Sunday, February 15, 2026
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Ghost Bites (Anglo American | ArcelorMittal | Boxer | Glencore | Hudaco | KAL | Kumba | Lesaka | MTN | Prosus – Naspers | Sasol | Super Group | Valterra Platinum)

The Finance Ghost
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Ghost Bites (Anglo American | ArcelorMittal | Boxer | Glencore | Hudaco | KAL | Kumba | Lesaka | MTN | Prosus – Naspers | Sasol | Super Group | Valterra Platinum)

Diamonds continue collapsing at Anglo American, with all eyes on near-term copper (JSE: AGL)

But copper production in 2025 was at the lower end of guidance

Anglo American has carved its group into two segments called “simplified portfolio” (the stuff they are keeping) and “exiting businesses” (the stuff they are selling).

That makes it sound like the businesses they don’t want are now someone else’s problem, but that’s not the case. At this stage, there are no concrete deals on the table for diamonds or steelmaking coal, with only a sales process running in the background. At least they have a buyer for nickel, with that deal currently going through approval processes.

Average diamond prices were down 7% year-on-year for full year 2025 and 17% for the fourth quarter. This is despite a 35% drop in fourth quarter production, so even a sharp drop in supply hasn’t sent prices the right way. Full year production was down 12%. At this rate, they might have to pay someone to drag De Beers away! Jokes aside, they’ve flagged that an impairment is likely in the full year numbers based on negative EBITDA in 2025. The lab-grown diamond disruption went beyond even my expectations when I first started writing about it.

In steelmaking coal, production fell by 15% in the fourth quarter and 43% for the full year. Thankfully, this drop is largely (but not exclusively) due to disposals of assets that were in the base period and not in this period.

Anglo would like to sweep these businesses under the carpet and move on. As you can see, it’s not quite that easy.

Let’s move on to the stuff they actually want to own.

We know that copper is the big focus, yet production actually fell 14% in the fourth quarter and 10% for the full year. They produced 695 kt in 2025, right near the bottom of the guided range of 690 – 750 kt. Great numbers at Los Bronces were offset by lower grades at Quellaveco and Collahuasi. Unfortunately, copper guidance for 2026 and 2027 has been revised lower. The 2026 revision is no joke – the lower end of the guided range has been dropped by 8%.

In premium iron ore, you can read further down about how well Kumba Iron Ore (JSE: KIO) performed within the Anglo stable. The other asset is Minas-Rio in Brazil, where production dipped by 1% for the full year. Guidance for 2026 is much more encouraging for that asset, revised higher thanks to recent operational performance.

The third and final business they plan to keep is manganese ore. Production jumped by 22% for the quarter and 30% for the year, with production now at normalised levels after a tropical cyclone hit Australia in March 2024.

Despite highlights appearing to be thin on the ground in this update, Anglo’s share price is up 34% in the past year thanks to exuberance around copper.

Losses down and debt up at ArcelorMittal (JSE: ACL)

Is a government bailout the only hope for this company?

ArcelorMittal released results for the year ended December 2025. It’s hard to imagine how much longer this can go on for, as the company has generated R8.4 billion in headline losses over the past two years. They are sitting with net borrowings of R6.5 billion, so we are firmly in “too big to fail” territory here.

Or are we? Will this thing be allowed to collapse? And is the South African government, via the IDC, the only potential saviour?

It’s hard to find positives here unfortunately. Even though the headline loss of R3.4 billion was much better than in 2024, it’s still a huge number. The net borrowings number is R1.3 billion higher than the year before. And perhaps most shockingly, this is despite the “Longs” business being EBITDA neutral in 2025! The group EBITDA loss in 2025 was R1.1 billion instead of almost R3 billion in the prior year.

Now get ready for the worst news of all: the stronger rand makes everything worse for ArcelorMittal. It makes imports cheaper and exports less attractive. This is a company that couldn’t keep it together when the rand was weak, so what do you think happens in 2026 with a stronger rand?

The company has flagged a commitment by the DTIC to address fair trade protections in the first quarter of 2021. The cynic in me can’t help but wonder whether government will give the business a helping hand before or after doing a deal to acquire these assets.

The share price of R1.27 is up 12.5% over 12 months. This is despite a headline loss per share of R3.01. There is only one reason why this is possible: the market is hoping with everything it has that government will swoop in with a deal.

I’ll keep my money far away from that “investment” thesis, thank you very much.

Boxer is certainly a worthy adversary for Shoprite (JSE: BOX)

The periods aren’t directly comparable, but Boxer is looking good

Boxer is by far the best part of the Pick n Pay (JSE: PIK) stable. The grocery chain competes very well for lower-income customers, giving Shoprite (JSE: SHP) something to really think about in the Shoprite and Usave chains. The winners are of course the consumers who get to enjoy a period of price deflation as these grocery stores fight over the most price sensitive customers in the country.

If you look over the past year, Shoprite is a victim of its valuation and a slowdown in growth. Pick n Pay is a victim of… well, a whole lot of things. And Boxer is the one you wanted to own, up 11.4%:

It gets tricky to compare the performance, as Boxer has a different reporting period to Shoprite. Due to factors like two-pot withdrawals at the end of 2024 and the timing of inflationary changes, it’s dangerous to compare the performance of companies over different periods and draw any conclusions.

Starting with just Boxer’s numbers, turnover for the 48 weeks to 1 February 2026 was up 11.9%, with like-for-like growth of 3.9%. For the 22 weeks to 1 February 2026, turnover growth slowed to 9.8% and 2.4% on a like-for-like basis. Interestingly, November was the month that they highlight as being the biggest struggle! Clearly, Black Friday at Boxer isn’t a thing.

For the 48-week period, there was deflation of -1%. For the 26 weeks to 31 August 2025, deflation was -0.7%. The closest comparable period we have at Shoprite is the six months to December 2025, in which deflation at Usave (the closest in spirit to Boxer) was -0.7%.

As you can see in the gap between total growth and like-for-like growth, Boxer is aggressively rolling out stores. They are on track to hit their targets for the 52 weeks to 1 March 2025 (the full financial year). They also believe that they will meet the trading profit growth targets based on an expectation of strong year-on-year numbers in February.

It’s a great business, that’s for sure.

Glencore doesn’t want to be swallowed up by Rio Tinto (JSE: GLN)

Mining mega-mergers remain rare things

The year kicked off with news of Glencore and Rio Tinto circling each other on the dancefloor. As is so often the case in huge mergers like these, one party decided to go home early and leave the other one hanging.

In this case, it was Glencore who decided that they weren’t comfortable with the value being put forward by Rio Tinto. At least Glencore was honest about one of the other issues: Rio Tinto insisting on retaining the Chairman and CEO roles. The mining industry does have a reputation for having bigger-than-average egos in the boardroom!

The official record will show that Glencore feels that the copper assets were being undervalued in the negotiations. I would’ve loved to be a fly on the wall for some of these deal discussions.

Glencore fell over 5% on the day, but the market hasn’t had an opportunity to digest this news yet.

Double-digit dividend growth at Hudaco (JSE: HDC)

The engineering consumables segment is doing all the heavy lifting

Hudaco has released results for the year ended November 2025. Turnover increased 4%, operating profit was up 9%, HEPS grew 16% and the dividend was up 10%. That sounds like a perfect story of leverage, with top-line growth translating into a much better outcome for shareholders by the time you reach the bottom of the income statement.

The segmental story is somewhat less steady.

Consumer-related products suffered a turnover decline of 2%, although they did well to increase operating profit by 0.6% despite this dip. The battery and alternative energy business is almost a lost cause, with Hudaco impairing the goodwill in that business in full. Other businesses like automotive, CADAC and data networking did well.

Engineering consumables brought the growth, with turnover up 10.1% and operating profit increasing by 11.2%. But what is the source of that growth? Acquisitions contributed R58 million in operating profit, so it looks as though the existing businesses only added R12 million in incremental operating profit (total operating profit was R696 million, up by roughly R70 million).

By now, the main thing you should be wondering is whether the stronger rand is a risk. Sure enough, the prospects section does note that it will put selling prices under pressure. They hope that some consumer relief will accompany this.

I wonder if anyone at the SARB reads these things when making interest rate decisions? Because until rates start coming down, I fear that the consumer relief isn’t going to happen.

KAL Group has a new CEO (JSE: KAL)

The group enters this new chapter in excellent shape

At KAL Group’s AGM, they announced that Sean Walsh will be retiring as CEO with effect from 28 February 2026. That’s a rather sudden change, not least of all after a 15-year term! Walsh will be available to the board on a consulting basis in the coming months.

This paves the way for Johann le Roux to take the reins. If that name sounds familiar, it’s because le Roux has just stepped down at Zeder (JSE: ZED) in the wake of the Zaad disposal being announced. I’m sure he’s excited to move into a growth business rather than a value unlock story.

And growth is the word: at the AGM, the company reiterated its 2030 goal of 15% compound annual growth in profit before tax at Agrimark and PEG. They are also targeting a 15% return on equity with a 40% gearing ratio.

These are lofty targets, representing an acceleration from the profit before tax growth of 12.8% in 2025. With considerable exposure to fuel retail and the whims of the fuel price, it’s important to remember that not everything is within their control.

The AGM update included news on trading during the first quarter of 2026. Recurring HEPS increased 13.4% and debt dropped by R385 million year-on-year, with a gearing ratio of 34.3%.

The share price is only up 4.7% in the past year, but that doesn’t tell the full story. It went as low as R36.69 before recovering to the current level of R49.00 (pretty close to the 52-week high of R53.49).

Kumba Iron Ore had a pretty good year in 2025 (JSE: KIO)

Earnings are up and there’s a more positive narrative around Transnet

Kumba Iron Ore released an update for the fourth quarter of 2025, which means we have full year numbers as well. This was accompanied by a trading statement indicating growth in HEPS of between 11% and 23% – a strong outcome. The share price is only up 6% over 12 months though, so the market is taking a cautious approach on this one.

Production in the fourth quarter was up 10% year-on-year. For the full year, they were up 1%. Kolomela was up 7% for the year and Sishen (which is 2.5x larger) was down 1% due to planned maintenance.

Kumba is responsible for getting the stuff out of the ground, but Transnet then needs to rail it to Saldanha. This is historically where things have gone wrong. Despite two derailments, there was a 2% increase in ore railed to the port in Q4!

Once it gets to the port, it then needs to be put on a ship. With high wind speeds and other issues, this is where things went south in Q4. Sales were down 5% year-on-year for the quarter, and up 2% for the full year.

As you can see, it’s not easy running this business. Nonetheless, it was a successful year, with earnings up thanks to better export ore prices, the 2% increase in sales volumes and penalty income from Transnet.

Production guidance for 2026 is unchanged at 31 to 33 Mt, while 2027 and 2028 sit at 35 to 37 Mt.

Lesaka Technologies finally delivers positive net income (JSE: LSK)

They’ve met profitability guidance and reaffirmed full-year guidance

Lesaka Technologies has released results for the second quarter of the year. Before we dig in, I want to remind you that I recorded a podcast in November last year with Executive Chairman Ali Mazanderani. It’s still a really great resource to help you understand the company, so check it out here.

In terms of the latest numbers, net revenue (a non-GAAP measure) was up 12.2% in dollars and 16% in rand. If you work with revenue as reported, it was up 1.4% in dollars and down 3% in rand.

That won’t really blow anyone’s hair back in terms of growth, but we haven’t gotten to the numbers that really count yet.

Operating income jumped by a lovely 265% in rand as the company started to climb the J-curve (or the S-curve, depending on your long-term view here). Curve shapes aside, profits are now starting to climb as the company has reached that inflection point that all successful technology companies must move through.

Most encouragingly, there was positive net income this quarter, a massive positive swing from where they were a year ago. This is a big deal for the company, as this is the first positive net income since Lesaka was put together in 2022. It’s also worth noting that this is the 14th consecutive quarter of meeting guidance.

Based on these numbers, further revenue growth will likely have a great impact on the bottom line. We can therefore move on to look at Lesaka’s three segments.

The largest is Merchant, where net revenue dipped 2% and adjusted EBITDA was down 6%. This is why the group revenue picture isn’t as inspiring as one might hope in this quarter.

The Consumer segment is much smaller on the net revenue line, but almost as big on the adjusted EBITDA line as Merchant. This is especially true after adjusted EBITDA more than doubled (up 106%) based on revenue growth of 38%.

The Enterprise segment is scaling rapidly, with revenue up 58% and adjusted EBITDA swinging from a loss to a solid positive of R24.3 million. For context, that’s still much smaller than Consumer’s EBITDA of R159 million, or Merchant at R170 million.

The guidance for the year ending June 2026 reflects expected growth in adjusted earnings per share of more than 100%. Most importantly, they expect positive net income. This excludes the acquisition of Bank Zero, a critical additional step in this journey.

The Lesaka share price hasn’t really captured the imagination of the market. Will a swing into profitability change that?

MTN is potentially acquiring the remaining 75% in IHS (JSE: MTN)

This seems like a slightly odd allocation of capital

As I wrote about in the Vodacom (JSE: VOD) update earlier this week, the macroeconomic situation in Africa is giving telcos like MTN a golden opportunity to cement their positions on the continent and generate proper cash flows.

It therefore makes sense for the companies to be allocating more capital to Africa. But I’m not so sure that it makes sense for this to take the form of owning the towers that are leased to the telco companies. The trend in the sector has been to separate the towers from the telco operators, as one is essentially a property company and the other is a technology company.

Despite this, MTN has confirmed rumours that they are at an advanced stage of discussions with IHS to acquire the remaining 75% in the company that it doesn’t already own. They are looking at an offer price close to the recently traded price of IHS on the New York Stock Exchange.

The MTN share price closed 5.8% lower on the day. I can’t say that I’m surprised.

Prosus is focused on execution, not M&A (JSE: PRX | JSE: NPN)

The real test of new management has arrived

Whenever there’s an exciting new thing out there (like AI), there’s always a flurry of capital that flows into it. When every dart is thrown at the dartboard, some of them are bound to land in weak positions – and others will fall off altogether. You can only see the outcome once the chaos of the initial throws has subsided.

Prosus is now 32% off its 52-week high. This gets me excited as a long-term investor. At nearly 38 years old, I still have plenty of time for the market to pay me for duration. In other words, riding out volatility in core positions is something I have no difficulties in doing.

Why the drop? Well, unless you haven’t been paying any attention at all to the big tech names globally, there’s been a shaking of the tree in anything related to AI and software. The market is treating almost everything with suspicion. This creates an opportunity for investors to identify the good stuff that gets sold off with the bad.

A letter to shareholders from CEO Fabricio Bloisi is no doubt an effort to remind investors of the long-term story. But he’s also given an important update about the near-term strategy: “I don’t have plans for any major M&A while we focus on this” – and by “this” he means execution on what they already own.

In fact, instead of doing major acquisitions, they will be selling more than $2 billion in assets in this fiscal year and even more the following year. Share repurchases remain a core focus, something that you absolutely want to see when a share price has come off the boil. It’s worth noting that they fund a large part of the buybacks through selling shares in Tencent, where the share price is also under pressure. It would be ideal if the buybacks were funded fully by cash profits in the group.

Speaking of profits, Prosus indicates that they are still on track to do over $7.3 billion in revenue and over $1.1 billion in adjusted EBITDA in FY26. For context, in FY25 they achieved $6.2 billion in revenue and $655 million in adjusted EBITDA.

This is only possible if the major acquisitions are performing well. In Brazil for example, Despegar is up more than 30% year-on-year in local currency and 50% in dollars, with strong sales synergies delivered with other Prosus businesses in the region. At Just Eat Takeaway.com in Europe, new management is in place and initial testing is encouraging, but there’s a very long way to go. At La Centrale, they are giving a positive overall view, but again these are early days and there’s a lot of integration to do with OLX.

On the topic of classifieds, OLX is on track for $450 million in EBITDA. They will be hosting an investor event soon that will be focused on the classifieds opportunity.

iFood, which is Bloisi’s area of deepest expertise, is facing strong competition in Brazil from new entrants who are burning through VC money with unsustainable pricing structures. I remember the exact same thing happened with Bolt Food in South Africa. Today, Bolt is gone and Uber Food is still here. I therefore understand when Prosus talks about how customers return to the best product and service once the subsidies are over, but that doesn’t mean that there won’t be short-term pain.

I remain long here. And if it keeps dropping, I’ll buy more.

A nasty knock to earnings at Sasol (JSE: SOL)

Better fuel volumes can’t offset the weak prices

Everyone’s favourite wild child is back with another day of volatility. Sasol closed 3.8% lower on Thursday, which means that it is flat over 90 days despite swinging wildly between R99 and R127 per share over that period.

The previous update on manufacturing performance was positive, indicating progress made in the South African fuel business. But that’s only half the battle won for any industrial company, with the other half being the selling price of the products. With a 17% decline in the average price of Brent Crude (on a rand per barrel basis) for the six months to December, Sasol’s earnings didn’t stand much chance.

To rub salt in the wound, the average chemicals basket price in dollars fell 3% over the period as well.

Despite the mitigating factors like much better refining margins, a 3% increase in sales volumes and a drop in costs, Sasol still suffered a decline in HEPS of between 29% and 40%. Adjusted EBITDA fell by between 4% and 21%.

I’ve been wondering how it is possible that the Sasol share price is up 35% over the past year despite a stubbornly flat Brent Crude price and a strengthening rand. Now that we know where HEPS has gone, I’m asking myself that question even more.

Results will be released on 23rd February.

Super Group is acquiring 70% in DIG Group (JSE: SPG)

The deal is valued at R447 million

After releasing an interesting update that laid bare the challenges in the UK automotive segment, Super Group announced that they are acquiring 70% in the DIG group of companies. They have the option to acquire the remaining 30% after the 5th anniversary of the effective date, so there’s a pathway to effective control here.

This business will fit into the fleet solutions offering at Super Group, with DIG’s niche being in sectors (like mining and civil engineering) that have strict safety compliance requirements and complicated induction and onboarding protocols. DIG is currently active across 19 mining sites, with exposure to clients in various commodities like coal, chrome and gold.

The fair value has been set at R576 million, with profit after tax for the year ended February 2025 of R191.5 million. I can’t help but wonder why the seller is happy to accept a Price/Earnings multiple of just 3x for this asset!

The purchase price is R448 million settled up-front in cash, with up to R160 million as a deferred profit warranty payment. The put option down the line will be based on the fair value of the business, with a cap in place as well.

The profit warranty is based on a profit after tax of over R200 million per annum in FY26 and FY27. The Price/Earnings multiple applicable to the profit warranty payment is 3.2x.

And no, your mental maths isn’t wrong – the numbers don’t reconcile particularly well in terms of the fair value and the 70% being acquired at this stage.

Despite Super Group trading on a P/E of over 7x, the market reacted negatively to this news of an acquisition at 3x. The share price closed 3.4% lower on the day.

Valterra took advantage of PGM prices in the fourth quarter (JSE: VAL)

They did what they needed to do in terms of production

As I’ve written many times, mining management teams are judged on production performance and capital allocation. This is because they have control over these factors, unlike commodity prices where they are merely passengers on that journey.

In the quarter ended December 2025, Valterra Platinum needed to take advantage of strong PGM prices (the basket price in rand was up 41% year-on-year). Total production increased by 1% and so did refined PGM production on a year-on-year basis. Momentum was good, with refined PGM production up 6% on a quarter-on-quarter basis.

PGM sales volumes were up 4% for the quarter, with some missed sales in Q3 rolling into this quarter.

Still, even if you adjust for the timing distortion of Kroondal, full year PGM sales volumes were down 10% based on refined PGM production falling 13%. Valterra may have had a decent end to the year, but the full year picture isn’t nearly as strong thanks to the flooding at Amandelbult (among other challenges).

Production guidance for 2026 to 2028 is identical across the three years: annual refined PGM production of between 3.0 and 3.4 million ounces. For context, 2025 was 3.4 million ounces. This tells you that earnings growth depends on efficient mining and especially ongoing improvement in PGM prices, rather than an uptick in production.

Nibbles:

  • Director dealings:
    • Two directors of Calgro M3 (JSE: CGR) exercised options and received a total value of R1.14 million, settled in cash. They seem to have retained the post-tax shares.
  • Exxaro (JSE: EXX) successfully refinanced R10 billion in corporate facilities due in April 2026 and added another potential R3 billion of debt on top for good measure. The funding structures range from term loans to recurring credit facilities, with an accordion of R3 billion applicable to all facilities. This is essentially a mechanism that allows for the facilities to be increased without renegotiating all the terms. Financial flexibility is never a bad thing to have.
  • There have been numerous announcements about Ninety One (JSE: NY1 | JSE: N91) acquiring stakes in South African listed companies of between 5% and 10%. I am sure that this is because the transaction with Sanlam (JSE: SLM) for the South African active investment management business has closed, so the ex-Sanlam stakes now fall under the Ninety One umbrella.
  • I’m confused once again about these weird stakes that Standard Bank (JSE: SBK) is picking up in other banks. One theory is that they are held by Liberty as part of a broader investment strategy. That seemed plausible, but now Nedbank (JSE: NED) has announced that the communication sent by Standard Bank to Nedbank was actually sent in error, and that they do not in fact own more than 5% of the shares. Very, very odd.
  • Southern Palladium (JSE: SDL) gave an update on the drill programme for the definitive feasibility study (DFS) at the Bengwenyama Project. The DFS remains on track for completion by the end of August 2026.
  • Argent Industrial (JSE: ART) announced that Fred Litschka will be retiring as an executive director after an incredible innings of over 22 years. That’s a well-deserved retirement I think!

PODCAST: No Ordinary Wednesday Ep120 | Water risk is business risk

Investec Focus Radio
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PODCAST: No Ordinary Wednesday Ep120 | Water risk is business risk

Listen to the podcast here:

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Water scarcity is no longer a future risk. It is already reshaping how businesses operate, invest and grow in South Africa.

With water demand in Gauteng at record levels and ageing infrastructure under strain, water has become a material constraint on business continuity, supply chains and long-term competitiveness. For many companies, water security is now as critical as energy security.

In this episode of No Ordinary Wednesday, recorded after an Investec and Proparco water-resilience event, Jeremy Maggs is joined by Dr Sean Phillips, Director-General of the Department of Water and Sanitation; Helen Hulett, water-security advisor; and Melanie Humphries, Head of Sustainable Solutions at Investec.

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 Apple Podcasts, Spotify and YouTube:

Ghost Bites (Rainbow Chicken | Sappi | Sea Harvest | Vodacom)

The Finance Ghost
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Ghost Bites (Rainbow Chicken | Sappi | Sea Harvest | Vodacom)

Rainbow Chicken’s earnings have doubled (JSE: RBO)

There may not be a pot of gold at the end of this rainbow, but the chickens ain’t bad either

The poultry industry is a bit like going on a night out with your wildest friend. You’re either going to have an absolutely incredible time, or you’re going to lose your phone and end up sleeping under a tree as the precursor to a morning of serious regret.

In other words, if you’re the type who prefers a quiet night with a book, then chicken is best left for your plate rather than your portfolio.

For the six months to 28 December 2025, Rainbow Chicken achieved growth in HEPS of between 94.9% and 114.9%. As jols go, this is the one you look back fondly on when you turn 35 and realise that you’re probably too old for this now.

The reason for the volatility in earnings is that poultry businesses run at paper-thin margins. A relatively modest improvement further up the income statement has a significant impact on margins by the time you reach the bottom. Likewise, a seemingly minor deterioration in e.g. gross margin can have a nasty impact on profits.

When several things go well, you can see earnings double like this. In this case, Rainbow enjoyed a lovely cocktail of operational efficiencies, strong demand and lower feed costs thanks to improved commodity input prices.

Detailed results are due on 11 March. It’s a pity I’m not a shareholder, otherwise I could treat them as my birthday present that day!

Another loss-making quarter at Sappi (JSE: SAP)

At least Q1’26 was a bit better than Q4’25

Sappi released results for the quarter ended December 2025, the first quarter of the 2026 financial year. Although they reflect a smaller net loss than in the quarter ended September 2025 (a sequential view), adjusted EBITDA is actually lower. And if you apply a year-on-year view rather than sequential, it’s particularly ugly.

This isn’t a surprise to the market, with the share price down 60% over 12 months coming into this release. If anything, the market got a better set of numbers than expected here, based on the share price trading nearly 5% higher by lunchtime and closing 3.6% higher.

The announcement only provides the year-on-year comparison, so a sequential view requires you to dig out the September 2025 results. Revenue fell 6% year-on-year and 7.4% quarter-on-quarter. As for adjusted EBITDA, they were down by a nasty 56% year-on-year and 19% quarter-on-quarter.

Net debt spiked 39% year-on-year, but is only slightly higher sequentially.

The headline loss per share for the quarter was 6 US cents. That’s smaller than the headline loss per share of 19 US cents in Q4’25, so there’s some sequential improvement at least. But compared to positive HEPS of 12 US cents a year ago, it makes for unpleasant reading.

The trouble for Sappi investors is that there are numerous external factors that affect the results each quarter. For example, as we’ve seen in other industrial names, the stronger rand actually creates difficulties for profitability in the Southern African region, particularly when combined with lower international prices for products like dissolving wood pulp.

It’s a real pity that even a 10% increase in pulp segment volumes year-on-year wasn’t enough to offset the pricing declines. Volumes in packaging and speciality papers were also higher by 6%, yet lower prices impacted that business as well. Graphic papers suffered a 9% drop in sales volumes, but managed to keep margins above historical trends.

Then you get all the usual risks in a manufacturing business, like scheduled maintenance shuts and unplanned operational disruptions. This is what we’ve seen play out at the Somerset Mill in North America.

Sappi has been reducing costs in Europe and rationalising the business, but it wasn’t enough to offset these pressures.

There aren’t many highlights in here, but one thing that investors will like is that capex was $56 million in this quarter. That’s way down on $101 million a year ago. When Sappi released full year FY25 numbers, they committed to the market that capex would be below $300 million per annum for the next two years in an effort to repair the balance sheet. This is a promise that they seem to be keeping, with a revised target of $260 million for FY26.

The guidance for the second quarter is filled to the brim with forecasting risk, as Sappi operates in such a difficult environment with multiple factors at play. Overall, they expect adjusted EBITDA to be worse in the second quarter than in the first quarter. Ugh.

Cyclical stocks tend to offer the best buying opportunities when it appears as though nobody could possibly want the shares. That’s what a chart of this phenomenon looks like:

Your eyes are not deceiving you – Sappi is trading at COVID and Global Financial Crisis levels! Have we reached the bottom or will rand weakness drag it even lower? Thanks to a fun new element in Ghost Bites, you can vote in the poll below and we can do a proper sentiment check as a community:

Even more good news at Sea Harvest (JSE: SHG)

Both the seafood and dairy businesses had a strong year

Primary agriculture is a tough gig, especially when you involve the unpredictability of the ocean. Financial performance tends to reflect the volatility of Mother Nature herself: some years are glossy blue days with perfect skies, while others look like they could inspire disaster movies.

Thankfully, the 12 months to December 2025 was a financial year straight out of a tourism brochure. Sea Harvest released an initial trading statement in November that indicated a jump in HEPS from total operations of at least 200%. Fast forward to February and we have a further trading statement that is even better, with an expected increase of between 293% and 303%!

This means that group HEPS has approximately quadrupled from 55 cents to between 216 and 222 cents. You can almost imagine the coconut cocktails with a view of sunset over the ocean.

One of the nuances in the results is that Ladismith Cheese is being sold to Fairfield Dairy based on an enterprise value of R840 million. This deal was announced in November 2025 and makes sense in the context of the company’s push to reduce debt. This means that Ladismith Cheese is reflected as a discontinued operation.

If we therefore dig deeper into the numbers, we find that discontinued operations (i.e. Ladismith Cheese) achieved HEPS growth of 25% to 35%. The continuing operations were particularly crazy, up by between 434% and 444%! The oceans are a lot more unpredictable than fields of cows and cheese facilities.

Aside from the higher catch rates that make a significant positive difference to the numbers, Sea Harvest also locked in efficiency gains in the hake business. To add to the party, pricing improved significantly. This combination can only ever lead to higher earnings, especially in a business with high operating leverage (it costs the same to send out a fishing boat regardless of how much you catch and what the fish are worth).

It’s not all good news of course. There are some impairments that sit in Earnings Per Share (EPS). As a reminder, these impairments are excluded from Headline Earnings Per Share (HEPS).

The impairments relate to the Shark Bay prawn fishery in Australia, the mothballing of abalone farms based on depressed consumer demand in the East, and Cape Harvest Food in relation to the disposal of Ladismith Cheese where the assets exceed the selling price of the business.

The share price closed 4.9% higher on the day.

Egypt takes Vodacom to new heights (JSE: VOD)

The share price has continued where it left off in 2025

2025 was a year to remember for the telcos sector. With the dollar giving frontier markets a breather, Vodacom (and MTN (JSE: MTN)) took full advantage. Suddenly, those earnings in Africa actually meant something, as they weren’t being washed away by currency depreciation.

Africa became investable in 2025 thanks to a new era of US politics. It turns out that when the elephants are fighting, most of the grass has a surprising opportunity to grow.

Results for the quarter ended December 2025 reflect ongoing momentum in the business, especially in Egypt. Group revenue was up 11%, but the segmental view really tells the story. South African service revenue was up just 1.4%, while Egypt grew by 39%!

There’s been a lot of focus on local prepaid revenue recently, with a price war underway across the South African service providers. Vodacom doesn’t give an exact number, merely referring to “revenue under pressure” based on the consumer backdrop and promotional pricing. With contract revenue up 2.6% and data traffic up 32.3%, prepaid revenue must be a fairly nasty number to drag South African service revenue growth down to just 1.4%.

Financial services revenue is another important growth lever, up 24.7% at group level and 59.4% in Egypt.

Encouraged by the current macro environment and the opportunity in Africa, Vodacom announced in December that they would be acquiring an additional 20% stake in Safaricom. Kenya and Ethiopia are attractive markets, so I can see why Vodacom would want to have a controlling stake (55% after the acquisitions) in this business.

In South Africa, the major deal is of course the Maziv fibre transaction, which Vodacom had to fight incredibly hard for at the Competition Commission. Approval finally came in November and implementation began on 1 Deember 2025.

Vodacom and MTN look like heroes right now, but a different result in the US election would almost certainly have resulted in a very different conversation around African earnings. Policies can change quickly, so investors need to always remember that frontier markets are risky places.

With 27.5% of Vodacom group revenue now being generated in Egypt, they will ride this macro wave for as long as possible and be rewarded for it in the market. But if the dollar starts putting pressure on these currencies again, Vodacom will be highly exposed.

There isn’t much of an alternative though, as sitting back and defending market share in South Africa is a strategy that would attract a very low valuation. It’s also incredibly difficult to do acquisitions here, as evidenced by the Competition Commission’s approach to the Maziv deal.

It’s literally a case of nothing ventured, nothing gained. Africa is where the opportunity lies.

Nibbles:

  • Director dealings:
    • A director of Stefanutti Stocks (JSE: SSK) bought shares worth R34.7k.
    • The spouse of a director of Afine Investments (JSE: ANI) bought shares worth R7k. There’s very little liquidity in this thing, with average daily value traded of around R15k!
  • With Zeder (JSE: ZED) having announced the disposal of Zaad, the company has relooked at its management function and decided to restructure things in light of how much smaller the group is becoming. Johann le Roux will step down as CEO and FD with effect from 28 February 2026. He will be replaced by Dries Mellet as FD and acting CEO. Don’t feel too sorry for le Roux here: in a separate announcement, Zeder noted net cash settlement of options to le Roux worth around R5.2 million! That’s like a memorable goodbye kiss after a successful first date.
  • It’s now Investec’s (JSE: INL | JSE: INP) turn to welcome Standard Bank (JSE: SBK) to the share register, with a shareholding of 5.95%. I’m now even more convinced that these must be stakes held via Liberty within the Standard Bank group, or some other broad investment vehicle. You may recall that Nedbank (JSE: NED) recently announced a similar stake held by Standard Bank.

Ghost Bites (Datatec | Glencore | Harmony Gold | Hyprop | Impala Platinum | Mpact | The Foschini Group | RCL Foods | Southern Sun | Super Group | Zeder)

The Finance Ghost
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Ghost Bites (Datatec | Glencore | Harmony Gold | Hyprop | Impala Platinum | Mpact | The Foschini Group | RCL Foods | Southern Sun | Super Group | Zeder)

Another bolt-on deal for Datatec (JSE: DTC)

Cybersecurity is an attractive space for deals

Datatec continues to increase its international footprint through bolt-on acquisitions that add to the business without creating significant risk. This is a clever and effective way to grow, although it does take longer. This is the benefit of investing alongside a founder CEO, rather than a “manager” CEO trying to move the dial and maximise earnings during a term of only a few years.

The latest deal is an acquisition by Logicalis US of Maple Woods Enterprises, a long-term cybersecurity partner of Logicalis US. The Maple Woods Overwatch offering is built for the US defence industry, so it’s clearly robust.

Cybersecurity is a priority area for the group, so I expect to see more deals like this in future.

Glencore does a deal with Orion for its DRC assets – but no, it’s not that Orion (JSE: GLN)

Orion Critical Mineral Consortium is a US-based entity

Glencore announced that Orion Critical Mineral Consortium will look to acquire a 40% stake in Glencore’s interests in the DRC assets. The implied combined enterprise value of the assets is around $9 billion, so this is a large transaction.

Orion Critical Mineral Consortium is focused on securing critical minerals (as the name suggests) for the US and its partners. This consortium was only established in October 2025, so this is firmly a Trump-era initiative. In this case, the minerals in question are copper and cobalt.

Encouragingly for the DRC and the people near the mines, Glencore will look for opportunities to expand and develop these mines. They will also be open to additional critical mineral projects and assets in the DRC alongside their new partner. There’s certainly no shortage of capital in the US, so being able to tap into the world’s deepest capital pool is helpful.

Harmony Gold had a wobbly, but they believe they can still achieve guidance (JSE: HAR)

Here’s another reminder that the commodity price is only half the battle won

The other half, of course, is getting the stuff out of the ground. For the six months to December 2025, Harmony Gold had some challenges in doing that.

A mill motor failure and a deferment of the final gold shipment at Hidden Valley to January 2026 will impact the interim numbers, but should be fine on a full-year basis. Other issues included disappointing recovered grades and an industry-wide cyanide shortage in South Africa.

Despite this, the company hopes to meet full-year production guidance and achieve the planned all-in sustaining cost.

The CSA copper operation in Australia is being integrated into the group after the recent acquisition, while the Eva Copper Project has an appointed EPC contractor that is expected to be on site during the March 2026 quarter.

Hyprop confirms the retail trend that we can all see: a shift from December to Black Friday (JSE: HYP)

South Africans love a deal even more than they love decorated trees

Hyprop released an update for the six months to December. We’ve seen in retailer commentary that sales growth in November seems to be stronger than December. The words “record Black Friday” have come up at various retailers. Hyprop has confirmed this trend, noting a pull-forward of sales from December to November.

This is of course great news for online adoption, as I would wager that Black Friday sales have higher online penetration rates than Christmas shopping when people are on holiday. In an omnichannel environment where orders are fulfilled from stores, my understanding is that Hyprop and other landlords still get a slice of that action.

In the South African portfolio, tenant turnover increased 5.6% in November and only 4% in December, so the trend is clearly visible there. Foot count is even more interesting, up 3.6% in November and thus similar to October at 3.5%. But December was only up 0.8%, supporting my thesis that a shift from Christmas to Black Friday will simply pull a portion of foot count out of the system forever. People aren’t going to the shops as often as they used to.

For the six months, tenant turnover was up 5% and trading density improved by 7.5%. These are decent metrics, particularly in a lower inflation environment.

In Eastern Europe, online adoption is even more obvious. Foot count has declined in every single month in the period, down by 3% overall. Tenant turnover was up 3.8% and trading density climbed 3.6%.

I’m fascinated by the concept of grocery stores as anchor tenants and how things just aren’t what they used to be in terms of these stores attracting people to the malls. It feels like it’s only going to get worse, not better.

Impala Platinum’s profits go to the moon (JSE: IMP)

This is what happens when commodity prices increase sharply

Impala Platinum has released a trading statement for the six months to December 2025. As you might expect, the numbers are incredible.

HEPS is expected to increase by between 392% and 411%, coming in at between R10.15 and R10.54 per share. Although these are interim numbers, annualising is a dangerous game in this sector because things can change so quickly. The share price trading at around R304 shows you how much is baked into this story in the market.

377 jobs on the line at Mpact’s Springs Mill (JSE: MPT)

The rand doesn’t help, but neither do hostile policies in South Africa towards employees and businesses

A weak rand has historically propped up local industrial companies who have managed to compete locally and globally despite the substantial inefficiencies that come with manufacturing in South Africa. We really don’t make it easy down here, with issues ranging from labour laws through to energy availability and costs.

With the rand now strengthening (and the SARB absolutely obsessed with avoiding any rate cuts), our manufacturers are coming under pressure. It’s a two-pronged issue, with exports becoming less lucrative and imported alternatives becoming cheaper.

Mpact is one of the first public examples of this issue playing out, but there will be others.

Mpact’s Springs Mill is the only domestic producer of cartonboard, competing directly with imports that have found a home in South Africa in an environment of overcapacity in the global cartonboard market. The largest customers of the mill can import cartonboard at prices that are 20% lower than the cost of local production. You can guess where this is going.

When you consider that operating profit for the year ended December 2024 was just R32 million based on revenue of R1.74 billion, you can see that there was no room to absorb this pricing pressure.

With the largest remaining customer notifying Mpact that they will be importing going forwards and no longer procuring from Springs Mill, the show is over for that facility. Production will run until the end of March, at which point 377 people are likely to lose their jobs.

Of course, in a vibrant economy, there should be 377 new jobs waiting for these people at companies that can flourish in a stronger rand environment. Alas, this isn’t a vibrant economy.

Hold on to your seats: the TFG bloodbath isn’t over (JSE: TFG)

The Foschini Group’s offshore results are going from bad to worse

The Foschini Group (TFG) is having a really tough time at the moment. It looks even worse in the context of 2025’s Capital Markets Day. Analysts felt that the targets shared that day were spicy to say the least, but I don’t think anyone expected this level of underperformance. I’m becoming concerned that TFG and Pick n Pay (JSE: PIK) might be in the same WhatsApp group.

TFG has released a trading update for the quarter and nine months ended 27 December 2025. There’s a lot of detail to unpack, but the overall theme is that TFG Africa is losing ground and the offshore businesses barely know where the ground is anymore.

Group sales increased 2.9% for the quarter, which is much lower than the 7.5% year-to-date growth. One of the reasons is that TFG Africa grew 3.5% for the quarter vs. 4.2% year-to-date, a noticeable slowdown. Another big reason is that White Stuff, part of TFG London, was acquired in October 2024 and was thus in the base for Q3. This is why TFG London was only up 6.5% for the quarter vs. 37.2% year-to-date where Q1 and Q2 weren’t comparable to the previous years.

It’s easy to grow by acquiring revenue, so that year-to-date number isn’t reflective of performance. Here’s the number that does show you the performance: if you strip out White Stuff, TFG London’s sales fell 2.4% in the third quarter and 2.6% over nine months. Yuck!

That’s still better than retail widowmaker Australia, down 2.6% for the quarter and 1.9% for the nine months.

And if you exclude White Stuff from the group numbers, then sales growth over nine months is only 2% instead of 7.5%. You get the idea.

The clear highlight is online sales. At group level, they increased 23.4% in the third quarter and 36.6% year-to-date, now contributing 14.3% to total retail sales. In TFG Africa, Bash did what it says on the tin and dished out pain to the competition, growing online sales 54.9% in the third quarter and 46.7% year-to-date. Online sales are now 7.9% of total sales in TFG Africa.

I’ll say the same thing that I said in the Pepkor (JSE: PPH) update this week: Mr Price (JSE: MRP) is asleep at the wheel in online sales and needs to stop throwing away market share by barely participating.

We may as well deal with TFG Africa, where like-for-like sales were up 1.2% in the third quarter and 2.9% year-to-date. I cannot for the life of me understand how Cellular sales can be down 2.5%, as that has been a very strong performer at major competitors. I guess for others to be winning, someone had to be losing! At least Beauty is a real highlight, up by 20.3% in the third quarter.

A meaty 26.1% of TFG Africa’s sales are on credit. The debtors book is 6.8% higher year-on-year, a surprising increase in the context of the credit sales performance of 5.3% year-to-date. They call it a steady risk environment, but that doesn’t seem particularly steady to me. Hopefully we won’t see credit challenges coming through as well, as TFG has more than enough to deal with already!

TFG London and TFG Australia continue to be huge headaches, with the group now expecting impairments of up to R750 million. This doesn’t impact HEPS, but it does indicate the extent of value destruction in those offshore businesses in recent times. This is just one of the many cautionary tales that Mr Price has opted to ignore in pursuit of NKD in Europe.

Before you feel that HEPS is safe, I must point out that TFG London’s gross margin has contracted by 90 basis points year-to-date based on inventory clearance. When you combine this with the pressures across the board, I suspect that investors are in for another rough ride in terms of HEPS. The company hasn’t given a range for HEPS in this update.

In terms of outlook and recent trading, TFG Africa’s sales grew 5.8% for the 5 weeks to 31 January 2026. TFG London increased 5.6% in local currency, which is an encouraging outcome. TFG Australia remains a mess, down 1.1% in local currency.

The share price is down 39% over 12 months. I personally don’t think we are anywhere near the bottom yet, but we will see how the market reacts to this update that came out at the close of play on Tuesday.

A bitter outcome for HEPS at RCL Foods (JSE: RCL)

The sugar is to blame

RCL Foods released a trading statement dealing with the six months to December 2025. I’m afraid that it isn’t good news, with HEPS expected to be at least 25% lower year-on-year.

The move is much bigger in earnings per share (EPS), but that’s because of numerous adjustments related to non-cash gains and insurance proceeds. This is exactly why the market focuses on HEPS instead, as it gives us a standardised metric that strips away as many of these distortions as possible.

So, what happened in HEPS? The answer lies in the sugar business.

A once-off partial recovery of the sugar industry levy in the base period is responsible for 5.6 cents of the “at least” 27.4 cents drop in HEPS. Kudos to the company for giving helpful and detailed disclosure here!

The remaining 21.8 cents is thanks to the performance in the sugar business itself, with the challenge being an influx of imports that led to local production being sold in the less lucrative export market.

This tells us that sugar is more expensive locally than it would be without tariffs. The importance of the growers and millers in the South African industry leads to government being willing to protect them, with RCL pushing for amendments to the tariffs to do something about these deep sea imports that have hurt the local industry.

Thankfully, the Groceries and Baking units are achieving higher profits despite pressure on volumes. It’s just not enough to offset the pain in Sugar as the largest individual segment from an EBITDA perspective.

Well, Sugar probably isn’t the largest segment anymore, as Baking has been hot on its heels and this update suggests that there might be a new pecking order within RCL.

Southern Sun will take a 50% stake in key properties in Sandton (JSE: SPG)

Liberty will be selling to Southern Sun and Pareto

Southern Sun currently operates the Sandton Sun, Sandton Towers, Garden Court Sandton City and Sandton Convention Centre under long-term contracts with Liberty and Pareto. Those two companies have stakes of 75% and 25% in the properties respectively.

Liberty is a wholly owned subsidiary of Standard Bank (JSE: SBK) and Pareto is owned by the Government Employee’s Pension Fund, managed by the PIC.

Liberty is going to sell its stake in Sandton Towers, Garden Court Sandton City, Sandton Convention Centre and the Virgin Active Sandton (but note: not Sandton Sun). Pareto will increase its stake from 25% to 50%, while Southern Sun will take the other 50%.

Strategically, this makes sense for Southern Sun. They own the majority of their hotel portfolio, giving them far more control than if they were purely an operator on behalf of others. Being able to take a 50% stake in these properties creates more strategic alignment with the rest of the portfolio.

Southern Sun’s 50% stake will cost them R735 million, payable from available debt facilities. This is in line with the independent valuation that was done as at December 2024.

This seems like a strong deal for Southern Sun, with the share price closing 4.3% higher in appreciation.

Super Group’s continuing operations live up to the name (JSE: SPG)

The same can’t be said for the automotive business in the UK

Super Group has released a trading statement for the six months to December 2025. HEPS is expected to be between 23.6% and 31.8% higher, which means a range of between 150 cents and 160 cents. To add to that good news, the balance sheet is in good shape and net debt ratios are healthy.

Great, but what about the discontinued operations?

If you include those operations and therefore look at the group total, then HEPS is between 134 cents and 145 cents. The year-on-year move is less relevant, as the disposal of SG Fleet in the prior year impacts comparability. The part that is relevant is that the UK automotive segment is in trouble.

The Hyundai and Suzuki dealerships in the UK have been closed. The UK KIA dealerships remain in discontinued operations. The automotive logistics segment has deteriorated thanks to a cyberattack on Jaguar Land Rover that led to a two-month shut down of production. If there are no cars being produced, there’s nothing to move around in the logistics business. This drove a trading loss in AMCO of R25.5 million for the six months. Overall, the UK is an unhappy place in the automotive space right now.

Super Group clearly believes in the mantra of your first loss being your best loss. They’ve decided to exit AMCO and they are looking for a buyer. This is why the business has landed in discontinued operations in this update. But with no guarantee of a buyer emerging quickly (or at a reasonable price), I don’t think it would be right to focus only on the continuing operations in this update.

The release of results on 24 February will have full details for investors.

Zeder finally has a buyer for Zaad (JSE: ZED)

The share price closed 18% higher on the day

Zeder has been a value unlock play for as long as anyone can remember. They’ve been selling off smaller assets in the group, but Zaad has always been the big fish that needed to find the right line to be hooked onto.

That line has come in the form of a consortium of WIPHOLD, the PIC, the IDC and Phatisa Food. This gives enough balance sheet muscle for Zeder and the minorities in Zaad to be able to sell their shares and claims for up to R1.42 billion. Zeder will receive R1.39 billion of that amount.

In case you aren’t familiar with the business, Zaad operates in the agri-inputs industry with a focus on emerging markets in Africa, the Middle East and Eastern Europe.

Nothing is ever quite this simple. As a precursor to this deal, excluded assets worth R801 million need to be sold separately or restructured out of Zaad Holdings. This means that Zeder will continue to own May Seed and various other assets. The assets other than May Seed are in the process of being disposed of.

Zeder intends to distribute a “significant portion” of the deal value to shareholders. They will give further information in the circular when it is released to shareholders (around 23 March 2026), as this is a Category 1 transaction.

The value of the shares and claims in the latest financials was R2 billion, but this included May Seed and the other “excluded assets” and isn’t directly comparable. This implies that they’ve sold roughly R1.2 billion worth of assets for R1.42 billion. Importantly, the share price was trading at a discount to the valuation anyway, so this price is significantly higher than the market cap was implying.

That’s how a value unlock is supposed to work!

Nibbles:

  • Director dealings:
    • Saul Saltzman, son of the founders of Dis-Chem (JSE: DCP), sold shares in the company worth R12.7 million.
    • A prescribed officer of Life Healthcare (JSE: LHC) sold shares worth R9 million.
    • A director of a subsidiary of RFG Holdings (JSE: RFG) bought shares worth R119k.
    • A director of a major subsidiary of Insimbi Holdings (JSE: ISB) sold shares worth R71.5k.
  • Bowler Metcalf (JSE: BCF) has a market cap of just over R1 billion, making it a small cap on the JSE and thus a company with limited liquidity in the stock. Recent results seem to be solid though, with revenue up 8% for the six months to December and HEPS up by 16%. The cash has followed suit, with the interim dividend up 16%. Nice!
  • Tharisa (JSE: THA) is looking for a new CFO after the resignation of Michael Jones with effect from 31 July 2026. That’s a solid handover period that reflects an innings of 14 years as CFO. It will be interesting to see whether they have an internal replacement lined up vs. bringing in external ideas.
  • Stefanutti Stocks (JSE: SSK) has made another repayment of R50 million to Standard Bank. The outstanding facility has been reduced from R300 million to R250 million.
  • Sirius Real Estate (JSE: SRE) announced the results of the dividend reinvestment programme. Holders of 0.46% of issued shares in the UK and 3.0% of issued shares in South Africa opted to receive shares instead of cash. But here’s the nuance: settlement is through the purchase of shares in the market rather than the issuance of new shares. This is therefore non-dilutive to other shareholders.
  • Between 26 November 2025 and 22 January 2026, Argent Industrial (JSE: ART) repurchased R11.4 million worth of shares at an average price of R33.34. The current price is R32.50. This only represents 0.63% of shares in issue and they have the authority to do far more.
  • MTN Zakhele Futhi (JSE: MTNZF) shareholders will receive an “agterskot” payment thanks to the costs of unwinding the scheme being less than anticipated. The final payment is 23 cents per share, of which 8 cents is the agterskot and 15 cents is the scheme consideration.

Ghost Bites (DRDGOLD | MC Mining | Pepkor | Shoprite | Vukile)

The Finance Ghost
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Ghost Bites (DRDGOLD | MC Mining | Pepkor | Shoprite | Vukile)

DRDGOLD inks a wage deal with NUM and AMCU (JSE: DRD)

This brings certainty, but also above-inflation increases for five years

DRDGOLD had a tricky end to 2025. Despite gold prices doing wonderful things for the share price, the company received notice of a protected strike action from NUM and AMCU. The strike was suspended to allow the parties to sit around the negotiating table.

It looks like the unions came out with a strong deal here. They’ve secured increases of between 6% and 7.5% per year for the next five years. There’s a new 2% performance-based incentive based on key metrics, as well as various other improvements to allowances and support schemes. Backpay is payable from 1 July 2025. And as the cherry on top, there’s a payment of R5k to each employee!

DRDGOLD better hope that the gold price keeps doing well.

MC Mining takes drastic action with Uitkomst Colliery (JSE: MCZ)

This comes after the quarterly update that revealed the difficulties

MC Mining has attracted international investment based on the exciting Makhado hard coking and thermal coal project. The problem is that the group also owns Uitkomst Colliery, where the financial performance is going from bad to worse. In business as in life, you cannot allow a tumour to go untreated.

This is why MC Mining has taken the decision to temporarily suspend mining and processing operations at Uitkomst with an intended effective date of 1 March 2026. They have a lot of hoops to jump through to achieve this, not least of all from a labour and retrenchment perspective.

It’s always very sad to see stuff like this, but businesses are run for a profit and sometimes need to make tough decisions. Uitkomst is suffering cash losses at the moment, something that a mining company with an important development project just cannot (and shouldn’t) stomach.

The reference to this being a temporary closure is just an effort to retain long-term optionality. I can’t see them magically reopening in a couple of months.

Pepkor had a solid finish to 2025 despite the tough base (JSE: PPH)

This is why the share price suffered much less than clothing peers over the past year

We know that the clothing sector has been a hideous place to invest in the past year. Even Pepkor, by far the best of a bad bunch, is only flat over 12 months. That’s considerable outperformance in this context though:

Yikes!

Pepkor’s defensive share price performance has been well earned. For the three months to December 2025, a really tough period vs. the two-pot withdrawal base period at the end of 2024, revenue was up by 8.3% if you split out the acquisitions. If you include them, then revenue was up 12.9%. Impressively, the two-year CAGR without acquisitions is 10.3%. Double-digit revenue growth in this market is excellent.

Sales in Southern Africa were up 2.0% on a like-for-like basis. In PEP Africa and Avenida, like-for-like sales were up 12.7% in constant currency, as those businesses didn’t have the two-pot withdrawal distortion that we had in South Africa. In rand terms, they were up 16.7%.

In case you’re wondering, PEP Africa and Avenida contributed 4% and 5% of group sales respectively.

Another important lens is to compare cash sales (up 7.4%) to credit sales (up 26.9%). Credit sales contributed 18% of total sales.

Group online sales increased by 27.9%, an exceptional performance that shows how important digital adoption is across the LSM curve. Mr Price (JSE: MRP) should pay attention here, as their online sales are only growing in line with in-store sales.

Looking at the retail segments, the Clothing and General Merchandise (CGM) segment grew 5.8% excluding acquisitions and 7.5% on a two-year CAGR basis. Furniture, Appliances and Electronics (FAE) grew 4.6% excluding acquisitions and 6.5% on a two-year CAGR basis. I must note that CGM is over 5x the size of FAE, so these segments are far from being of equal importance.

Speaking of importance, PEP and Ackermans contributed a combined 63% of group sales. It’s therefore critical that these parts of the business perform well. Ackermans struggled with a 0.6% decline in like-for-like sales, but PEP managed a strong 2.8%. Back-to-school is a critical period for Ackermans, so the current quarter likely matters even more than the festive quarter.

Retailers often have to make tough decisions in their footprints. For example, Pepkor has closed Shoe City – that’s a significant closure of 113 stores. Making these tough decisions is key in driving the group forwards.

You might be wondering how those segmental performances reconcile with the much stronger group revenue performance. The answer lies in the Fintech segment, where revenue was up by a wonderful 25.4%. This includes financial services, insurance, cellular and other revenue opportunities.

In the first three weeks of January 2026, they’ve carried on where they left off. Group sales were up 8.3% excluding acquisitions.

Shoprite piles the pressure on competitors (JSE: SHP)

They achieved above-inflation earnings growth despite being very aggressive on price

Shoprite isn’t trying to win a competition based on who can release the best quarterly results. They are playing a long game, acting as the python that is continuously squeezing the impala until it devours the whole thing. Retail is a game of tiny incremental changes and improvements, particularly in grocery retail where consumers are so price sensitive.

The recent trend at Shoprite has been one of decelerating growth in the Supermarkets RSA segment, although they are still posting strong growth rates that reflect ongoing increases in volumes.

The trend continued in the quarter ended 28 December (Q2), Supermarkets RSA grew sales by 6.5% vs. 7.9% in the quarter ended 28 September (Q1). The trend was visible elsewhere as well: 11.3% in Supermarkets non-RSA in Q2 vs. 12.9% in Q1, and 2.3% in Other Operating Segments in Q2 vs. 4.8% in Q1.

This means that group sales from continuing operations increased 6.5% in Q2 vs. 8.0% in Q1. For the first half of the year, that comes out at 7.2% growth. It’s easy to forget the sheer scale here: to achieve that growth, Shoprite needed to find an additional R9.2 billion in sales!

But the real story here is around inflation, which is where we can see how Shoprite is punishing inefficient competitors. In a period in which official food inflation was 4.7% for the six months, Shoprite’s internal selling price inflation was just 0.7%. Competing against Shoprite is no joke, with price deflation in November to December!

Like-for-like sales increased 1.9% for the six months, so this implies volume growth of roughly 1.2%.

Digging into the segments, we find Shoprite and Usave with sales growth of 5.1%. Both banners experienced price deflation, including -0.7% at Usave.

Tell me again how capitalism is evil and that it doesn’t benefit the poor to allow businesses to run efficiently? I would love to see any government in the world do a better job than this with the capital they would raise through more taxes.

Further up the LSM curve, Checkers and Checkers Hyper achieved sales growth of 8.9%, with selling price inflation for Checkers of 1.9% and Checkers Hyper of 1.1%. This is another reminder of how difficult they are making things for competitors like Woolworths (JSE: WHL).

As for the scooters all over our roads, Sixty60 sales increased by 34.6%. It’s a remarkable story of disruption and the importance of distribution.

The growth in the footprint is rapid, not least of all as Shoprite is stepping into the void left by a shrinking Pick n Pay (JSE: PIK) across the country. They opened 262 stores over the past 12 months (note the different time period here), including 50 Shoprite, 42 Usave and 32 Checkers.

Shoprite is also incubating a number of other banners like Petshop Science, Uniq Clothing, Checkers Outdoor and Little Me. These form part of the “adjacent businesses” and these names were good for 71.2% growth. Petshop Science is being rolled out the fastest, with 45 new stores in the past year. They actually closed two Little Me stores, so there are clearly more little tails and fluffy ears out there than humans who need prams. The birth rate is becoming a very scary story.

In Supermarkets Non-RSA, constant currency sales growth was 9.5%. In rand, sales were up by 12.1%. They opened a net 15 stores over 12 months, taking them to 272 stores across seven countries.

In the Other Operating Segments area, OK Franchise suffered a decline of nine stores and sales growth of only 1.7%. In much happier news, Medirite increased sales by 13.5% and pharmaceutical distributor Transpharm was up 5.5%. Pharmacy (with the associated health and beauty knock-on benefit) is an important retail category in South Africa.

Once you bring it all together, HEPS from continuing operations increased by between 5.2% and 10.2% for the six months. That may not sound exciting (especially for a company on a P/E close to 20x), but that’s still an inflation-beating return in a period where Shoprite delivered lower prices to the poorest South Africans. That’s hard to fault and certainly looks like a strong, defensive performance.

As an aside, the sale of the furniture business to Pepkor (JSE: PPH) is ongoing. Lewis (JSE: LEW) is fighting hard to get that deal blocked by the Competition Commission.

Vukile buys a new property in Spain (JSE: VKE)

They haven’t taken long to recycle some capital

Vukile recently announced that they were selling some properties in Spain. This is because those properties had reached a level of maturity that made them more suitable for ownership by an institutional investor rather than a dedicated REIT. The hands-off approach of the new owners is evidenced by Spanish subsidiary Castellana locking in a management agreement for the properties.

Naturally, this means that Castellana has been looking for new opportunities to deploy capital. It didn’t take them very long, with a property in Spain having been identified.

Castellana has agreed to buy Berceo Shopping Centre in Logrono from Barings Core Spain, a company listed on the Euronext Paris. The price is €108 million, payable in cash.

Castellana will acquire the majority of the gross lettable area, with the portion occupied by Carrefour owned by an institutional investor in Spain. We aren’t used to seeing these structures in South Africa, but it makes sense if you think about it – the opportunity to really add value lies in the part of the property that isn’t occupied by the anchor grocery tenant.

The broader region has around 324,000 inhabitants and has grown 3% since 2018. The GDP per capita is ahead of the Spanish average, with expected GDP growth of 2.4% being in line with the national average.

We easily forget how developed South Africa actually is. Vukile notes that this centre is the only major retail destination within a 100km radius!

The acquisition price is a net operating income yield of 7%. Buying a European property at that yield does seem interesting, especially as Castellana believes that there are good opportunities to improve the underlying income. Thanks to the lower cost of debt in Europe, the cash-on-cash yield is actually leveraged up to 8.6% through the use of €50 million in debt (a loan-to-value ratio of 46%).

Nibbles:

  • Director dealings:
    • The brothers who founded WeBuyCars (JSE: WBC) sold a whopping R866 million worth of shares. The entity through which they both hold their shares now has only 5.65% in the company. I can certainly understand the desire to diversify, but obviously the optics aren’t great when the company has been through a difficult time recently. The selling pressure was clear in the share price, which is down 11% over 7 days. I remain invested in this story for numerous reasons.
    • The CEO and founder of Acsion (JSE: ACS) bought shares in the company worth R2.4 million.
    • The CFO of Sephaku Holdings (JSE: SEP) bought shares worth R646k.
    • A director of Visual International (JSE: VIS) sold shares worth R45k. And no, the website still doesn’t work.
  • In December, Sappi (JSE: SAP) announced a possible joint venture for graphic paper in Europe with UPM-Kymmene Corporation. This would be a Category 1 transaction, so a circular and shareholder vote is required. The JSE has granted an extension to the company for the distribution of the circular, with the new date expected to be around 30 April 2026.
  • ASP Isotopes (JSE: ISO) never seems to sit still. The company is highly active in growing its existing business and bringing in new opportunities, evidenced by the latest deal to acquire preferred stock in a company called Opeongo. This is a biotech company working in therapeutics for fibrosis, inflammation and cancer. The preferred stock is convertible and comes with various investor protections. This is a casual $10 million bet on this biotech firm.
  • KAL Group (JSE: KAL) announced the disposal of Agriplas back in September 2025. There’s just one condition outstanding, namely approval by the Eswatini Competition Commission. It’s amazing how it is almost always a non-South African competition regulator that takes the most time to grant approval in these deals. The parties have extended the fulfilment date to 16 February 2026.
  • Hulamin (JSE: HLM) has renewed the cautionary announcement related to the disposal of Hulamin Extrusions. There is still no guarantee of a firm deal being announced here.
  • Sanlam (JSE: SLM) has now received the shares in Ninety One (JSE: N91 | JSE: NY1) as payment for the asset management deal. This makes Sanlam a 12.5% shareholder in Ninety One. If you adjust for the minorities in Sanlam Investment Holdings, Sanlam Group has an effective 9.1% holding.
  • Orion Minerals (JSE: ORN) announced that some of its South African project companies have been selected for the BHP Xplor accelerator program – basically an incubator for mining projects. This delivers $500k in equity-free funding for the projects, as well as access to technical expertise and experienced mentors. Before you panic, the Prieska Copper Zinc Mine and New Okiep Mining Company are not part of this award as they are far further down the road in their respective development journeys.
  • Oando (JSE: OAO) released results for the quarter and year ended December 2025. There’s close to zero liquidity in the stock, so I’ll just mention it down here. Revenue fell 21% year-on-year and gross profit was down 82%. Profit after tax increased 10%, but there are lots of non-operating adjustments in there.

Ghost Bites (ArcelorMittal | Gemfields | Impala Platinum | MC Mining | Ninety One – Sanlam | Orion Minerals)

The Finance Ghost
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Ghost Bites (ArcelorMittal | Gemfields | Impala Platinum | MC Mining | Ninety One – Sanlam | Orion Minerals)

ArcelorMittal reports another huge loss (JSE: ACL)

It’s better than the prior year, but that’s not saying much

ArcelorMittal’s share price is R1.35. For the year ended December 2025, the company has flagged a headline loss per share of between R2.68 and R3.18. Sure, that’s better than the loss of R4.58 in the prior year, but you can see where this is heading.

It’s not often that you’ll see a company trading on a Price/Earnings multiple of worse than -1. Although valuation techniques get very murky in these extreme examples of value destruction (it becomes about liquidation value rather than going concern value), the simplistic view is that this multiple implies that the company would be worthless within the next 12 months if losses continue at the current rate.

Results will come out on 5th February. The company will need to convince the market that it isn’t going to fall right off a cliff in 2026. It’s certainly teetering on the edge.

Gemfields released some key metrics for the year ended December 2025 (JSE: GML)

Avoiding the use of comparative numbers doesn’t mean that people won’t go digging for them

You can learn something from the omissions in a SENS announcement, not just the inclusions. When a company doesn’t disclose comparative numbers, it can be because they don’t have a great story to tell and would prefer mainstream media to gloss right over it.

Gemfields at least gives a link to an Excel doc that has their comparative numbers, but they still aren’t making it easy for casual observers to get a flavour of the performance. I will say this: they are at least consistent in terms of not disclosing any comparative numbers whatsoever, so at least they aren’t just cherry-picking the (few) good ones and ignoring the rest.

Sadly, positive narratives have been hard to come by for the company. Gemfields could only manage auction revenues of $128.5 million for the year to December 2025. A quick dig through the 2024 annual report reveals that revenue was $212.8 million in that year and $262 million in 2023, so the trajectory is very ugly.

The share price has lost over two-thirds of its value in the past three years, so this isn’t a huge shock if you’ve been following the company.

The net debt position as at December 2025 was $39.2 million (before auction receivables of $20.5 million). That’s a lot better than when it was out of control at the end of 2024 ($80.4 million before receivables of $33.9 million). The Gemfields balance sheet had to be bailed out by brave shareholders, as the company’s capex programme proved to be too aggressive and got them into serious trouble.

Is there any other good news? Yes, there are thankfully some highlights.

The second processing plant at Montepuez Ruby Mining is expected to be commissioned “imminently” after being delivered materially on budget. The first rubies from this plant should go on auction this month.

At Kagem, the emeralds business, premium recoveries have met expectations. This is a good time to remind you that precious stones like these come out of the ground in all shapes and sizes, so Gemfields is never quite sure what they will find. When a whopper of a thing is discovered, it gets a name and a story and ideally a premium price when sold!

Through the use of night shifts at Kagem in this period, they made good progress in processing the stockpiles.

Gemfields has been through the most, and so has the balance sheet. I hope 2026 will be a better year for them. It must be tough to see the success in areas like gold and PGMs, while emeralds and rubies are left for dead. On the plus side, at least they aren’t mining diamonds!

Impala Platinum can be grateful for PGM prices (JSE: IMP)

Production has been pretty flat and unit costs increased 11% per ounce

When you see major one-day moves in mining stocks, you have to be careful in how you interpret them. Impala Platinum closed 13.3% lower on the day of release of a production update, but this is correlation rather than causation (despite the production update being less than inspiring).

The quickest way to check this is to just look at how the sector peers performed. Sure enough, it was a bloodbath across the gold and PGM names, with the Resource 10 index dropping 10.4% on the day. This is because of movement in the commodity prices, not because of Impala Platinum’s production update. I must remind you that the Resource 10 is up 129% over 12 months and Impala Platinum has tripled over that period (up 208%)!

Moving on to the production update itself, there isn’t much growth here to take advantage of the higher prices. For the six months ended December 2025, they grew group 6E production by just 1%. This is in line with guidance, but is ultimately a flat performance that has relied on the PGM price upswing to deliver earnings growth. An increase of just 0.3% in 6E sales volumes drives this point home.

Sales revenue jumped by 39.5% to R33,250 per 6E ounce sold, while group unit costs per 6E ounce increased by 11% to R23,200. When detailed earnings are released on 5 March, there will be a good story to tell in terms of margins and headline earnings.

In further good news for free cash flow, group capital expenditure came in at R2.9 billion vs. R3.9 billion in the comparable period. This is due to lower capital expenditure at Zimplats as projects neared completion.

It’s just a pity that more PGMs aren’t coming out of the ground at the moment to take advantage of these prices! The great irony is that if production did rapidly increase in response to high prices, then the prices would likely drop anyway due to the supply/demand balance changing in the market. Such is life in PGMs.

Uitkomst remains a problem at MC Mining (JSE: MCZ)

They need to deliver the Makhado Project without any hiccups

MC Mining has released a quarterly report. We may as well deal with Uitkomst Colliery first, as this is the big headache.

Despite a turnaround plan being in place and delivering some cost savings, production has gone the wrong way at Uitkomst. Run-of-mine coal production fell 30% sequentially and 40% year-on-year. Production yields weren’t the problem, so this means that they just weren’t processing enough material.

Sales at Uitkomst were down 34% year-on-year for high-grade coal. There were no sales of lower-grade coal. To make it worse, prices for thermal coal weakened further in the quarter.

Concerningly, cash on the balance sheet was just $2.9 million as at the end of the quarter. That’s a lot less than $13.2 million at the end of the prior quarter!

Luckily, Uitkomst isn’t the exciting asset here. Kinetic Development Group is working towards a controlling stake in the company for one big reason: the Makhado Project. This will be South Africa’s largest hard coking coal producer.

At Makhado, hot commissioning activities for the coal handling and preparation plant are scheduled to begin by March 2026. They are also making a lot of progress on other major workstreams, ranging from steelworks through to overhead power transmission lines. Project expenditure is within the budgeted estimates.

They cannot afford to slip up in the delivery of Makhado, that’s for sure.

Ninety One completes the acquisition of Sanlam Investment Management’s SA business (JSE: N91 | JSE: NY1 | JSE: SLM)

A new era has dawned

Sanlam does many things, but sitting still isn’t one of them. The financial services giant is never far from the action, with interesting transactions concluded on a regular basis. As internal corporate finance teams go, this must be one of the better ones to work for!

You might recall that at the end of 2024 (yes, that long ago), we found out that Ninety One and Sanlam would be putting in place a long-term active asset management relationship. This makes sense for all involved, as it gives further scale to the operations and allows Sanlam to focus elsewhere (including on its excellent passive investment management business, Satrix).

This is a highly regulated space, so transactions take time to be completed. After a long road, the companies have announced that Ninety One has finalised the acquisition of the South African component of the deal. This triggers the 15-year strategic relationship between the groups.

To pay for the acquisition, Ninety One is issuing shares to the various Sanlam entities that held the Sanlam Investment Management business. This means that Sanlam shareholders will retain look-through exposure to the combined business and gain exposure to the broader Ninety One story.

If you feel like you’ve read something similar to this before, it’s because the UK component of the deal was completed in June 2025. The South African component took longer and is now complete.

Orion Minerals is getting closer to finalising the Glencore deal (JSE: ORN | JSE: GLN)

In the meantime, work continues at both major projects

The Orion Minerals share price has done some crazy things. It has literally doubled year-to-date (yes, that means in January alone) and strongly rewarded those who saw the opportunity to add this asset to their portfolio.

2026 is the year that should see Orion transition from an exploration company to a mining company. This is why much of the focus is on finalising the terms of an offtake and financing deal with Glencore to the value of between $200 million and $250 million.

Orion has two base metal production hubs in South Africa: the Prieska Copper Zinc Mine (PCZM) and the Okiep Copper Project (OCP). You’ll notice that the magic word (“copper”) is in both of those project names. Given all the focus on copper among the mining giants, this is a great time to be on the cusp of producing the stuff. It also makes Orion a really interesting acquisition target.

The Glencore funding is earmarked for work at PCZM. If they can get it finalised, then work on the uppers can begin at PCZM. The due diligence has made significant progress and investors will be hoping for a positive outcome that could give even more momentum to the share price.

Although the near-term excitement is around PCZM, they are also working on optimising the OCP project. Moving forward with both projects is important in justifying what is now a R3.4 billion market cap!

To give you an idea of how much value sits in the ground vs. the bank account, the cash on hand at the end of the quarter was A$5.74 million. That’s less than 2% of the market cap.

Nibbles:

  • Director dealings:
    • A director of Santova (JSE: SNV) exercised share options worth R277k based on the strike price. The value is R644k based on the current share price. The announcement doesn’t note a sale to cover the tax, but such a sale may still come. If it doesn’t, then that would count as a buy in my books.
  • Southern Palladium (JSE: SDL) added its quarterly report to the mix. They are still early in their journey, so the quarterly report is shorter than some of the sector peers (and thus sits in the Nibbles). The company raised A$20 million in the quarter from institutional and large investors, giving it all the funding needed to complete the Definitive Feasibility Study workstream at Bengwenyama. This is the key milestone as they work towards receipt of the mining right and a Final Investment Decision (an official term). It doesn’t hurt that PGMs have gone through the roof. Get this: in the past year, the share price is up 678%! Maximum risk means maximum reward.
  • With Libstar (JSE: LBR) currently trading under cautionary based on engagements with potential acquirers of all the shares in issue, we’ve seen an interesting shift on the shareholder register. Cearus Holdco has sold a 6.56% stake to Allan Gray, taking the latter’s stake to 14.1865%. I noticed this post by Anthony Clark (@smalltalkdaily) that describes Cearus as “allied” to major shareholder Actis.
  • ISA Holdings (JSE: ISA) renewed the cautionary announcement related to the receipt of a non-binding expression of interest related to the acquisition of a controlling stake in ISA. Note the careful use of “controlling” here, rather than “all” the shares. Although this would likely mean a mandatory offer to all shareholders, that’s very different to a scheme of arrangement where it’s an all-or-nothing approach. But here’s the most important thing: there is still no guarantee of this progressing to a firm intention to make an offer. Hence the need for caution!
  • AB InBev (JSE: ANH) has completed the previously announced acquisition of the 49.9% minority stake in its US-based metal container plants from various institutional investors. A meaty number changed hands for this: $2.9 billion!
  • A rather odd SENS announcement came out on Thursday. I had hoped that further clarity would emerge, but all I’ve really seen is speculation. Nedbank (JSE: NED) announced that Standard Bank (JSE: SBK) now has a 5.57% stake in the green bank. Tempting as it may be to think of a merger, it is extremely unlikely that regulators would allow it. I’ve heard a plausible theory that the stake is held in Liberty’s investment funds, which could then be seen as Standard Bank Group. Time will tell.
  • Famous Brands (JSE: FBR) has decided to repurchase up to 5% of the company’s issued share capital. The programme will commence on 1 February 2026 and run until 31 May 2026. With the stock trading on a P/E of just over 10x, the board is sending a message that the shares are undervalued. The market didn’t ignore this, with Famous Brands up 5.5% on the day. The share price is down 6.5% over 12 months, having largely been ignored by the market despite the rally in local stocks.
  • Another local stock that is still in the “cheap” bucket is iOCO (JSE: IOC). They’ve already been busy with repurchases for a while, acquiring R9.6 million worth of shares during January at an average price of R4.42 per share. Since August 2026, they’ve repurchased shares worth R26.5 million at an average price of R4.09 per share. The current share price is R4.48.
  • Europa Metals (JSE: EUZ) has been trying to get a deal done with Marula Mining. As Europa is currently a cash shell, this would’ve injected much-needed operating assets into the structure. Alas, the deal is not going to proceed, which means that the company has been a cash shell for too long and thus the listing on AIM (the London Stock Exchange’s development market) will be cancelled. The company is confirming what this means for the JSE listing, but we can probably guess the outcome here.
  • Zeda (JSE: ZZD) has moved its AGM from 11 February to 27 February based on nominations received from major shareholders for the appointment of directors to the board. An amended notice of the AGM has been published. I don’t usually make reference to AGM notices, but an amended notice like this is worth highlighting.
  • Wesizwe Platinum (JSE: WEZ) is suspended from trading. They need to get the financials for the six months to June 2025 published, followed by financials for the year ended December 2025. They expect the interims to be out by 15 March 2026 (on an unreviewed basis) and the full-year results to be released by 30 April 2026.
  • African Dawn Capital (JSE: ADW) is suspended from trading. They are trying to finalise the February 2025 financials. They expect to release those annual financial statements by mid-February 2026, with interims for the six months to August 2025 expected to go out by the end of February 2026.
  • The timetable for the planned delisting of Sail Mining Group (JSE: SGP) is being revised due to certain regulatory approvals remaining outstanding. It’s not unusual for transaction timetables to be pushed out for this reason.

The Pony Express: you can’t outrun progress

Dominique Olivier
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The Pony Express: you can’t outrun progress

From galloping horses to “typing…” bubbles, we’ve spent centuries chasing faster ways to communicate. Clarity, it turns out, hasn’t kept the same pace.

Earlier this week, I found myself in a very modern kind of limbo: a WhatsApp conversation with a service provider that simply refused to end.

This, on its own, is unremarkable. I’m sure you’ve also noticed that a growing number of small businesses have retired their reception desks in favour of a single, dedicated WhatsApp line. In theory, it’s efficient, personal, and refreshingly direct, and in practice it usually works just fine.

What made this exchange different was the way every straightforward question I asked was met with an answer that was technically responsive but functionally useless. Not wrong. Just vague. And so the conversation dragged on, message by message, as I tried to establish one very basic thing: was this person actually the right service provider for the job? By the time the matter was resolved, I had spent what felt like ages engaged in a game of WhatsApp ping-pong with a stranger who seemed determined to remain just out of reach of specificity.

I was thinking about this exact exchange later in the week when I read about the history of the Pony Express and how revolutionary it was at the time to be able to send a letter from one end of the United States to the other in only 10 days. With mounting horror, I considered how long the protracted conversation with the service provider would have been if, instead of WhatsApp, we were reliant on teenage boys crossing a vast and dangerous expanse on horseback with a bag full of mail.

The question of the service provider was thankfully (eventually) answered, after an abundance of messages were exchanged. But the awareness of how far we’ve come in terms of getting messages (and even goods!) to each other in the last two centuries has stuck with me. 

Once upon a time

The Pony Express began operations in 1860 and, for just 18 months, achieved something that previously seemed implausible: delivering mail between the east and west coasts of the United States in less than a fortnight. That sounds extremely slow to our modern ears, but before this, communication between the two coasts could take weeks or even months. In a country stretching rapidly westward, that delay was becoming deeply inconvenient. 

California was the reason urgency suddenly mattered. After gold was discovered there in 1848, the population exploded. By 1860, nearly 380,000 people had become Californians, many with financial, political, and family ties back east. California itself had become a state, a battleground of political opinion, and a strategic concern as the Civil War loomed. Yet it remained, in practical terms, very far away from almost everything.

The Pony Express was created in an attempt to shrink that distance. It was founded by William Russell, Alexander Majors, and William Waddell, three experienced logistics operators who already ran vast freighting operations supplying the western frontier. These weren’t romantics – they were businessmen with government contracts, warehouses, wagons, oxen, and an appetite for scale. The fast-mail idea was bold, expensive, and widely dismissed as impossible. But that didn’t put them off.

Instead of using stagecoaches (which is what the post office was doing at the time), they proposed a relay system of mounted riders travelling a shorter, more direct route. Horses would be changed every 16 to 24 kilometers. Riders would be swapped out roughly every 120 to 160 kilometers. The only cargo would be a proprietary leather mail pouch – called the mochila – thrown over the saddle. Everything else (besides a rifle) was stripped away to save weight.

Cape to Congo

The entire system was assembled in just two months of winter. By early 1861, the route was established, stretching nearly 3,000 kilometers from St. Joseph, Missouri, to Sacramento, California (for context – that’s about the distance from Cape Town to the middle of the Democratic Republic of the Congo). The Pony Express crossed plains, deserts, mountains, and territory that was, at best, unpredictable, and at worst, full of warring Native American tribes. Around 190 stations dotted the route, many little more than rough shelters in remote landscapes. Riders travelled day and night, in snow, heat, and isolation.

The Pony Express rider himself had to be lightweight, weighing in at under 60kg, and tough enough to survive the exertion and the elements. For this, he would be paid $125 a month, a handsome wage at the time, though it came with the small downside of constant danger. Naturally, the horses were as critical to the operation as the riders themselves, and they were worked hard. Chosen for speed and stamina rather than size, these “ponies” were expected to run at a fast canter for most of a stage, often up to 24 kilometers an hour, and to be pushed into a full gallop when time or danger demanded it. The moment a rider arrived at a station, the mochila was thrown onto the next horse and the race continued.

During its short life, the Express carried around 35,000 letters faster than anyone thought possible. Perhaps its most famous moment came during the 1860 presidential election. While previous election results had taken months to reach California, the outcome of Abraham Lincoln’s victory arrived in just over seven days – an unrivalled feat at the time, and a powerful demonstration of what the system could do.

Success at a cost

Pony Express riders were often little more than teenagers, chosen not for their experience but for their light weight, stamina, and willingness to take risks that older men might hesitate over. Billy Tate was only fourteen when he took on one of these routes in Nevada. During the Paiute uprising of 1860, he was chased by a group of Paiute warriors and forced into the hills. Outnumbered and trapped behind a cluster of rocks, he fought until he ran out of ammunition but still managed to take down seven of his attackers. When his body was found, it was riddled with arrows but he had not been scalped – a sign, according to contemporary accounts, that his attackers respected his bravery.

Bart Riles was a Mexican teenager with an exceptional knowledge of the Nevada desert. When he was shot on his route – whether by accident or ambush, history disagrees – he knew he would not survive the journey. Instead of dismounting, he tied himself to the saddle, trusting that his horse would follow the familiar route to the next relay station. It did, and Riles’ mochila was transferred to a fresh rider and continued on its way, even as Riles died at dawn.

A swift end

For customers, the price of speed was steep. Sending a half-ounce letter initially cost $5, which was roughly 250 times the cost of ordinary mail. The founders hoped this would be a temporary bridge to a lucrative government contract. Unfortunately, that contract never came.

In October 1861, the transcontinental telegraph reached Salt Lake City, completing the wire between east and west. Messages that once took ten days could now travel in minutes. Two days later, the Pony Express announced its closure. Financially, it had been a failure – it grossed $90,000 and lost $200,000. Its founders never secured the government backing they needed. Within a few years, its assets would be absorbed into other companies, eventually landing with Wells Fargo.

Yet its failure didn’t erase its impact. The Pony Express proved that a unified, year-round communication system across the continent was possible. And once it disappeared, it was almost immediately romanticised as a symbol of endurance, ingenuity, and a brief moment when speed depended not on wires or machines, but on human stamina and a galloping horse.

Speed, reconsidered

The Pony Express didn’t fail because it moved too slowly (either literally or metaphorically). It failed because something faster and more efficient arrived. For a brief moment, it solved a real problem and proved what was possible. It reset expectations. But once communication could travel by wire instead of horseback, endurance and effort stopped mattering as much as convenience and cost efficiency.  

Modern businesses face the same reality. Speed is easy now. Messages are instant and channels are everywhere. The scarce resource is clarity. As my experience with the service provider proved, fast responses that don’t answer the question are just noise, no matter how modern the platform.

The lesson of the Pony Express is simple: disruption doesn’t reward motion. It rewards usefulness. And when a better system appears, the old one isn’t remembered for how hard it tried – only for whether it delivered.

About the author: Dominique Olivier

Dominique Olivier is the founder of human.writer, where she uses her love of storytelling and ideation to help brands solve problems.

She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting. She now also writes a regular column for Daily Maverick.

Dominique can be reached on LinkedIn here.

Ghost Bites (ASP Isotopes | Dipula Properties | Exxaro | Glencore | Sibanye-Stillwater | Woolworths)

The Finance Ghost
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Ghost Bites (ASP Isotopes | Dipula Properties | Exxaro | Glencore | Sibanye-Stillwater | Woolworths)

ASP is already achieving better metrics at Renergen’s helium project (JSE: ISO)

Money and expertise: the magic ingredients

ASP Isotopes has released an update on the Renergen helium project. With bridge loan funding having been put to good use (including the engagement of Kinley Exploration as a drilling and modelling specialist), things are starting to look much better in terms of drilling results and other key metrics.

The plant is now processing around 60% more gas than before, although this is obviously off a soft base. They are also making progress in further monetising the LNG, with 60% of the phase 1 offtake already contracted with industrial customers. The expectation is to achieve positive operational cash flow before the end of 2026.

But of course, the big value sits in the helium. My overall read of this announcement is that ASP is focused on stopping the cash burn by ensuring that the LNG business is working properly. They are obviously working on commercial pathways for helium in the meantime as well.

It all seems sensible to me.

Dipula’s lower-income focused portfolio is doing well (JSE: DIB)

This is fascinating to read alongside recent apparel sector updates

When you read updates from the clothing retailers, they lament the extent of participation in online gambling and blame it for their troubles. I don’t doubt that there’s at least some truth to that, but it cannot possibly be the entire story. This is why it’s important to read the perspective of the landlords as well, particularly as it relates to properties situated near townships, on busy commuter routes and in rural areas.

Dipula Properties gives us a great data point, as 70% of their portfolio sits in this category. A 5% increase in total turnover in the retail portfolio for the quarter ended 31 December 2025 suggests that apparel retailers are struggling more than other retailers. Either that, or some of the listed names in apparel just aren’t managing to participate in the growth story at this lower end of the market, while also failing to appeal to a higher income audience that isn’t spending too much money on gambling. That messy middle is a tough place to play (and invest).

Anyway, back to Dipula we go. Almost all retail categories grew by between 3% and 11%, with cellular and electronics growing the fastest (we’ve also seen this at retailers like Mr Price). Services turnover fell by 2%, the only one in the red.

Provincially, KZN and the Eastern Cape were good for 10% and 8% growth respectively. Limpopo was up 6%, North-West grew 4%, Gauteng and the Free State each did 3% and Mpumalanga managed to dip by 1.5%.

By property type, urban convenience and rural centres were up 6%, while urban township centres increased 3%.

Another trend that we’ve seen among retailers is record Black Friday sales. Dipula has echoed this, noting a pull-forward of sales from December into November.

Dipula also noted that the acquisition of four properties that was announced in August 2025 has now been completed. With a total value of R713.3 million, this is a meaty acquisition. Two of them are industrial assets and two are retail properties.

Exxaro updates the market on the manganese deal (JSE: EXX)

This acquisition was first announced back in May 2025

Exxaro is in the process of acquiring manganese assets from Ntsimbintle Holdings and OMH Mauritius. Corporate deals take a long time to close, so companies tend to keep investors updated along the way.

The first transaction includes the acquisition of various stakes, including 100% in Ntsimbintle Mining, 19.99% in Jupiter and 9% in Hotazel (among other assets). These transactions have become unconditional and are expected to close before 27 February.

The Mokala transaction, which involves the acquisition of 51% of Mokala, is still in the process of fulfilling its suspensive conditions. The long stop date has been moved out to 26 February 2027. That seems very far in the future, so I wondered if this might be a typo in the SENS (it would make sense if they meant 2026).

A big finish to the year at Glencore in its copper operations (JSE: GLN)

But investors will have to be patient for a meaningful further increase

Glencore has released its full year 2025 production report. For the second year in a row, they’ve achieved volumes within the guided ranges for the key commodities. That’s a very important performance metric that the market pays close attention to.

Like all the other big dogs in the sector, Glencore is barking at every copper asset it can find. They want to become one of the largest copper producers in the world over the next decade.

With copper production in the second half (H2) being nearly 50% higher than in the first half (H1), it looks very good at first blush. As you dig deeper, you’ll see that full year production in copper was actually down 11%. Another point that cannot be ignored is copper guidance for 2026, which reflects a 1.4% year-on-year decrease at the mid-point of guidance.

They’ve disclosed significant additions to the copper mineral resource base, so hopefully this drives production growth in years to come.

Zinc production was up 7% for the full year. Momentum was good, with volumes up 8% in H2 vs. H1. This is another area where guidance for FY26 is going the wrong way, with a 26% drop at the mid-point of the range.

Steelmaking coal jumped 63% for the full year (thanks to the acquisition of Elk Valley Resources in mid-2024) and 7% in H2 vs. H1, while energy coal dipped 2% for the full year and increased 3% in H2 vs. H1. Guidance for the coal assets suggests flat production in 2026.

Special mention to silver, which is all the rage at the moment: production was up 6% for the full year and 25% in H2 vs. H1!

In terms of average realised prices, copper actually dipped 1% on a 12-month basis. Steelmaking coal fell 16.3%, while energy coal was down more than 20%. Even zinc fell by 1%. Overall, the production story is far more positive than the prices, although a 12-month average isn’t a good reflection of underlying momentum in prices.

Glencore is up 41% over 12 months based on the market’s love affair with emerging markets and anything that has copper in it.

Sibanye-Stillwater has given a detailed strategy presentation (JSE: SSW)

It feels like it’s been a while since I saw a fat deck of slides from them

A couple of years ago, Sibanye-Stillwater used to regularly release gigantic slide packs to the market that would go into tons of detail on the strategic thinking in the group and the approach to the commodity in question. Although there’s clearly been a changing of the guard in the form of a new CEO, it’s good to see that the company hasn’t completely moved away from giving such detailed presentations.

The latest such example is a great overview of the group. It includes some helpful slides on the journey of the company, including its history as a gold miner first and then only a PGM play! It also clearly demonstrates the split across primary mining, secondary mining (tailings) and recycling. Over the past three quarters, they generated 75% of EBITDA from primary mining, 19% from secondary mining and just 6% from recycling.

Aside from the usual stuff, like a focus on reducing costs in the group and being as efficient as possible, there’s a lot of talk around “unlocking value” and “portfolio simplification” – this means selling off non-core assets and focusing on the stuff that is making serious money at the moment. That’s probably the right approach, as Sibanye-Stillwater’s portfolio includes a lot of stuff that doesn’t really make sense in there.

One of the happy outcomes of such a portfolio simplification (and ongoing profits in the core operations) would be a de-risked balance sheet. They are targeting a 50% reduction in gross debt.

The full presentation is well worth checking out. You’ll find it on the Sibanye home page here.

Australia pulls Woolworths down under (JSE: WHL)

The South African businesses are doing well at least

Woolworths released a trading statement dealing with the 26 weeks to 28 December. It includes plenty of detail on the underlying performance, an approach that the market always appreciates.

What the market didn’t appreciate is the expected change in adjusted HEPS (restructure costs / forex / other distortions taken out) of between -2% and 3%. At the mid-point of the range, that’s only slightly positive. With the share price closing 6.2% lower on the day, it’s clear that the market focused on adjusted HEPS instead of HEPS as reported (up by between 7% and 12%).

If you dig deeper, you’ll find that the biggest issues are related to the usual suspect: Australia.

Let’s start with the good news story, right here in South Africa. There’s a nuance here that we need to deal with straight away: this update is for the 26-week period, not just the fourth quarter. It’s therefore not directly comparable to the other retailers in the sector who recently released quarterly updates vs. a very tough two-pot withdrawal base. These Woolworths numbers are impacted by that base, but it’s like comparing a triple-shot cocktail to a single-shot cocktail: they both have tequila, but you won’t taste it as much in the second one.

Credit to Woolworths – they do at least give an indication of trading in the last seven weeks of the period to help us make these comparisons. I’ll deal with that after the 26-week numbers.

Woolworths South Africa grew turnover and concession sales by 6.8% for the 26-week period. Within that, Woolworths Food was good for 7.0% growth, while Fashion, Beauty and Home (FBH) managed 6.2%. This tells us that both parts of the business are performing well at the moment.

The comparable-store picture is even more interesting: Food was up 5.2% and FBH up 6.4%. Price movement was 4.6% in Food and only 2.8% in FBH, implying solid growth in volumes in both businesses. They are expanding trading space in Food (up 4.3%, or 1.8% on a weighted basis) and reducing it in FBH (down 1.9%, weighted basis not disclosed).

In terms of online growth, Woolies Dash grew by a juicy 23% as South Africans chose to shop with their phones instead of their cars to get their hands on the best veggies in the market (with a side of fresh flowers). Online is now 7.2% of local Woolworths Food sales.

Irritatingly, they decided not to disclose the growth rate for online sales in FBH, forcing me to go digging to figure it out. In the comparable period, it was 6.6% of FBH sales, and in this period it was 6.4%. By my maths, this means that sales increased by around 3% (you can work it out based on the total FBH sales growth and how the contribution changed). That’s a bleak performance vs. growth of 25.2% in the prior period. Companies should disclose metrics consistently instead of cherry-picking the good ones.

Looking at momentum, the last seven weeks of the period saw sales growth of 5.3% at Food and 6.1% in FBH, in both cases a deceleration (as expected). This was despite my best efforts in buying a particularly good potato product that they now have.

Any other nuggets? Well, there’s a warning around gross margin in FBH due to inventory clearances, so we will need to wait for detailed results to see that. Another useful metric is that Beauty and Home continues to do very well for them, with those categories up 8.9% and 14.0% respectively. Fashion is a tougher place to play.

Now we need to deal with Australia, where Country Road Group continues to compete in a horrible retail market. Sales were up 2.3% for the period and 2.5% on a comparable-store basis. The last seven weeks were disappointing, with sales up just 1.0%. Despite how hard it all is, net trading space was up slightly by 0.2%, so they aren’t attempting to shrink into prosperity like they’ve done in FBH. The online sales contribution was unchanged at 27.2%, as Australia is a more mature online market.

The share price is down 4% over 12 months. There was some positive momentum recently, but the market response to this update reversed most of it. I’m looking forward to seeing the profitability in South Africa based on these sales numbers, as my suspicion is that Australia is the cause of all the issues and the disappointing growth in adjusted HEPS.

Nibbles:

  • Director dealings:
    • The CFO of Sephaku (JSE: SEP) bought shares worth R655k in on-market trades that are part of the long-term incentive scheme. This is a direct beneficial interest though, so I’m not sure how exactly this relates to the incentive scheme (something I would normally ignore as a director dealing). I’ve therefore included it here.
  • Caxton and CTP Publishers and Printers (JSE: CAT) has decided to pay a special dividend. With over R3 billion in cash at the end of the 2025 financial year, they certainly aren’t short of resources. When you consider that the normal dividend for the year ended June 2025 was only R247.5 million, there’s even more headroom. They’ve decided to put a further R353.5 million into a special ordinary dividend (100 cents per share in the context of a share price of R13.80). Capital discipline is an important thing that investors look out for, so the share price rose 4% in response.
  • Hosken Consolidated Investments (JSE: HCI) has achieved shareholder approval for the Squirewood transaction with SACTWU. It’s been quite complicated to get the structuring right, with HCI trying to help SACTWU with its investment needs, while ensuring that the company’s B-BBEE status is maintained at adequate levels.
  • Ethos Capital (JSE: EPE) has given the market further details on the reinvestment option related to the offer for the residual assets in the group. With Ethos planning to return capital to shareholders from the transaction, there’s an option for qualifying shareholders (i.e. those with at least R1 million in ammo for this investment) to reinvest into the unlisted partnership that will hold these residual assets. Such shareholders would be become limited partners i.e. would have no part in management of the partnership. If this appeals to you, then I suggest you keep a close eye on company announcements.
  • Greencoat Renewables (JSE: GCT) released a net asset value (NAV) update for 31 December 2025. Power generation was 9.1% below budget in Q4, so the variability in this business model continues to come through. They were 10.4% below budget for the full year. Still, they achieved 1.5x net dividend cover, which means that the target dividend for 2025 was met. Sadly, they are targeting a flat dividend for 2026. The balance sheet gearing ratio is 52% and they’ve been successful in extending facilities. Although the NAV per share dipped by around 2.5% for the quarter, the company has reminded the market that the internal rate of return (IRR) on the underlying portfolio is 9.4%, which is around 13% if you adjust for the current share price. South African investors are looking for dividend growth rather than pure currency hedges, so I don’t envy the management team in trying to sell this story at the moment.
  • AfroCentric (JSE: ACT) is fighting with Bonitas Medical Aid Fund. Medscheme (part of AfroCentric) currently has the administration and managed care contracts from Bonitas, due to expire on 31 May 2026. Bonitas ran a Request for Proposal process and has awarded the contracts to a different company. Here’s the thing though: in December, Medscheme filed an urgent application with the High Court (due to be heard in March 2026) to stop the finalisation of the RFP process until the forensic investigation by the Council for Medical Schemes has been completed. Bonitas has finalised the process anyway, so the court hearing in March 2026 has now become very important for all parties involved. I’m grateful that I don’t have to take any of my customers to court to try keep them!
  • Transpaco (JSE: TPC) has been busy with the due diligence related to the acquisition of Premier Plastics, a deal announced in November 2025. With the due diligence out of the way, Transpaco will not acquire the shares in Polyethylene Recoveries Proprietary Limited, a wholly owned subsidiary of Premier Plastics. There are no other changes to the terms of the deal and no significant new matters.
  • Trustco (JSE: TTO) is suspended from trading and therefore has to release a quarterly update to the market. They’ve been working towards clarification from the JSE on the proposed audit sign-off that would include audit opinions by firms in each of Namibia and South Africa. Based on the current progress of the audit, they expect that the financial statements for the year ended August 2024(!) will likely be completed during Q1 of 2026. This timing depends on the ruling by the JSE regarding the audit process.

Ghost Bites (Datatec | Mr Price | Vukile)

The Finance Ghost
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Ghost Bites (Datatec | Mr Price | Vukile)

Datatec concludes a bolt-on acquisition in Europe (JSE: DTC)

Slow and steady acquisitive growth is the right approach

In a world where executives love doing blockbuster deals and rolling the dice on a grand scale, it’s refreshing to see companies doing bolt-on deals that are so small that they only require a voluntary announcement.

It’s amazing how often you see this approach in a company where the founder still has a large equity stake, like Datatec. There’s a big difference between playing with Other People’s Money vs. your own money, as any banker knows.

Through its subsidiary Westcon-Comstor, Datatec has acquired REAL Security, a cybersecurity distributor in Slovenia. The idea is to get a foothold in the Balkans region, thereby expanding Westcon-Comstor’s European footprint.

As a good example of how sales strategies tend to play out in this space, REAL Security hosts an annual cybersecurity conference in the region. Acting as a thought leader in a particular market is a good indication of the quality of the underlying brand.

The acquisition was effective on 27 January and we won’t get any further details on it, as the deal is too small for there to be a full terms announcement. I see this as a positive thing. After all, a global success story like Bidcorp (JSE: BID) was built in much the same way (small bolt-on deals), albeit in the food service sector.

Mr Price grew sales at the end of 2025 – but not by much (JSE: MRP)

The base period was tough

Despite all the entirely self-inflicted noise around the NKD deal, Mr Price has a strong South African business. In fact, that’s precisely why there is so much frustration around the offshore push! This means that the performance of Mr Price is a decent barometer for the sector as a whole. We’ve already seen what a weak performance looks like, courtesy of Truworths (JSE: TRU). We now get to see what a stronger player was capable of achieving against a very tough base of two-pot withdrawals at the end of 2024.

The answer is: not much. Mr Price’s sales are in the green, but group sales were up just 3.6% for the quarter ended 27 December 2025. The base period was up 10.6%, so the two-year growth stack makes more sense (a two-year compound annual growth rate or CAGR of around 7%). Mr Price’s growth was ahead of the market in this period, so they are winning market share.

Unsurprisingly, Mr Price raises the concern around online betting. This is clearly a worry in the market and one that doesn’t seem to be going away. Overall consumer demand for apparel is weak at the moment, with total unit sales falling 1.5% in an environment where retail selling price inflation was 5.2%.

Mr Price is predominantly a cash retailer (90.9% of total sales), with cash sales up 3.7% vs. credit sales up 2.9% as the group took a cautious approach.

Another interesting element of the Mr Price model is that online sales aren’t growing faster than in-store sales. This is totally different to what we are seeing at players like The Foschini Group (JSE: TFG). Store sales at Mr Price were up 3.6% and online sales increased 3.5%. Trading space also increased by 3.5%.

As you read those numbers, alarm bells should be going off about comparable store sales. After all, the increase in trading space is remarkably similar to the comparable store sales growth. Did they actually grow in their existing space?

Sure enough, comparable store sales for apparel (83.1% of group sales) was up just 0.4%. That’s not enough to offset the inflationary impact of costs at store level.

Moving on to the performance of the brands acquired in recent years, Studio 88 is certainly one of the highlights in this story. It achieved growth of 7.7% during the period vs. a demanding base of 12.3%. Another absolute winner (in Homeware rather than Apparel) is Yuppiechef, up 10.1% this period vs. 26.5% in the base period. I’ll refrain from making bad puns about two-pot savings being spent at Yuppiechef.

The rest of the Homeware segment doesn’t have much to smile about. They actually lost market share, with management noting that they are trying to focus on profitability instead. Comparable store sales were up 1.7% in that segment. This tells us that consumer demand for homeware is stronger than apparel, albeit not by much.

The Telecoms segment, which contributes just 2.9% of group sales, increased sales by 11%. It also achieved better margins. People clearly need phones and airtime for all that online betting!

The sales growth, as light as it was, was only achieved at a lower gross profit margin. Margin fell by 20 basis points for the quarter, although management expects it to be flat for the full year ending March 2026. This will require a strong finish to avoid any stock write-downs, with Mr Price telling a positive story around stock levels.

In the first four weeks of January, sales growth was 4.2% vs. a demanding base of 16.0%. The full Q4 base is 7.6% as sales slowed down a lot at the start of the 2025 calendar year, so that should give them a year-on-year boost as the year comes to a close.

There’s nothing in this announcement to suggest that a bounce-back in apparel is likely this year.

Vukile’s Castellana offloads mature retail properties in Spain (JSE: VKE)

The idea is to reallocate capital to higher growth opportunities

Nostalgia has no place in business. When an asset has reached the point where it no longer meets the risk/reward framework applied by a company, then it’s time to go. This doesn’t mean that the journey was a failure. Quite the contrary – it often means that it was a success!

You see, there are different lenses applied to assets in terms of return requirements. This is especially true in the property game. Funds that actively manage their properties will look for opportunities to increase the value – the classic “fixer-upper” so to speak. Other funds that are just looking to allocate capital across a wide range of properties will look for opportunities that are unlikely to cause headaches. These are “mature” assets.

Vukile Property Fund is in the former bucket, as they are a REIT rather than an institutional investor like a pension fund or similar. This means that when properties have matured, they will look for opportunities to sell them at attractive prices.

This is why Vukile’s Spanish subsidiary, Castellana Properties, will be selling a portfolio of nine retail properties. This has nothing to do with a bearish view on Spain or a change in strategy. It’s merely a reflection of where these properties are in their lifecycle.

Interestingly, Castellana will provide asset and property management services for a period of 5 years and will receive market-standard fees for these services. This tells you a lot about how hands-off the acquirer plans to be – typical of mature assets.

The returns since the properties were acquired in 2017 haven’t exactly been inspiring. Thanks to numerous issues along the way (pandemic / geopolitical), the capital gain over the period has been a total of 13% despite net operating income growing by 26% over that period. It’s a disappointing outcome, but still a positive return despite all the challenges.

The selling price is €279 million at a disposal yield of 7.1% and a discount to the 30 September 2025 valuations of 2.5%. The effective date is 1 April 2026.

Once the deal is done and the money is in the bank, Vukile plans to deploy capital into various opportunities that they already have in the pipeline. They will target higher growth shopping centres that will be earnings accretive to Castellana and Vukile.

Nibbles:

  • Director dealings:
    • Nictus (JSE: NCS) announced that directors and their associates bought shares worth just over R2.5 million.
  • Independent directors churn all the time on the JSE, so I don’t mention appointments and resignations unless they reflect a change in strategic direction or relate to a change in the chair / lead independent director. At Purple Group (JSE: PPE), Happy Ntshingila has returned as chairperson after completing his pupillage and bar examinations.
  • Trustco (JSE: TTO) is suspended from trading and continues to be deep in the “never a dull moment” bucket. A significant shareholder, Riskowitz Value Fund, is trying to get rid of the current board. The latest is that Trustco has now said that the Legal Shield Holdings transaction, which led to Riskowitz being issued 200 million Trustco shares, is invalid. If they can get that legal angle right, then it would rip away voting power from Riskowitz and make everything much harder in terms of the board changes. My money is nowhere near this thing and I plan to keep it that way.

Ghost Bites (Accelerate Property Fund | AVI | Lewis)

The Finance Ghost
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Ghost Bites (Accelerate Property Fund | AVI | Lewis)

Accelerate exits another property – and at a modest discount to NAV (JSE: APF)

I remain happily long

Accelerate Property Fund is such a beautiful example of the type of dislocations that can happen in the market. I’m up 46% in this counter thanks to the gap between net asset value (NAV) per share and the share price closing over time. It hasn’t even taken that long to happen, as I waited until the release of the Portside disposal circular last year before I bought.

There’s further good news from the company in the form of the disposal of the Bosveld Bela Bela Shopping Centre for R88 million. The book value is R95 million. Sure, they need to pay commission of 3%, but that’s a discount of just 7.4% to the NAV (before fees). When a share is trading at a vast discount to NAV, a disposal like this does a wonderful job of turning uncertain NAV (property valuations) into certain NAV (cash on the balance sheet).

The disposal yield is around 8.6%, so they achieved a solid price for the sale.

Naturally, the proceeds will be used to reduce debt.

Another important point is that shareholders won’t be asked to vote on the transaction, as this is a Category 2 transaction.

The share price closed flat on the day despite this news. Currently trading at its 52-week high, more investors need to get involved here for the share price to be pushed higher. I’m confident that they will come.

Double-digit HEPS growth expected at AVI (JSE: AVI)

This is despite at least one ugly duckling in the group

AVI is a very good business in the world of branded food and beverages. They do particularly well in snacks as well. And with their I&J business, they have a household name in the seafood space – even if Mother Nature (and catch rates) doesn’t always play along.

Alas, they also have some segments that are like barnacles on their boats. Barnacles get removed because they cause damage and reduce speed. The same fate should befall segments like Footwear and Apparel, and especially Personal Care, where AVI is playing in spaces in which I don’t believe they have a right to win.

For example, the Food and Beverage part of the business (which has three sub-segments) contributed 82% of revenue in the six months to December 2025. Revenue in this area increased by an appealing 6%.

Digging deeper, we find I&J as the growth highlight, up 9.4% thanks to better catch rates and increased capacity from a vessel commissioned in February 2025. Abalone continued to struggle though, with weak selling prices and poor demand in Asia. Snackworks put in a solid performance with 5.9% growth. People will never get tired of Bakers Choice Assorted, no matter how much we care about sugar consumption! Entyce Beverages lagged with 4.5% growth, mainly due to coffee volumes amid higher prices – to the benefit of better tea demand.

As for Fashion Brands (with two sub-segments and an 18% contribution to group revenue), their revenue was flat for the period. This is because Personal Care dropped by 7.2% and Footwear and Apparel was up 3.4%.

The Personal Care result is because of struggles in the deodorant body spray category. Unlike in AVI’s food businesses, they don’t have a strong brand there. In Footwear and Apparel, SPITZ is a brand that you’ll likely recognise, although this sector is a competitive bloodbath at the moment. Much of the latest growth was thanks to a weak base with supply challenges.

Combine these performances and you get group revenue growth of 4.9%. But that’s enough of the revenue story – what about the rest?

Group gross profit margin improved thanks to margin management and the higher contribution from I&J. AVI is famous for cost management, so I’m not surprised to see that this revenue growth translated into higher operating margin.

Net finance costs were flat, with lower interest rates offset by increased average borrowing levels.

By the time we get to HEPS, we find growth of between 10.5% and 12.5%. This is a masterclass in both operating and financial leverage, with the earnings growth rate more than double the revenue growth rate of 4.9%.

Leverage is exactly what AVI is known for. I just wish they could deal with those barnacles!

The share price is up 4.2% in the past year, but the real story is the 16% increase over six months as momentum has picked up. It is trading very close to its 52-week high.

Lewis bucks the weak retail trend with a solid third quarter (JSE: LEW)

Positive sentiment towards the company will be strengthened by this update

After the year got off to a rough start in terms of local retail updates, Lewis threw the market a bone in the form of a SENS announcement detailing the performance for the nine months to December 2025. It looks as though the latest quarter was a manageable deceleration vs. the first six months of the year.

The business model at Lewis depends on substantial credit sales, so it’s important to look at both total merchandise sales (which drives initial gross margin) and total group revenue (which includes the credit and other business lines).

Merchandise sales is the metric that feeds the top of the funnel. For context, it had previously grown by 6.7% for the six months to September (8.9% in Q1 and 4.6% in Q2). The latest update is that Q3 achieved 7.8% growth, an acceleration that was aided by strong Black Friday sales.

Similarly, comparable store sales were up 4.3% for the nine-month period vs. 4.9% for Q3, so there’s a further acceleration.

Other revenue, which would be combined with merchandise sales to get to total revenue, increased by 15.2% for Q3 after growing 16.7% in the first six months. This takes them to 16.2% for the nine months year-to-date.

This slowdown wasn’t due to a lack of credit sales, as credit sales growth was 69.4% of total sales vs. 68.2% in the comparable period. I suspect that the lower interest rates in the market impacted other revenue in the third quarter.

I must flag a deterioration in the collection rate year-on-year, coming in at 78.3% (identical to the first six months) vs. 79.6% in the comparable nine-month period. They saw an uptick in debtor costs to manage the book, flagging growth in the book and overall pressure on consumers. This is something to keep an eye on.

In terms of what they can actually control (i.e. not the prevailing level of interest rates), Lewis appears to have done well. This won’t do any harm to the group’s reputation as a resilient retailer, with the share price up 23.6% in the past year.

For context, Shoprite (JSE: SHP) is down 7.6% over 12 months and Pepkor is up just 1.5% (JSE: PPH). Those are two of the very best retailers we have on the market. I won’t even mention the other apparel retailers, as they were truly slaughtered in 2025.

Lewis stands head and shoulders above the rest of the sector at the moment.

Nibbles:

  • Director dealings:
    • The CEO of Mantengu (JSE: MTU) disposed of just under R3 million in shares to a family member.
  • Libstar (JSE: LBR) has renewed the cautionary announcement related to a potential acquisition of the company’s shares by a third party. There have been a few cautionary announcements in the past few months that suggested that there was more than one potential investor at the table. At this stage, there’s still no guarantee of a firm offer. The share price is up more than 20% since the first cautionary announcement was released on 16 September.
  • The CFO of Heriot REIT (JSE: HET) has bought a unit in the company’s Fibonacci mixed use sectional title development for R1.2 million. This is a related party transaction, hence it must be announced. This pre-sale is priced in line with what other purchasers in the scheme are paying.
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