmental numbers, things predictably get a lot more volatile. For examples, Materials Handing and Mining saw operating profit margin drop sharply from 10.9% to 8.4%. Revenue was up 39.1% in that division, so they still ended up in the green. Construction Materials grew revenue by 18% and saw operating profit nearly double, with operating profit margin up from 5.1% to 8.5%. Roads and Earthworks also had a great story to tell, with revenue up 31.2% and operating profit margin up from 5.6% to 7.4%, leading to an increase in operating profit of 74%. The Infrastructure business grew revenue by 26.9%, but margin decreased from 7.9% to 7.3% and so operating profit was “only” 15.9% higher. Finally, the International division saw strong results across Rest of Africa (operating profit up 51.4%) and Australia (operating profit up 13.9%).

Overall, it’s hard to fault this set of numbers.

A lower dividend at Stor-Age (JSE: SSS)

At least the net asset value per share is up

If memory serves, Stor-Age warned previously that the dividend payout ratio would be decreasing. This allows the company to retain some of its earnings to fund further growth, a major challenge faced by REITs who are effectively cash conduits for shareholders. Most REITs don’t pay out 100% of their distributable income per share as a dividend, so Stor-Age is simply aligning with the rest of the sector here.

Still, it means that the interim dividend is down 6.8% despite distributable income per share being up 3.5%. The payout ratio is now 90%.

Dividend aside, the underlying metrics look strong. Rental income increased by 10.8% in South Africa and 6.8% in the UK for this interim period, whilst net property operating income was up 12.0% in South Africa and 87.4% in the UK.

The net investment property value increased by 5.4%. The balance sheet is healthy, with a loan-to-value of 31.3%. All this has contributed to 8.3% growth in the net asset value per share.

Still, if you combine the net asset value per share growth with the decrease in the dividend, the total return to shareholders is minimal. Despite this, the share price is up 27% in the past 12 months. Keep an eye on this one, which has been a market darling and is thus ripe for a wobbly.

The net asset value per share is R16.8554 and the share price closed at 1.7% higher on the day of results at R15.21.

Sibanye-Stillwater locks in a gold wage agreement (JSE: SSW)

This is of critical importance with such favourable gold prices

With the ongoing pain in the PGM side of the business, the gold operations are the best part of Sibanye-Stillwater. It’s therefore beyond critical that there are no labour disruptions, as that would truly be a disaster for the group.

It’s good news that Sibanye has concluded wage negotiations in the SA gold operations, effective July 2024 to June 2025. Although this only gives certainty until the middle of next year, it’s a step in the right direction. The wage increase is 5.5%, so that feels fair for all involved.

Vodacom reminds me once more why I don’t like the telecoms sector (JSE: VOD)

The interim dividend is down 6.6%

Vodacom’s revenue increased by just 1% for the six months to September 2024, with substantial forex headwinds as a problem. Much like sector peer MTN, Vodacom has gone looking for growth in Africa and has found consistently depreciating currencies.

Although they try hard to push the constant currency growth story, also known as the “pretend we aren’t in these risky markets and just imagine the possibilities” approach, we know better from MTN experience. You can’t ignore these risks, hence I completely ignore the normalised growth.

HEPS fell by 19.4% and the dividend is down 6.6%, so they’ve increased the payout ratio in an effort to stem the bleeding for shareholders. Operating cash flow fell 18.3% and free cash flow came in at negative R1 billion thanks to the extent of capital expenditure.

Will things work out well with the business in Egypt? It grew by 44.1% in local currency, which is encouraging. It just doesn’t help if these currencies keep falling off a cliff.

This is a really tough sector, with minimal growth opportunities in South Africa (Vodacom didn’t even get approval for its fibre deal with Remgro) and many risks beyond our borders.

Some positive momentum at Woolworths (JSE: WHL)

Australia is still a mess, but the rest is looking better

Woolworths has released a trading update for the 18 weeks ended 3 November. At group level, an increase in turnover of 6.5% really isn’t bad, especially when you start digging deeper.

Woolworths Food managed growth of 9.6% excluding Absolute Pets. With that acquisition included, sales growth was 12.1%, but that’s not a very useful metric. Instead, it’s better to consider price inflation for the period of 6.2%, with trading space (excluding Absolute Pets) up 2% as the group invested in expansion once more. Online sales were up 36.9%, driven by Woolies Dash which grew 54.4%.

Food isn’t where the problems have been recently. The battered and bruised Fashion Beauty and Home (FBH) business seems to be improving, with sales up 3.5% overall. This does however include the winter clearance sale, so be careful of extrapolating this for the entire interim period. Still, it’s a green result despite price movement of just 1.9%, so volumes were positive. Beauty was a highlight, up 20.6% as Woolworths invests in that category. Online sales increased by 36.5%.

The Woolworths Financial Services book was down 3.5% year-on-year and the annualised impairment rate was better at 5.9% vs. 7.5% in the prior period.

This brings us neatly to the end of the good news. Australia remains a huge problem, with Country Road Group suffering a sales decline of 8.8% overall and 13.8% on a comparable store basis. Trading space decreased by 1.6%. They’ve flagged that operating margins have also gone the wrong way, so brace yourself for ugly numbers from that part of the world.

Nibbles:

  • TeleMasters (JSE: TLM) renewed its cautionary announcement regarding a potential offer from B-BBEE investors. The potential acquirer is in the process of securing funding and nothing is guaranteed yet, so for now they are still under cautionary.
  • Acsion (JSE: ACS) released a related party announcement that is a good reminder of just how odd the place is. Firstly, one of their subsidiaries is Hey Joe, a restaurant and brewery in Franschhoek – not the kind of asset you’ll usually find in a listed company. Then, said brewing company has appointed K Anastasi Projects (which happens to be owned by the CEO of Acsion) to construct 69 hotel units on the property. The contract is worth R87.5 million and is thus a small related party transaction under JSE rules. This requires a fairness opinion from an independent expert. Merchantec Capital has opined that the contract is fair, so no further approvals are necessary for the contract.
  • Trustco (JSE: TTO) has announced a general progress update on its corporate transactions. There are a bunch of underlying transactions that are being dealt with in one circular, the drafting of which will start when they publish 2024 financial statements. The Legal Shield deal circular is in progress at the JSE and is going in for its third submission soon (circulars go through several reviews). The resources transaction is also in process at the JSE, with the Preliminary Economic Assessment with the readers panel for review. There’s a lot going on at Trustco and they are doing a decent job here of keeping shareholders in the loop.

UNLOCK THE STOCK: Calgro M3

The Finance Ghost
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UNLOCK THE STOCK: Calgro M3

Unlock the Stock is a platform designed to let retail investors experience life as a sell-side analyst. Corporate management teams give a presentation and then we open the floor to an interactive Q&A session, facilitated by the hosts.

We are grateful to the South African team from Lumi Global, who look after the webinar technology for us.

In the 45th edition of Unlock the Stock, Calgro M3 returned to the platform to talk about the performance and prospects – and of course, for the outgoing management team to explain where they are going and why. The Finance Ghost co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.

Watch the recording here:

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