Monday, March 9, 2026
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Ghost Bites (ADvTECH | Clientele | Fairvest | Harmony | Hulamin | Italtile | Momentum | Sasol)

The Finance Ghost
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Ghost Bites (ADvTECH | Clientele | Fairvest | Harmony | Hulamin | Italtile | Momentum | Sasol)

Despite mid-teens earnings growth at ADvTECH, the share price is flat this year (JSE: ADH)

This is the great frustration for investors of an unwinding multiple

When the market loves a company, the valuation tends to get pushed to the limits. This leads to a scenario where an excellent company can be an average or even poor investment, as the thing needs to grow into its boots. With ADvTECH’s share price down 1% this year despite HEPS for the six months to June 2025 being up 15%, it’s a perfect example of this situation.

If you ever hear someone referring to an “unwinding multiple” then this is what they are talking about – earnings moving higher and the share price not following suit, leading to a decreasing earnings multiple over time as it “grows” into its valuation.

The company can’t control the share price, but they can control the underlying performance. Full credit to ADvTECH here: 10% revenue growth and an 18.4% increase in the interim dividend is excellent.

Above all else, ADvTECH is a story of the benefit of operating a premium model in a market that is struggling for growth in volumes. In this case, the “volume” is the number of kids in schools, with Curro’s (JSE: COH) huge footprint turning out to be more of a liability than an asset thanks to current birth trends. ADvTECH has a smaller base of schools that have a more upmarket focus, which means that demand remains strong relative to supply and that they can drive prices higher accordingly. In Schools South Africa for example, revenue was up 11% and operating profit increased 12%, driven by a 4% increase in enrolments on a like-for-like basis.

In Rest of Africa, ADvTECH operates a similar premium model that targets expats and wealthy locals. Revenue increased by 31% and operating profit was up 34% in that business, so the model clearly works.

As the cherry on top, the Tertiary business (the largest segment) generated revenue growth of 13% and operating profit growth of 14%. As we’ve seen at sector peer STADIO (JSE: SDO), this is a lucrative place to play.

The Resourcing business continues to be the ugly duckling in the group, with revenue down 5% and profit down 2%. As I say every single time I write about ADvTECH, it’s an odd strategic fit that the group would be better off selling. I’m pretty sure that investors are bullish on ADvTECH despite the Resourcing business, not because of it. I would love to hear any opposing views on this!

Clientèle has had a strong financial year (JSE: CLI)

And the market responded accordingly

Clientèle has released a trading statement dealing with the year ended June 2025. HEPS is expected to be up by between 39% and 59%, a fantastic outcome indeed. That suggests a range of 136.88 cents to 156.56 cents, or 146.72 cents at the midpoint. The share price closed at R13.64, suggested a P/E at the midpoint of around 9.3x.

Although the group results will be skewed by a bargain purchase gain on the acquisition of 1Life, this doesn’t affect the HEPS calculation and thus isn’t the reason for the jump in earnings. Having said that, the actual consolidation of 1Life into the numbers would’ve had an effect on the numbers, but they acquired it in a share-for-share deal and thus HEPS (which is a per-share measure) would take into account the additional shares in issue for that acquisition. In contrast, a cash-settled acquisition skews the numbers far more, as companies “buy” earnings and don’t issue additional shares for them, leading to a significant increase in HEPS that might not be reflective of the true underlying performance.

As for Clientèle, it seems as though these numbers might be a reflection of just how well the business is actually doing. We will have to wait for detailed results on 5 September to know for sure.

Fairvest’s capital raise is another sign that things are getting frothy in property (JSE: FTA | JSE: FTB)

Shares trading above NAV and accelerated bookbuilds that raise far more than initially planned? Yeah, I’ve seen this movie…

Fairvest kept SENS busy on Monday, starting off with the announcement of an accelerated bookbuild to raise R400 million. Now, if you go back a bit in their SENS announcements, you’ll find that they announced some deals a couple of months ago for R478 million. Tempting as it is to think that this capital is needed for those deals, a further read shows that those deals already closed. So, this is more a case of “give us the money and we will figure out what to do with it” – that’s one of the early warning signs of the local property sector being overvalued.

But is this an isolated example, or have we seen others? Sirius Real Estate (JSE: SRE) did much the same in terms of raising for general acquisition purposes, but they have an incredible track record of capital allocation. I would be more worried about the more recent Hyprop (JSE: HYP) example, where the company raised R808 million through an accelerated bookbuild based on little more than a vague promise to try and acquire MAS (JSE: MSP) – and as regular readers will know, that deal never happened and now Hyprop is sitting on the capital.

Onwards to the next test of frothiness in the sector: did the market throw more at Fairvest than they asked for? The answer is a resounding yes, with the book eventually closing with commitments of R970 million – more than double the initially planned amount! It’s clear that institutions are falling over themselves to throw money at quality funds, even when the use of those proceeds isn’t clear. Hmmm.

Third test: the pricing. If the raise was at a substantial discount to the net asset value per share, then it makes sense for there to be a bunfight over the shares. There was a discount in the end, but a narrow one to say the least. They raised at R5.40 per share, which is 2.28% off the 30-day VWAP per Fairvest B share of R5.53. But here’s the wild thing thing: the net asset value per B share as at March 2025 was R4.79, which means that the share and the capital raise were both at a substantial premium to net asset value.

Buckle up. Whilst I don’t think we are quite at silly season levels yet (the 2014 – 2016 bubble saw weekly bookbuilds in the sector), we seem to be heading that way. When I start seeing more of this, I’ll be rotating my tax-free savings exposure away from local property and into something else. It’s been fun, but I have zero desire to own property funds at a premium to NAV while I get diluted regularly by discounted bookbuilds.

Harmony’s production dipped year-on-year, but the gold price drove earnings higher (JSE: HAR)

They ended up within guidance for production and costs

Harmony Gold released a trading statement for the year ended June 2025. Production came in at just over 46,000kg, which is around 5.3% lower than the prior year. Although the production number was towards the upper end of the guided range, it’s still a pity that production decreased at such a lucrative time for gold miners.

All-in sustaining costs (AISC) came in sharply higher at R1,054,346/kg, a nasty increase of nearly 17% year-on-year. Again, they are within guided range here, but that doesn’t mean that the year-on-year trend is what shareholders want to see.

Thankfully, a 27% increase in the average gold price received was more than enough to offset these issues (and a few others, like a higher tax expense), with HEPS increasing by between 18% and 32% in rand.

The share price is up 72% year-to-date, which is obviously a lovely return, but it’s well off the performance at peers like Gold Fields (JSE: GFI – up 114%) and AngloGold Ashanti (JSE: ANG – up 111%). For shareholders, it’s a case of what might have been.

Detailed results are scheduled for release on 28 August. You can expect the company to spend plenty of time talking about its copper strategy as a source of diversification.

Hulamin’s volatility is quite something – and poor results don’t help (JSE: HLM)

Earnings have plummeted

If you enjoy rollercoaster rides and possibly even skydiving, then Hulamin might be for you. The 52-week high is R4.28 and the 52-week low is R1.65. You can park an entire national dialogue in that gap, with the share price currently trading at R2.53.

The reason for the price being much closer to the 52-week low than the 52-week high is that results for the six months to June were somewhat awful. Despite core volumes being up 2%, they suffered a 20% drop in normalised HEPS and a 48% decrease in normalised HEPS.

There are a few strategies in place to try and address this. They’ve closed Hulamin Containers and they are looking to dispose of Hulamin Extrusions this year. Importantly, the wide canbody expansion project has been commissioned and they are targeting commercial readiness in the first quarter of 2026, with the plan being to compete with imports by offering a locally sourced alternative.

Unsurprisingly in this context, there’s no dividend. Those who are willing to take a punt on this turnaround aren’t going to be paid to wait around. Luckily, if things are going to get better, that should be visible pretty soon.

Personally, this isn’t one for me, not least of all with net debt up 16% at a time when earnings have dropped so sharply.

A resilient performance at Italtile (JSE: ITE)

For some reason, they feel very confident with the dividend

For Italtile (and other consumer discretionary product retailers) to do well, they need consumers to have spare cash and a willingness to spend it. Alas, this combination doesn’t tend to be a feature of the South African business landscape, hence Italtile had to make do with a 2% drop in system-wide turnover for the year ended June 2025.

Along with the dip in sales, the retail business saw a decrease in margins as well. This speaks directly to consumer pressure. If interest rates drop at some point, then that will help.

The margin situation is far more worrying in the manufacturing business, with an oversupply situation in South Africa that has led to damaging price competition. It’s not clear that a decrease in rates will solve that problem.

Against this backdrop, Italtile has to focus on controlling what it can, like expenses. They managed to decrease operating costs by 3%, which means that trading profit was flat. Impressively, HEPS actually came in 2% higher at 125.1 cents.

The dividend is the real star of the show though, with the ordinary dividend up 2% and the special dividend up 26%. The total dividend is thus 17% higher at 148 cents, a payout of significantly more than HEPS! Management is clearly very happy with the balance sheet and is keen to demonstrate capital discipline to investors, although they obviously need to be careful here.

The share price is down 21% year-to-date and is now on a more reasonable price/earnings multiple of 8.8x, which makes a lot more sense than the previous inflated levels it was trading at despite management consistently telling the market that things are tough out there.

Momentum really is living up to its name (JSE: MTM)

The latest trading statement shows why the share price has been strong

Momentum’s share price is up roughly 33% in the past year. For a company of this size to increase in value by a third, there needs to be a good reason. Thankfully, the latest trading statement has given a few good reasons!

Here’s the reason that really counts: normalised headline earnings per share increased by between 41% and 51% for the year ended June 2025. That’s not very different to HEPS without normalisation adjustments, which increased by between 45% and 55%.

Importantly, this also represents excellent follow-through from the interim results, where normalised headline earnings per share increased by 48%.

They say that “most business units” contributed “meaningfully” to the performance, so that’s further happy news for investors. Across the life and short-term books, there were several drivers of the positive performance. Detailed results are due for release on 17 September and it’s certainly going to be interesting to see exactly where they made their money,

Sasol’s numbers have large once-offs – but what else is new? (JSE: SOL)

The worry remains the rand oil price

The market seemed to appreciate Sasol’s results for the year ended June 2025, with the share price closing 11.7% higher on the day of release. Perhaps the exuberance was around free cash flow, which jumped by 75% to R12.6 billion. That sounds incredible, but a Transnet net cash settlement of R4.3 billion was just one of the unusual boosts to this number.

As always, Sasol’s adjustments also include huge non-cash items, in this case related to items like derivatives and environmental rehabilitation provisions.

If we look through all the noise to the core drivers of earnings, we find the rand oil price as the major concern. Sasol made it clear at the capital markets day that they are hoping for a flat performance in their refining business over the next few years, which means they need the rand oil price to play along. Alas, a stronger rand and a weaker oil price this year meant that the rand oil price fell by 15%. Combined with lower sales volumes, this led to a 9% decrease in turnover at Sasol and a decline of 14% in adjusted EBITDA.

Within that negative group performance, there are at least signs of life in the chemicals business. US ethylene margin improved and so did the chemicals basket price, leading to an uplift in adjusted EBITDA of $120 million in that business. As this is the focus area at Sasol for earnings growth, I’m sure this was part of why the market enjoyed these numbers.

But when it comes to the contribution to group earnings, the Southern Africa business is still way more important than International Chemicals. The latter contributed 15% of adjusted EBITDA in this period vs. 9% the year before. This tells us that for all the self-help initiatives underway at Sasol, they are still heavily exposed to the rand oil price.

They are doing what they can to try and make up for this issue, with a focus on cost control and a 16% decrease in capital expenditure. But as is always the case with cyclical energy companies, their fate is to a large extent determined by external forces.

And yet at the bottom of this income statement filled with noise and distractions, we find HEPS growth of 93%!

The balance sheet is stronger at least, with net debt excluding leases down 13%. The Transnet settlement and the overall cash generation of the business was useful here. There’s no interim dividend though, as Sasol won’t pay a dividend unless net debt is below $3 billion. They are currently on $3.7 billion, so shareholders have to be patient.

Nibbles:

  • Director dealings:
    • An associate of a director of NEPI Rockcastle (JSE: NRP) sold shares worth R13.2 million.
    • The founder and CEO of Datatec (JSE: DTC) bought shares worth R1.5 million.
    • Des de Beer has bought another R87k worth of shares in Lighthouse Properties (JSE: LTE).
  • As a condition precedent to the acquisition by Mantengu Mining (JSE: MTU) of Blue Ridge Platinum that was announced approximately a month ago, Mantengu needed to enter into a B-BBEE deal to sell a portion of its stake in Blue Ridge to suitable empowerment parties. Mantengu has duly done so, with the counterparties including a private company (20%), an employee trust (5%) and a community trust (5%). The 30% is being sold for a nominal value.
  • As per usual, NEPI Rockcastle (JSE: NRP) is giving shareholders a choice regarding how they want to receive their dividend. A circular has been distributed to shareholders that deals with the election of either an ordinary cash dividend or a capital repayment. It will all come down to tax at the end of the day. If you are a NEPI shareholder, I strongly suggest you refer to the circular and check with your tax advisor.
  • Life Healthcare (JSE: LHC) has received approval from the SARB for the special dividend, with a payment date of 22 September.
  • The CFO of Putprop (JSE: PPR), James Smith, will be retiring at the end of this year after 18 years with the group. A successor has not been named as of yet.
  • AH-Vest (JSE: AHL) will be delisted from the JSE on 26 August. That’s more than fine, as this company should’ve been gone a long time ago – it was way too small to be listed.

Ghost Bites (Adcock Ingram | Gold Fields | Grindrod | Hulamin | MTN Zakhele Futhi)

The Finance Ghost
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Ghost Bites (Adcock Ingram | Gold Fields | Grindrod | Hulamin | MTN Zakhele Futhi)

Adcock Ingram could delist later this year if the Natco Pharma deal goes through (JSE: AIP)

The latest full-year numbers might be the last ones we see

Adcock Ingram has released results for the year to June 2025. They weren’t exactly a thrilling read, with turnover up 1% as pricing more than made up for a 3.1% decline in volumes. Gross margin suffered a slight dip and operating expenses increased by 2%, so that was enough to drive a 4% decline in trading profit.

The positive impact of equity accounted earnings further down the income statement took HEPS into the green, albeit with growth of just 1%. The dividend increased by 2% to 280 cents, a modest payout ratio in the context of HEPS at 626 cents.

If you dig deeper, the Prescription segment is where things really went wrong. Turnover was down 3% and trading profit fell by a nasty 25%, showing just how much operating leverage you’ll find in that part of the business. The best performing segment was Consumer, with both turnover and trading profit up 6% – and thus no operating leverage in sight.

The circular for the Natco Pharma deal will be posted in September and if all goes well, Adcock Ingram expects to delist by November this year. In case you’re wondering why Natco pulled the trigger on this uninspiring set of numbers, it’s worth highlighting that HEPS in the second half of the year was a whopping 36% higher than in the first half, driven by a 7% increase in turnover and 30% jump in trading profit.

The full-year numbers may have been weak, but the momentum is strong.

Gold Fields is a gold mine in every sense of the words (JSE: GFI)

Production increased at exactly the right time

The gold price has been very kind to the gold sector in recent times, boosted by global monetary policy that is seen by the market as highly inflationary. That’s happy news for gold bugs, but the mines can only take full advantage of this environment if they get the basics right: in other words, if they get the stuff out the ground efficiently.

In the six months to June, Gold Fields increased its production by 24% and they are on track to meet guidance for the year. So, they’ve kept up their side of the bargain with investors. The swing in free cash flow is quite something to behold, from an outflow of $58 million in the comparable period to an inflow of $952 million!

The dividend isn’t as volatile as free cash flow, as the latter is impacted by the exact timing of capex and the former is deliberately smoothed out. This is why the dividend is up by “only” 133% – still a fantastic outcome for investors.

Although all-in sustaining costs (AISC) fell by 4% year-on-year, Gold Fields expects to do better and they believe that they can meet full-year guidance on this key metric. They came in at $1,682/oz for the interim period vs. full-year guidance of $1,500/oz – $1,650/oz.

With net debt to EBITDA of 0.37x, the balance sheet is in exceptional shape. They just need to keep delivering on the opportunity that the gold market is presenting them.

The Port and Terminals segment boosted Grindrod’s interim earnings (JSE: GND)

Can they unlock better numbers in Logistics going forwards?

Grindrod has released interim earnings for the six months to June. The period got off to a dicey start, with weak volumes at the terminals in the first quarter. There was substantial improvement in the second quarter, which did enough to move the overall performance into the green.

You need to be quite careful in interpreting Grindrod’s numbers. There were major corporate actions in this period, like the acquisition of the remaining 35% in the Matola terminal in May and the exit of the KZN property and Marine Fuels businesses. This is why Grindrod reports headline earnings from core operations, which came in flat year-on-year.

Once you include the non-core stuff, you get to a 23% increase in HEPS. I would focus on the core earnings instead, as further evidenced by the interim dividend being flat year-on-year (and therefore in line with core HEPS).

Shareholders are at least being rewarded for the disposals though, with Grindrod declaring a special dividend of 32.3 cents per share. For context, that’s bigger than the interim dividend at 23 cents per share!

If we look deeper into the numbers, we find that port volumes had their first wobbly in recent years, with the pressure coming from the ports other than Matola:

Despite the drop in volumes and the 5% decrease in revenue in Port and Terminals, EBITDA jumped by 13% as EBITDA margin improved from 33% to 40%. Although normalisation adjustments blunt that move to an improvement from 33% to 36%, the point is that the business was more profitable and grew its headline earnings by 12.6%. Return on equity fell from 26% to 18% though, so keep an eye on that.

Logistics, on the other hand, suffered an 11% drop in revenue and a 19% decrease in EBITDA. Normalised EBITDA margin dipped from 27% to 26%. Headline earnings fell by over 21% and return on equity suffered a substantial drop from 21% to 9%.

Grindrod has some major projects to bed down, with the Matola terminal acquisition as the obvious area of focus. On the Logistics side, they are working to improve the rail business that experienced low utilisation of rolling stock, accompanied by a decrease in margins in road transportation where competition is heavy.

CEO Xolani Mbambo’s time with the group is drawing to a close, with the interesting choice to move across to Kumba Iron Ore (JSE: KIO) as CFO. Although that may sound like a step backwards, Kumba’s market cap is around 9x higher than Grindrod, so the size of the prize is much larger. Grindrod is still searching for a successor for Mbambo, with his time at the company due to end in December 2025.

Hulamin’s latest numbers are awful (JSE: HLM)

The share price has lost nearly a third of its value this year

Hulamin is having a tough time out there. The benefit of higher sales volumes in the first half of the year was more than offset by the impact of pricing pressure in the local market, a stronger rand (which hurts our exporters) and higher energy costs.

The company is making significant changes, like the wind-down of the Containers division and the plans to sell the Extrusions business, with negotiations currently in progress for that disposal. The silver lining at the moment is the successful commissioning of the wide canbody expansion project, although the returns from that project will ultimately depend on market forces.

For the six months to June 2025, HEPS is down by between 78% and 82% – a nasty outcome indeed. If you accept Hulamin’s view of normalised HEPS, which adjusts for the metal price lag (which can swing wildly year-on-year), then the expected drop is between 42% and 54%.

In other words, whichever way you cut it, it’s been a really rough period. This explains why Hulamin’s share price is down 31% this year and 34% over 12 months. If anything, I’m surprised that the drop isn’t worse.

MTN Zakhele Futhi has fully exited its MTN position (JSE: MTNZF)

The residual net asset value per share is estimated to be R4.00

MTN Zakhele Futhi has been quite the story over the past 12 months. A year ago, the directors were staring down the barrel of a scheme that was set to mature with close to zero value in it, thanks to the immense pressure on the MTN (JSE: MTN) share price. But since then, the MTN share price has been on a trip to the moon, driven by vastly improved circumstances in Africa.

Thankfully, MTN stepped in last year and restructured things at MTN Zakhele Futhi in such a way that the scheme could continue for long enough to realise decent value. I’m not sure that anyone expected things to happen quite so quickly thereafter, as it only took a few months before the winding up began!

Thanks to the latest disposal of shares that raised R391 million after costs, MTN Zakhele Futhi is officially out of MTN. They are now just sitting on cash and they will need to go through the process of winding up the scheme. The estimated residual value per share is R4.00 and the current share price is R3.10, with the gap representing the time value of money (to some extent) and the lack of liquidity available to close the gap (the real reason, I think).

This comes after the payment of a R20 per share special distribution that was funded by the sale of most of the shares in early June via an accelerated bookbuild offering in the market at R128 per share. The current MTN share price is R156, showing just how much momentum the MTN share price has enjoyed this year – and how much was left on the table!

Yes, MTN Zakhele Futhi shareholders would’ve been better off if the directors had been more patient, but hindsight is always perfect. If you go back 12 months, I doubt anyone would’ve believed that they would eventually get roughly R24 per share out of MTN Zakhele Futhi, particularly as it was trading at around R9 per share at that stage!

Nibbles:

  • Director dealings:
    • The CEO of Vunani (JSE: VUN) is still buying up shares in the market, with the latest trades being worth R87k.
    • An associate of a senior exec of Investec (JSE: INP | JSE: INL) sold shares worth R63k.
  • RMB Holdings (JSE: RMH) released more details on the change of directors in Atterbury Property, which saw RMB Holdings CEO Brian Roberts removed from the board of the operating company in that group. The backstory to this is that RMB Holdings is trying to realise value from that asset, a strategy which is at odds with the wishes of the controlling shareholders in Atterbury. This seems to be the reason why Roberts was removed. This entire situation is a cautionary tale about the danger of having a lot of money tied up in non-controlling stakes – it’s all fun and games while everyone agrees, but there’s no guarantee of that being the case forever. If you would like to the read the rather interesting transcript of Roberts’ presentation to Atterbury Property shareholders, you’ll find it here.
  • There’s an unexpected change to the board at RH Bophelo (JSE: RHB), with Bojane Segooa stepping down as director and chairperson of the audit and risk committee. The reason I know this was a surprise is that the announcement was made on the day of the AGM and the resolutions dealing with her reappointment were therefore withdrawn.

Note: Ghost Bites is my journal of each day’s news on SENS. It reflects my own opinions and analysis and should only be one part of your research process. Nothing you read here is financial advice. E&OE. Disclaimer.

The next space race is all in our heads

Dominique Olivier
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The next space race is all in our heads

The next frontier isn’t space or AI – it’s the human brain. And it looks like we’re strapping in chips before we’ve even read the user manual.

I heard a joke about 3D printers a while ago, where the punchline poked fun at the fact that humanity was dabbling with 3D printing technology when we clearly hadn’t mastered regular printing yet. As someone who (once upon a time) had to put up with the whims and temper tantrums of an office printer, I chuckled at the accuracy of this joke.

What is it about our species that makes us want to run before we’ve really gotten the hang of walking? I thought about this question earlier in this week, when I read about the new “space race” unfolding between Elon Musk and Sam Altman.

If you have no idea what I’m referring to, then allow me to fill you in: Sam Altman, co-founder of OpenAI, is preparing to back Merge Labs, a new brain-computer interface (BCI) startup reportedly raising $250 million at an $850 million valuation. A big slice of that funding is expected to come from OpenAI’s ventures arm, meaning the same company that gave the world ChatGPT now wants to sink its hooks (quite literally) into the human brain.

If that sounds vaguely familiar, it’s because Altman’s old sparring partner, Elon Musk, is already making waves in this space. Musk’s company Neuralink recently raised more than $600 million and is in the middle of human trials, with paralyzed patients reportedly using brain implants to control cursors and play chess with their minds.

On paper, this all sounds like progress, right?

“The singularity”.

“The future of humanity”.

Pick your buzzword. But here’s the problem: we’re strapping neural chips to our heads when we don’t even really know how our heads work yet.

A race with no finish line

Altman vs. Musk is often framed as a tech soap opera. The two worked together on OpenAI, then Musk left in 2018 in a storm of clashing egos and now they seem locked in an innovation arms race. But this isn’t Grok vs. ChatGPT anymore. This time, the battleground isn’t cars or rockets or code. It’s us.

Musk’s Neuralink is already tinkering with human brains, albeit under the watchful eye of the FDA. Its first volunteer, a quadriplegic man named Noland Arbaugh, made headlines in early 2024 when he used Neuralink’s “Telepathy” implant to move a cursor and play online chess. It was the stuff of science fiction novels, until the Wall Street Journal revealed in an update that 85% of the implant’s threads had detached a few months after insertion, as Arbaugh’s brain shifted more than engineers expected. The FDA signed off on fixes, and a second patient, codenamed “Alex”, has since been implanted.

Even so, this is early-stage, high-stakes surgery. We’re talking lithium batteries in your skull, with wires thinner than a hair running through tissue we barely understand. If it sounds messy, that’s because it is.

The brain is not an iPhone

Tech culture thrives on iteration. Build it, break it, ship the update has long been the mantra. That methodology works fine for a rideshare app. But it’s potentially catastrophic when the test subject is the most complex biological structure in the known universe.

When asked how much we know about the human brain, Christof Koch, Chief Scientist and President of the Allen Institute for Brain Science, will readily tell you that we don’t even fully understand the 300 neurons that make up the brain of a worm. Compare that to the 80 to 100 billion neurons inside a human brain. 

We can’t explain how emotions form or what their exact purpose is. We can’t explain what causes a mental illness like schizophrenia, or why some medications seem to lessen its symptoms (through trial and error we’ve established that certain kinds of medication work, but we don’t know why they work). And we definitely can’t explain consciousness, the very thing these tech giants want to “merge” with machines.

Memory? Sleep? As it turns out, we can’t really explain those either.

The memory problem

When you learn something new – say, a person’s name – your brain undergoes a physical change. Synapses strengthen or weaken, proteins are synthesized, and new neural pathways begin to form. In theory, these molecular and structural shifts are what transform experience into memory. In practice, no one fully understands the details. 

Neuroscientists can track activity at the level of single neurons or entire brain regions, but the precise chain of events that turns fleeting experience into stored knowledge remains one of the great mysteries of biology. Sometimes we memorise things consciously, other times memories are created without our consent. Some things we wish we could remember better; other things we can’t forget even if we want to.

Retrieval is even more puzzling. Ask yourself whether you know someone’s name and the answer often arrives instantly, without conscious effort. That speed and accuracy suggest the brain has an extraordinarily efficient indexing system. Yet no current theory explains how billions of neurons can search, locate, and reconstruct a memory in less than a second. 

Each time a memory is accessed, it becomes malleable and open to alteration before being “saved” again. Imagine that you are with a friend and you discuss a shared experience from your childhood. If your friend adds a detail from the experience that you didn’t know before, it will now be included in the memory when you recall it again. This phenomenon, known as reconsolidation, has been demonstrated in laboratory experiments where memories could be weakened, erased, or chemically blocked during the window of recall. So what seems like a simple act of remembering is, in reality, an opportunity for rewriting.

The sleep mystery

You and I spend roughly a third of our lives asleep. Newborns run at double that, spending nearly 16 hours a day in slumber. Dolphins and some birds sleep with just one hemisphere at a time, keeping half the brain awake while the other rests. The evolutionary pattern is universal: all complex animals need sleep. And yet, despite decades of study, science still doesn’t fully understand why.

Several leading theories have emerged, none of them mutually exclusive. One argues that sleep is restorative, allowing the body to conserve energy and repair tissue. Another suggests it acts as a simulation engine, letting the brain rehearse scenarios like problem-solving or threat responses before facing them in waking life. The most widely supported hypothesis is that sleep is central to memory and learning. During certain phases of sleep, neural connections thought to encode memories are strengthened, while irrelevant or redundant information is pruned away. In this view, sleep is not passive rest but active recalibration, making room for the next day’s flood of sensory input.

But definitive proof to back up these theories remains elusive, and the pile of questions remains high. Why eight hours? Why specific cycles of REM and non-REM? Why does a lack of sleep lead not just to fatigue, but to cognitive breakdown, hallucinations, and in extreme cases, death? What happens to our consciousness when we sleep, and how or why do we dream? These questions remain unresolved.

The mirage of safety

Defenders of brain-computer interfaces argue that regulation will keep us safe. After all, the FDA is already in play, ethics committees exist, and human trials are heavily monitored.

And yet, while Neuralink’s first FDA application was rejected due to “major safety concerns”,  approval was given anyway, less than a year later. Investigations into the treatment of test animals at Neuralink labs were halted when 20 FDA investigators were fired by Donald Trump in February this year – coincidentally around the time that Elon Musk started spending a lot of time around the Oval Office. Noland Arbaugh’s implant malfunction didn’t end the program; instead, it triggered a patch-and-proceed mentality. Altman’s Merge Labs is still in fundraising mode, but the sheer flow of capital – hundreds of millions at a time – suggests the market isn’t waiting for the science to catch up.

The futurist’s dream is the singularity; a state where human and machine intelligence blur into one. For Musk, it’s insurance against AI outpacing us. For Altman, it’s a logical extension of OpenAI’s mission – if language models already shape how we think, why not plug them directly into thought itself?

But that dream skips over the messy middle: the inconvenient truth that after almost a century of studying the brain, we’re no closer to knowing what we’re actually messing with.

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 (Aspen | Blue Label | Curro | Exxaro | Octodec | Spur | WBHO)

The Finance Ghost
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Ghost Bites (Aspen | Blue Label | Curro | Exxaro | Octodec | Spur | WBHO)

Aspen still hasn’t started recovering from the market shock in April (JSE: APN)

Looking at the latest earnings explains why

The Aspen share price is down 32% year-to-date, with almost all of that move happening in a single swipe of the ol’ bear claws in April. When people say that stocks take the stairs up and the elevator down, this is what they are talking about:

The driver of that catastrophe was the news of a significant contractual dispute in the business with an expected impact of R2 billion on EBITDA for the year. This kind of thing certainly doesn’t build confidence in the market.

The latest update from the company is a trading statement for the year ended June 2025. HEPS is down by between 40% and 45%, which is awful. If you use normalised HEPS instead, it’s still terrible with a drop of between 27% and 32%. This is why the share price has shown no signs of recovery since that massive knock.

As for the dispute, the latest update is that normalised EBITDA for the Manufacturing business (where the problematic mRNA contract sits) is expected to be down 60% in FY25 vs. FY24. They are in an adjudication process, so the outcome is uncertain.

Silver linings? Well, Aspen’s core Commercial Pharmaceuticals business grew revenue by double digits and achieved normalised positive EBITDA growth. But although operating cash conversion seems to be strong, there’s still plenty of debt on the balance sheet and finance costs are up. It’s hard to find many positives here I’m afraid.

Here’s another negative: changes to tax legislation across South Africa and Mauritius have led to a permanent increase in the effective tax rate, leading to a substantial impairment of R1.7 billion. You can compare this to the mRNA asset impairment of R0.8 billion and other market related impairments of R1.6 billion. These numbers are excluded from HEPS, but they have pushed the group into an overall loss-making position. Ouch.

Looking ahead, they expect mid-single digit organic revenue and stronger EBITDA growth in Commercial Pharmaceuticals in 2026, driven mainly by growth in China and in South Africa. They have invested heavily in GLP-1 products, with the hope that their margins will get fatter while the people get skinnier.

Sadly, the most noticeable loss for people isn’t on their waistlines, but rather in their share values.

Blue Label (which will shortly have a slightly different name) flags a huge earnings jump (JSE: BLU)

And I mean huge…

Blue Label Telecoms will soon change its name to Blu Label Unlimited. Given the latest earnings, I don’t think punters care in the slightest about the name – they just want to see this trend continue.

For the year ended May 2025, Blue Label (still the official name for now) grew HEPS by a rather ridiculous 517% to 521%. If you use core HEPS, you get between 505% and 509%. Either way, that’s pretty wild.

If we focus on core HEPS, the range is 384.03 cents to 387.07 cents. The share price is around R17.20, so the Price/Earnings (P/E) multiple is just 4.5x. This is why the share price is up 228% over 12 months!

Well done to those who took the punt here. I like to stick to my knitting of buying things that I understand, with Blue Label’s financials and underlying business being beyond my comfort zone. This is a good example of where traders can do especially well, as they tend to worry more about momentum than anything else. When it works, it works very well!

Curro just keeps sliding (JSE: COH)

And unless people start having more kids, I don’t see things improving

My view is that Curro is in more trouble than most people realise. All you have to do is go and research the number of births in South Africa in recent years and you’ll see the problematic trend. Curro’s footprint was built on the assumption of stronger demand for the schools over time, rather than weaker demand. In other words, they have too many seats.

The schools are thus nowhere near full and I don’t see that changing anytime soon, with an update for the six months to June 2025 reflecting a decrease of 1.4% in the weighted average number of learners.

This means they either have to cut costs (which is very hard as a class needs a teacher whether there are 18 kids or 22 kids or 26 kids – hence the issue for margins), or increase prices. Even prices are hard to increase, as families that do have kids are facing the well-known squeeze that South Africa likes to dish out to middle-income families. You know, the one where they pay tax to the government and then pay again for all the services that government should be providing (but doesn’t).

The latest trading statement shows us what this looks like in practice. For the six months to June 2025, despite significant share buybacks, HEPS will change by between -3.0% and +2.7%. At the midpoint, that’s slightly negative.

The share price is showing a far sharper drop than sideways earnings would suggest, down 37% year-to-date. This is what happens when growth expectations are washed out of the market. And although impairments don’t affect HEPS, the fact that Curro impaired its assets by R74 million in this period tells you that there are still worries around these assets living up to their potential.

Coal volumes drive Exxaro higher (JSE: EXX)

This is a far more bullish update than we’ve seen from most of Exxaro’s peers

The mining and resources sector has been very hit-and-miss this year, mostly driven by the exact mix of commodities in each company. Occasionally, a company comes out with results that buck the trend, driven by strong execution in the business despite weaker global prices. Exxaro is one such example.

For the six months to June, Exxaro grew revenue by 8% and HEPS by 13%. Although the interim dividend is just 6% higher, these key numbers are all heading in the right direction.

The coal business improved its EBITDA by 10% thanks to higher export and domestic sales volumes, which more than offset the weak price environment that has hurt other businesses in the sector.

Part of the reason for the modest dividend growth is the extent of capital expenditure, coming in at R2 billion in this period – almost double the previous period thanks to the expansion capital required for the Karreebosch renewable energy project. Exxaro has substantial wind energy investments that contribute positively to earnings.

It’s always tough for companies in this space to make accurate forecasts, as there are many global factors at play. The word “stable” comes up a lot on the outlook statement for the second half of the year. When earnings are moving higher, stability is exactly what investors want to see. Exxaro’s share price closed 7.9% higher on the day.

Octodec upgrades guidance, despite all the challenges of being in CBDs (JSE: OCT)

Amazingly, Joburg still hasn’t properly repaired Lilian Ngoyi Street after the gas explosion in July 2023

Octodec plays the property game on hard mode, treading where many others simply won’t go: major CBDs in South Africa (other than Cape Town, obviously). That doesn’t mean that there isn’t money to be made. Quite the opposite, actually, as evidenced by the latest pre-close update for the year ending August 2025.

The portfolio isn’t exclusively inner city properties. There’s a lot of other stuff in there, including the likes of Killarney Mall in Joburg. But despite that feeling like an “easier” property to manage on paper, it has a vacancy rate of 18.5% and is held for sale. Just because one property is in a rough area and the other is in a better area doesn’t mean that the latter is automatically a better investment.

Vacancies remain a challenge across much of the portfolio, with tenant affordability as a handbrake on growth. The general state of urban decay doesn’t help, nor does the impact of a massive hole in Lilian Ngoyi Street that still hasn’t been fixed after the gas explosion in July 2023.

In terms of the financials, the loan-to-value ratio is expected to be below 40%, with Octodec aiming to get it below 35%. Financing activity is leading to better interest rates, which will assist with earnings growth for investors.

Speaking of growth, despite the obvious challenges at play, the company has upgraded its full year guidance. They expect distribution growth of between 3% and 6% vs. original guidance of 2% to 4%.

Spur’s strategy keeps working (JSE: SUR)

Get the ice cream and sparklers – there’s something to celebrate

Spur’s share price has been choppy over the past year, with no obvious trajectory after the strong performance in early 2024. The market is always nervous of South African consumer stories, particularly in discretionary categories like restaurants.

In the background though, the company has been consistently delivering. In the year ended June 2025, revenue was up 11.2% and HEPS jumped by 16.8%. And for dessert, how does dividend per share growth of 40.4% sound? Return on equity came in at 31.7%, a useful reminder of the kind of returns that businesses in this space can generate when things are working.

Update store designs are making a significant difference here across the Spur and Panarottis brands in particular, with improvements also being made to John Dory’s, Hussar Grill and Doppio Zero. There’s no mention of changes to RocoMamas and I’m not surprised, as there’s really no need to change anything there (perhaps I just really like the wings and ribs with the kids – goodness knows I’ve contributed to their revenue growth this year).

Here’s an interesting statistic: the largest revenue stream for the group is lunch. I guess that makes sense when you consider the typical approach of a family going shopping for a few hours and making a stop at a Spur group restaurant in a mall somewhere.

Franchised restaurants turnover was up 8.3%, which is well below group revenue growth of 11.2%. The gap is explained by company-owned stores and particularly the acquisition of Doppio Zero, along with the manufacturing and distribution division in the group.

Overall, Spur’s brand portfolio is clearly working very well. It’s a great example of the power of focus and the value of understanding consumers in one particular region, rather than running off overseas in the hope of finding something new to buy.

WBHO is enjoying growth in earnings (JSE: WBO)

But the share price has told a different story this year

The construction sector provides a great opportunity for the old joke about making a small fortune – after starting out with a large one. Generally speaking, investors have been hurt in this sector, not least of all because there is such limited investment in infrastructure in South Africa. And in cases where companies have gone overseas, results have mostly been awful.

In what feels like an ocean of despair at the moment, with Murray & Roberts (JSE: MUR) now dead and Aveng (JSE: AEG) fighting to turn the corner, WBHO has come out with a positive trading statement. They appear to be growing across basically all their markets, with overall order book levels up by a meaty 23%.

Is this translating into earnings growth? Simply: yes, it is. HEPS from continuing operations increased by between 5% and 15%, while HEPS from total operations was good for growth of between 10% and 20%.

You would never say this from looking at the share price, which was down 27% year-to-date coming into these numbers. Understandably, the market appreciated this trading update and the share price was up over 3% by late afternoon trade.

Nibbles:

  • Director dealings:
    • An associate of the CEO of Acsion (JSE: ACS) bought shares worth R1.2 million.
    • A director of Kumba Iron Ore (JSE: KIO) bought shares worth R85k.
  • The latest at MAS (JSE: MSP) is that the group of institutional shareholders who requested the upcoming extraordinary general meeting has now withdrawn the resolutions related to the appointment of directors. I can only imagine that this is because of the extent of shares that Prime Kapital managed to secure through their offer. The other proposed resolutions will still be voted on though, including the proposed removal of certain existing directors.
  • Assura (JSE: AHR) is fast approaching a level at which I can’t see the company remaining listed, with Primary Health Properties (JSE: PHP) now holding 81.37% in the company and pushing for it to be delisted. If they get to 90%, they can pursue a squeeze-out, but that’s not a prerequisite for a delisting. The takeover has certainly been a success, which I think can largely been attributed to the strong recent numbers from both companies and the fact that a merger gave investors the chance to remain invested in the sector vs. selling out to private equity for cash. In such a case where there’s a bullish view on the sector, share-based offers can be superior to cash.
  • There’s still nothing easy about the relationship between RMB Holdings (JSE: RMH) and Atterbury Properties, the company in which RMB Holdings has a stake that is proving to be really difficult to monetise. RMB Holdings is a value unlock play, but unlocking it requires a complicated key. It’s interesting to note that shareholder activist Albie Cilliers (a good example of a complicated key) is now on the board of Atterbury. The latest announcement is that fellow director Brian Roberts was set to be removed by the controlling shareholders in Atterbury, but that RMB Holdings has the power to appoint him to the board under the shareholder agreement. So, it looks as though Roberts stays on the board, if I understand the announcement correctly. There’s a lot of money at play here and clearly some strong differences of opinion on the board.
  • In happy news for Trellidor (JSE: TRL), the disposal of Taylor Blinds and NMC South Africa has now become unconditional. The company has had some tough times in recent years and is hopefully in a better place now. Time will tell.
  • PPC (JSE: PPC) announced that PPC Zimbabwe has sold vacant land for $30 million. It’s been quite the story with that property, as the Zimbabwean government tried its best to expropriate it over the years until 2010. In a nice surprise for shareholders, this land was only valued at R37 million in the financials for the year ended March 2025. And no, the two currencies aren’t a typo – they really did sell it for $30 million after carrying it at R37 million!
  • South Ocean Holdings (JSE: SOH) released results for the six months to June 2025 that I’ll just give a passing mention here. The electrical manufacturing company saw revenue fall by 10.1% and operating profit collapse from a profit of R68 million to a loss of R31.6 million. The headline loss per share is 15.20 cents and the share price is now just R1.00. Unsurprisingly, there’s no dividend.
  • Wesizwe Platinum (JSE: WEZ) has announced the appointment of three new directors, including a new CEO.
  • Randgold & Exploration Company (JSE: RNG) has flagged a much smaller headline loss per share for the six months to June 2025, but it’s still a loss. They expect to be at between -8.22 cents and -9.38 cents.

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

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

Exchange-Listed Companies

The disposal by Nedbank of its 21.2% stake in Ecobank Transnational Incorporated (ETI) comes as no surprise. The group indicated recently in its interim results that the stake was classified as held for sale but its unhappiness with the asset has been well documented for a number of years. In 2008 Nedbank and Ecobank established a strategic business co-operation relationship. In 2014 Nedbank exercised the option to acquire a 20% stake in ETI for which it paid at the time US$493,4 million (R5,57 billion). Last week Bosquet Investments, the private investment vehicle of managing partner and co-founder of Enko Capital, acquired the stake for $100 million (R1,8 billion). Nedbank says the disposal represents a reset for the Bank’s strategy on the rest of the African continent with a clear focus on the SADC and East Africa regions in businesses Nedbank owns and controls.

African Rainbow Minerals (ARM) is to purchase 25,781,715 shares in Surge Copper at a price of C$0.175 per share for a total consideration of C$4,51 million. The acquired shares increase ARM’s stake from 13,44% to 19.9%. The transaction represents a non-brokered private placement and was undertaken for investment purposes.

African Infrastructure Investment Managers (Old Mutual) through its IDEAS Fund and Motseng Investment have formed a joint venture company Motseng Ideas Infrastructure Group (MIIG). MIIG’s mission is to invest in, develop and operate assets that directly improve the lives of communities and drive inclusive growth. MIIG is a black-owned, black women-led entity.

Dipula Properties has acquired Protea Gardens Mall in Soweto from Pietersburg Property Development for a purchase cash consideration of R487,1 million. In addition, Dipula acquired a further four properties from various vendors for an aggregate R215,6 million. Two of the properties are industrial, one retail and the fourth, which is land, is adjacent to Tower Mall in Jouberton which will allow for future expansion potential.

Through its Isle of Man-based subsidiary, Equites Property Fund has concluded an agreement to dispose of the last-mile logistics facility know as Unit 1, The Hub, situated in Burgess Hill in the UK. Proceeds from the £17,6 million (R422 million) cash disposal will be applied to settle the associated debt. The property is being sold at an initial net yield of c.5% which is in line with its book value as at 28 February 2025.

Deneb Investments has disposed of 9 Warrington Road in Mobeni Durban for R170 million to Siana Property. Deneb will receive an initial cash deposit of R4 million and the balance secured by the issue of a bank guarantee. The asset was considered non-core to its strategy and represents a category 2 transaction, not requiring shareholder approval.

PPC Zimbabwe (PPC) has concluded an agreement to dispose of vacant immovable property situated in Harare, known as the Arlington Estate, to a privately held Zimbabwean company for a cash consideration of US$30 million.

PK Investments increased the maximum cash amount it was offering to shareholders from €110 million to €115 million to be applied to all acceptances of the voluntary bid. At the Bid’s close, shareholders holding 14.38% of MAS accepted the offer with PKI collectively holding 36.32% and 49.4% together with concert parties.

The Competition Appeal Court has approved Vodacom’s acquisition of a 30% stake in Maziv subject to the set of revised conditions proposed by Vodacom, Remgro and Competition Commission. Implementation of the transaction now awaits ICASA’s unconditional approval.

The Competition Tribunal has approved the acquisition, first announced in December 2024, of Barloworld by Newco, a consortium comprising Gulf Falcon, a subsidiary of Saudi Arabia’s Zahid Group and Entsha, a company linked to Barloworld CEO Dominic Sewela. The transaction is still subject to the implementation of certain agreed public interest conditions, including the implementation of a B-BBEE structure after delisting.

Harmony Gold Mining has received approval from the Australian Foreign Investment Review Board to acquire MAC Copper from minority shareholders in a $1,03 billion (R18,4 billion) deal announced in May this year. Harmony received SARB approval earlier this month – shareholders will vote on 29 August 2025.

Peabody Energy has indicated that it intends to terminate the $2,05 billion (R36,9billion) deal with Anglo American announced in November 2024 citing a Material Adverse Change event. The decision follows a fire in Anglo’s steelmaking coal business Moranbah North in March this year which suspended operations. Anglo believes the event does not to constitute a MAC under the sale agreement with Peabody and will initiate an arbitration to seek damages for wrongful termination.

Unlisted Companies

VEA Capital Partners, the investment arm of VEA Group, has announced a strategic investment in Cape-based StraTech. The fintech is a full-stack enterprise fintech infrastructure company delivering payment, reconciliation, and treasury solutions for complex, high-volume industries across Africa. The investment will unlock StraTech’s next phase of growth, enabling the expansion of its core platform into new verticals and regions, accelerating enterprise sales and strategic partnerships across Southern Africa, and further enhancing its suite of embedded compliance and treasury tools.

Alterra Capital Partners has made an undisclosed investment in the Cobra Group, a designer and manufacturer of customised mining support and firefighting vehicles, and critical enabler of operational productivity and workplace safety. The partnership will enable Cobra to expand into new markets and scale its capabilities.

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

Weekly corporate finance activity by SA exchange-listed companies

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

Orion Minerals’ share purchase plan has closed with 158,5 million shares purchased for an aggregate A$1,79 million (R20,6 million). The purchase plan follows the capital raising recently completed by way of a private placement of 289 million shares and an agreement to convert outstanding loan amounts owed via the issue of 233 million shares for an aggregate value of c.A$5,8 million.

In terms of the revised offer to Assura plc shareholders by Primary Health Properties plc (PHP), a further 73,665,754 new PHP shares will be listed this week. The revised offer remains open for acceptances until further notice. As at 20 August 2025, PHP had received acceptances in respect of 2,65 billion shares, representing c.81.37% of the issued share capital of Assura.

A creditor of Murray & Roberts (M&R) has instituted liquidation proceedings against the company, which M&R says it will not oppose, bringing to an end a 120-year legacy for the construction and engineering giant.

Blue Label Telecoms’ name change to Blu Label Unlimited has been accepted and placed on file by CIPC. The company will commence trading under the new name on 3 September 2025.

This week the following companies announced the repurchase of shares:

Investec ltd intends to execute a share purchase and buy-back programme of up to R2,5 billion (£100 million) whereby Investec ltd will purchase Investec plc ordinary share and repurchase Investec ltd ordinary shares. The programme will run until 31 March 2026 subject to market conditions. The Investec ltd shares will be cancelled, and the Investec plc shares will be treated as if they were treasury shares in the consolidated annual financial statements of the Investec Group.

Bytes Technology will undertake a share repurchase programme of up to a maximum aggregate consideration of £25 million. The purpose of the programme is to reduce Bytes’ share capital. This week 118,594 shares were repurchased at an average price per share of £3.85 for an aggregate £151,789.

Glencore plc’s current share buy-back programme plans to acquire shares of an aggregate value of up to US$1 billion. The shares will be repurchased on the LSE, BATS, Chi-X and Aquis exchanges and is expected to be completed in February 2026. This week 9,3 million shares were repurchased at an average price of £2.97 per share for an aggregate £27,6 million.

In May 2025 Tharisa plc announced it would undertake a repurchase programme of up to US$5 million. Shares have been trading at a significant discount, having been negatively impacted by the global commodity pricing environment, geo-political events and market volatility. Over the period 11 to 15 August 2025, the company repurchased 28,603 shares at an average price of R20.48 on the JSE and 299,445 shares at 87.39 pence per share on the LSE.

In May 2025, British American Tobacco plc extended its share buyback programme by a further £200 million, taking the total amount to be repurchased by 31 December 2025 to £1,1 billion. The extended programme is being funded using the net proceeds of the block trade of shares in ITC to institutional investors. This week the company repurchased a further 594,538 shares at an average price of £42.43 per share for an aggregate £25,22 million.

During the period 11 to 15 August 2025, Prosus repurchased a further 2,285,237 Prosus shares for an aggregate €119,7 million and Naspers, a further 108,067 Naspers shares for a total consideration of R996,15 million.

Six companies issued profit warnings this week: South Ocean, Aveng, Northam Platinum, Randgold & Exploration, Curro and Aspen Pharmacare.

During the week one company issued or withdrew a cautionary notice: Hulamin.

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

Ghost Bites (DRDGOLD | Equites Property Fund | Naspers – Prosus | Sabvest)

The Finance Ghost
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Ghost Bites (DRDGOLD | Equites Property Fund | Naspers – Prosus | Sabvest)

The gold price did wonders for DRDGOLD (JSE: DRD)

These numbers were well telegraphed to the market

DRDGOLD already released pretty detailed disclosure around the latest financial year, so the release of full results hasn’t told us much that we didn’t already know.

The TL;DR is that gold production fell by 3% in the year ended June 2025, which is unfortunate timing as the average gold price received was up by 31%. Under those circumstances, you would obviously love to see production running as high as possible.

Cash operating costs were up 8% per kilogram of gold, although they were actually down per tonne of material processed. This tells you that they are getting more efficient at managing throughput, yet it’s also becoming harder to extract the gold. DRDGOLD is shifting towards having higher throughput and lower yield, so you can expect to see this trend continue. It’s fine, provided the cost per kilogram of gold is well managed – something that will rely on technology being used effectively.

Thanks to the high gold prices, operating profit jumped by 69% and operating margin came in at 44.7% vs. 33.4% in the prior period. HEPS also jumped by 69%.

Guidance for FY26 is production of between 140,000 and 150,000 ounces of gold. They produced 155,288 ounces in FY25, so you don’t need to get the calculator out to figure out that this is the wrong direction of travel. They would like to get to over 200,000 ounces, which feels like a long way away from current levels.

Equites Property Fund is selling one of its large UK properties (JSE: EQU)

This is part of a broader strategy to exit the UK market

Equites Property Fund announced the sale of a logistics facility known as Unit 1, The Hub in Burgess Hill in the UK. They are selling it for around R422 million. For whatever reason, the announcement doesn’t disclose who the buyer is.

Importantly, the selling price is a net initial yield of 5.0% and is in line with the book value as at February 2025. They will use the proceeds to settle debt.

The disposal is part of the overall plan to get out of the UK portfolio, which comprised seven assets at the time of making that decision in early 2025.

Here’s something interesting to learn about property in this sector: as this is a 25-year lease (typical of logistics properties), rental reviews only happen every 5 years. The most recent one was in March 2024, leading to an uplift of 69% to the base rental! Even if you work that out over 5 years, it’s still a huge uplift – especially in hard currency.

The deal has already closed and the asset was transferred on 19 August, so there’s no implementation risk.

Prosus reminds the market of the Tencent Plus strategy (JSE: NPN | JSE: PRX)

The shareholder letter after the AGM carries on where the Capital Markets Day left off

If you’re following the Prosus story closely (as I am – mainly because I’m long Prosus), then you’ll know that the recent Capital Markets Day was all about the “Tencent Plus” strategy – a clever narrative from CEO Fabricio Bloisi that talks to how the group excluding Tencent should be seen as a positive contributor rather than a detractor from the story. This speaks directly to growth in the broader eCommerce business interests.

They’ve got a lot of work to do, both across organic initiatives and deal integrations like the recent JustEatTakeaway and Despegar transactions. The exciting thing about JustEatTakeaway is that regulators approved the deal far more quickly than anyone expected, giving them the opportunity to realise those benefits sooner.

When it comes to targets for organic growth, the first quarter of 2026 suggests that Prosus was on target for revenue (which meant 15% growth) and 14% ahead of target for adjusted EBITDA (translating to 54% growth).

My long position at Prosus is based on where they are on the J-curve and how deeply they can embed AI in their business. So far so good, with the share price up 44% year-to-date. I bought the very odd dip at the start of the year, so my position is thankfully up 58%. Goodness knows things don’t always go that way in the market, but it’s lovely when they do.

Sabvest saw a strong increase in NAV per share in the past 12 months (JSE: SBP)

And this is the right metric for the investment holding company

As investment holding companies go, Sabvest is regarded as one of the best ones. The company has a portfolio of two listed and thirteen unlisted companies, which means that the bulk of the portfolio is in assets that you otherwise can’t get exposure to. In theory at least, this helps to minimise the discount to net asset value (NAV) that the fund trades at.

In practice, with the NAV per share at R138.82 and the share price at R94.90, there’s still a huge discount in place. The market just doesn’t show much love to investment holding companies.

In Sabvest’s case, there’s certainly no lack of performance. The NAV per share has achieved a 15-year CAGR (compound annual growth rate) of 18.1% without dividends, or 19.3% with dividends reinvested. The latest period shows that NAV per share grew by 17.8% over the past year.

In case you’re wondering whether these are all just paper gains, Sabvest has declared an interim dividend of 40 cents per share, which is 14.3% higher than in the comparable period. They’ve also increased their allocation to share buybacks.

They have a bullish outlook, with an expectation for growth in the second half of 2025 to be “in line with prior years” – and with the track record that they have, that’s strong guidance to give.

Sabvest’s share price is up roughly 30% in the past 12 months

Nibbles:

  • Director dealings:
    • The founder and CEO of Datatec (JSE: DTC) bought shares in the company worth R5.7 million.
    • A director of South Ocean Holdings (JSE: SOH) has been buying up shares in multiple tranches since April. Why is it only being announced now, I hear you ask? Great question. The total comes to over R630k, so I also wouldn’t describe this as an immaterial trade, nor would I describe this as acceptable disclosure.
    • The CEO of Vunani (JSE: VUN) bought shares worth R6.7k – this may sound insignificant, but he’s executed many such recent trades. The challenge is that liquidity in the stock is limited.
    • A non-executive director of Collins Property Group (JSE: CPP) sold shares worth R1.4k.
  • Those watching the Investec (JSE: INP | JSE: INL) share prices carefully may be interested to know that the company is commencing a share buyback programme of up to R2.5 billion that they expect to run until March 2026.
  • You’ll need sharp eyes to notice the difference, but Blue Label Telecoms (JSE: BLU) will start trading under its new name (Blu Label Unlimited) from 3 September. The JSE code is unchanged, mainly because most of the name is also unchanged.

PODCAST: No Ordinary Wednesday Ep107 | A pivot to lower interest rates in South Africa?

Investec No Ordinary Wednesday
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PODCAST: No Ordinary Wednesday Ep107 | A pivot to lower interest rates in South Africa?

Listen to the podcast here:

Inflation is at 3%. The Reserve Bank wants to lock it there. Interest rates are edging down. But the bigger picture is far from settled:

  • Growth is stuck below 1%
  • US tariffs threaten trade and jobs
  • The rand’s strength rests on fragile global sentiment
  • Consumers are squeezed and government finances remain stretched

In this episode of No Ordinary Wednesday, Jeremy Maggs speaks to Investec Chief Economist Annabel Bishop about the shifting sands of macroeconomic policy, and what it means for business, households and markets.

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.

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Also on Apple Podcasts, Spotify and YouTube:

Ghost Bites (Anglo American | BHP | Deneb | Dipula | Harmony Gold)

The Finance Ghost
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Ghost Bites (Anglo American | BHP | Deneb | Dipula | Harmony Gold)

Anglo American laughs off the sale of the steelmaking coal business to Peabody (JSE: AGL)

This avoids a long and expensive legal fight around the MAC terms

A MAC clause in a transaction is an important thing. It stands for Material Adverse Change and is a critical protection for the buyer, as it is effectively an escape clause if something goes wrong with the target asset during the time between the agreement and implementation of the deal. It’s rare to see it invoked in practice, but it does happen.

A perfect example is Anglo American’s attempted sale of its steelmaking coal business in Australia, which Peabody Energy agreed to buy in late 2024. An underground fire at the mine in March 2025 spooked Peabody and they invoked the MAC clause, arguing that this event gave them the ability to walk away from the deal. Based on the lack of damage to the mine and all the progress made in restarting the mine, Anglo American argued that this isn’t in fact a MAC. An AC perhaps, but not a MAC.

Sadly the arguments over the “M” (Material) can become really burdensome, particularly in vague legal agreements. Remember, the more vague the definition of a MAC, the more wriggle room the buyer of the asset has.

I suspect that the state of the coal market this year is also part of the decision. If Peabody really wanted the asset, they would’ve surely negotiated with Anglo and gone ahead with a deal. Instead, it’s a convenient escape clause that allows Peabody to be more cautious with its capital.

Rather than becoming embroiled in a long and expensive legal battle in which only the lawyers are the ultimate winners, Anglo American is giving up on the deal and focusing on the safe restart of the mine and the performance of the broader steelmaking coal portfolio. Having said that, they will be initiating an arbitration process to seek damages for wrongful termination, so that could get pretty interesting.

Anglo claims that they have received unsolicited inbound interest for the asset in recent months, which suggests that an alternative sales process could be on the table soon. Of course, the price is what really counts, with the coal market in a rough place this year and unlikely to support a strong price.

BHP’s headline earnings dipped in 2025 and remain well off 2023 levels (JSE: BHG)

If you want consistent growth, the mining industry isn’t for you

BHP’s share price is up 4% in the past 12 months, which is probably a fair reflection of the mixed bag that the commodities sector has been in the past year. This is the benefit of buying one of the diversified mining houses as opposed to one of the specialists that can have great years and awful years. The diversified names tend to have a smoother experience.

This doesn’t mean that earnings are smooth, though. In the year ended June 2025, HEPS fell by 6.9% (reported in USD). This puts HEPS at 182.4 US cents, which is way off the 2023 levels of 256.1 US cents. Even in the diversified names, you’ll see the cyclicality in the sector coming through.

I quite enjoyed this waterfall chart in the earnings presentation, which shows the split between “external” factors (like commodity prices and forex) and “controllable” factors (like production and operating costs):

The EBITDA margins vary substantially across the different commodities. For example, iron ore (with record production) was the star performer in this period, with EBITDA margin of 63%. Copper (another record) wasn’t far behind at 59%. Steelmaking coal was then some way off at 17% and energy coal firmly brought up the rear at 10%.

Here’s another great chart from the presentation that I think is helpful in understanding how the capital cycles work in mining, showing how the levels of debt change over time based on the extent of capex plans vs. the earnings in the business:

Aside from the obvious focus on copper, what BHP would really love to see is an uptick in global activity that would support higher iron ore prices. BHP is the world’s lowest-cost major iron ore producer, so they can literally print money when things go their way.

Deneb remains committed to selling properties (JSE: DNB)

Mobeni Industrial Park is on its way out – hopefully

Unless there is an exceptionally good reason for doing so, operating companies shouldn’t own properties. This is because property doesn’t have the same return profile (or risk) as commercial operations, so it’s better to separate the two and allow property investment companies to hold property and lease it to companies.

That’s the theory, anyway. There are many examples on the JSE of non-property companies holding large property portfolios, not all of which are for financially sound reasons.

The broader Hosken Consolidated Investments (JSE: HCI) group has been offloading property recently, which is good to see. Deneb is part of that, with a recent attempt to sell 195 Leicester Road in Durban in a deal that unfortunately fell through. Thankfully, they aren’t giving up.

The latest attempted sale is for Mobeni Industrial Park for R170 million, which makes it much bigger than the 195 Leicester Road deal which was only R48.5 million. I guess if only one of the two goes through, the bigger one is better!

Mobeni Industrial Park was valued at R170 million as at March 2025 and generated profit after tax of R11.5 million for that financial year. That’s a yield of just 6.8%, which shows you exactly why Deneb is much better off having R170 million on the corporate balance sheet and ready for investment in its own operations.

This is a Category 2 transaction, so shareholders won’t be asked to vote on it. Now we wait and see if the money actually materialises and the buyer completes the sale!

Dipula is buying Protea Gardens Mall in Soweto (JSE: DIB)

And a few other properties as well

There aren’t many pockets of growth in South Africa at the moment, but one of them is in township-adjacent and commuter-focused retail properties. Dipula Properties knows this, which is why they are happy to spend R478.1 million buying Protea Gardens Mall in Soweto.

Importantly, the mall boasts 70% occupancy by national tenants (i.e. large retail chains), so that’s a strong income underpin.

Instead of just giving us the latest financial performance of the mall, the announcement includes a forecast for the 9 months to August 2026 and then the 12 months to August 2027, as they assume that it will transfer during November 2025. This is frustrating disclosure.

Given the seasonality inherent in retail, I can’t see much use for the 9 month forecast. Using the 2027 12-month forecast, net property income is estimated to be R56.2 million. If we discount that for two years at 10% per year, that’s roughly R45.5 million in 2025 terms. This would be an acquisition yield of 9.5%, which feels a bit expensive to me. By the time you allow for debt, it’s likely that the distributable income of the mall will be below the dividend yield that Dipula’s shares are trading at (currently 8.7%).

Of course, if they actually disclosed the current level of net property income, I wouldn’t have to guess.

Dipula has hinted in its announcement that they may need to issue new shares to help fund the deal, although nothing is finalised at this stage. That’s perhaps something for retail shareholders to keep in mind, as such capital raising activity is usually in the form of an accelerated bookbuild that focuses only on institutional investors. Perhaps the company will surprise us here and give everyone a chance. Just to be clear on this – there’s no guarantee that any issue of shares for cash will take place.

But that’s not all folks – Dipula has also concluded a further R215.6 million in acquisitions that get a casual mention near the bottom of the announcement. The biggest individual one is Abland DC for R134.4 million, accompanied by the acquisition of Airborne Industrial Park for R63 million and marking a significant investment in logistics property around the airport in Joburg. They’ve also announced the acquisition of the Woolworths Gezina building for R16.2 million, along with land adjacent to the Tower Mall in Jouberton for R2 million.

Dipula has clearly been very busy. As the fund’s market cap is over R5 billion, the size of these acquisitions means that shareholder approval won’t be needed for any of them.

Harmony Gold can finalise the Mac Copper deal (JSE: HAR)

Harmony Cold? Harmony Gopper? Perhaps a better name is needed

Harmony Gold has ambitions to grow beyond what the name suggests. The allure of copper is so strong at the moment than even gold companies are keen to get in on the action, with Harmony acquiring MAC Copper in Australia in a deal that was announced back in May. The relevant update is that the Australian Foreign Investment Review Board (FIRB) has given the green light for the deal.

I can only assume that one of the conditions was to let them win a game of rugby. The timing is too suspicious.

There are a few remaining conditions to be met, not least of all shareholder approval 29 August.

Nibbles:

  • Director dealings:
    • After suffering a massive sell-off, the Bytes Technology (JSE: BYI) share price has recovered by 11% over the past 30 days and can now boast significant insider buying by various directors as part of the bullish thesis. The on-market purchases come to roughly R6.6 million in total.
    • A non-executive director of Primary Health Properties (JSE: PHP) bought shares worth R3.6 million.
    • An associate of the CEO of Acsion (JSE: ACS) bought shares worth R604k.
    • Des de Beer has bought R454k worth of shares in Lighthouse (JSE: LTE).
    • A director of Orion Minerals (JSE: ORN) participated in the company’s Share Purchase Plan to the value of A$6k (almost R70k).
    • The CEO of Vunani (JSE: VUN) bought shares worth R11.5k.
  • The chairman of Assura (JSE: AHR), Ed Smith, has notified the board that he is resigning as a director. As Assura might remain listed depending on the level of acceptances achieved in the Primary Health Properties (JSE: PHP) offer, the company has appointed senior non-executive director Jonathan Davies to take his place.
  • CAFCA (JSE: CAC) has almost zero liquidity in the stock. The cable manufacturing company operates in Zimbabwe and saw a 14% drop in sales volumes year-on-year. It looks like the mining sector was the culprit, with the construction and manufacturing sectors achieving growth to offset some of that pain. With three quarters out of the way, revenue is down 5% year-to-date and margins have also fallen.

Note: Ghost Bites is my journal of each day’s news on SENS. It reflects my own opinions and analysis and should only be one part of your research process. Nothing you read here is financial advice. E&OE. Disclaimer.

Ghost Bites (Absa | Aveng | CA Sales | MTN | Northam Platinum | Orion Minerals | Thungela)

The Finance Ghost
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Ghost Bites (Absa | Aveng | CA Sales | MTN | Northam Platinum | Orion Minerals | Thungela)

A much better credit loss ratio drove higher earnings at Absa (JSE: ABG)

This is how modest income growth led to 16.5% growth in HEPS

Absa’s results for the six months to June 2025 offer a fascinating way to learn about the drivers of banking earnings. The overall story looks great for investors, with the dividend up 14.6% thanks to a 16.5% jump in HEPS. Return on Equity – a key driver of bank valuations – increased from 14.0% to 14.5%.

And yet, net interest income (the core source of income for banks) increased by just 3%. What happened here?

Firstly, you need to understand that Absa finds itself in a situation where the decline in interest rates hasn’t driven a substantial increase in economic activity. Total loans and advances increased by 8%, but net interest margin contracted from 4.69% to 4.58%. That was enough to blunt the growth in net interest income to just 3%, as mentioned.

Then, you need to understand that although net interest income is the biggest source of income (R36.3 billion), they also have non-interest income at R20.2 billion. Thankfully, that was up 10% thanks to juicy underlying numbers like a 36% increase in net trading income. As non-interest income is far less capital hungry than net interest income, growth in this area is great news for return on equity.

The next critical point is that net interest income is measured before credit provisions. Absa’s credit loss ratio has improved sharply from 1.23% to 1.00%, which means the impairments charge in this period was 14% lower than in the prior year.

What does this mean in practice? Well, pre-provision income (including all sources of income) was up just 5.2%, whereas operating profit (after impairments) was up 8.6%. When you compare this to operating expenses growth of 6%, it shows you that the much-improved credit loss ratio helped Absa get on the right side of margin growth.

This tells us that although shareholders have something to smile about here, the reality is that Absa’s numbers were boosted by an increase in the credit loss ratio that won’t happen every year. Once the ratio is back within target range, impairments tend to move by a similar percentage to the overall book. Absa is less of a growth story right now and more of a recovery story, which is why the share price is actually flat year-to-date.

Another way to look at this is to take the segmental earnings, where there are wild swings in headline earnings that reflect how difficult things are in some of the underlying businesses. Focusing on the client-facing segments, Personal and Private Banking was up 23%, Business Banking fell 12%, Absa Regional Operations (rest of Africa) grew by a lovely 35% and Corporate and Investment Banking was up 10%. The rest of Africa did the heavy lifting in this period.

Aveng may need the Avengers at this rate (JSE: AEG)

And I’m talking about the superheroes, not the Covid-era shareholders they had

The pandemic delivered some pretty incredible cultural moments in the market, not least of all the self-styled “Avengers” on X (then Twitter) who were punting at Aveng. This was in the pre-share consolidation days, when Aveng was trading at literally a few cents a share – a genuine penny stock.

Sadly, after an 18.6% drop on Monday to take the year-to-date performance to a drop of 62%, the Aveng share price seems to miss its penny stock days and wants to get back down there as quickly as possible. It is now at R4.80 per share, way off the near-R30 levels it traded at after the consolidation.

This is unfortunately what happens when you swing from HEPS of R3.64 to a headline loss per share of -R7.44 for the year ended June, driven by huge losses in major projects like J108 and Kidston. This is precisely why I avoid the construction industry completely: just one or two projects need to go wrong and earnings get obliterated.

Silver linings? Well, there was still a free cash inflow of R257 million, so there’s that. The net cash position actually improved from R2.1 billion to R2.5 billion. They’ve also come into the new financial year with higher work in hand of R37.5 billion (up slightly from R37.2 billion).

In case you’re wondering, it’s the Australian Infrastructure business that is breaking the income statement. I wish someone had the time to do the research on just how many South African listed companies have been given an Ellis Park-level drubbing by the Australian market. For whatever reason, the business environment there is even more frightening than the spiders.

The other two major segments (Built Environs and Mining) both reported improved operating earnings. Before you get too excited, there’s an “Aveng Legacy” book of problematic non-core assets that contributed a significant operating loss.

Aveng’s corporate strategy is to split the group in two, which means the sale of Moolmans (the local Mining segment). They have made “significant progress with a preferred party” on that sale. This would leave them with the businesses in Australasia and Southeast Asia, which is like being left with your least favourite family member on a three-day hiking trip with no access to cellphones. You may survive, but it won’t be fun.

CA Sales flags high-teens growth (JSE: CAA)

The impressive growth story continues

Although there are some worries in the market around the risks to the Botswana economy from the collapse in the diamond market and what this might mean for the likes of CA Sales Holdings with significant exposure to that country, there’s no indication at this stage that growth is suffering. Quite the opposite, in fact, with the company releasing an encouraging trading statement.

For the six months to June 2025, CA Sales expects HEPS to increase by between 14% and 19%. As is the norm for the group, the growth is coming from a mix of organic sources (i.e. existing businesses they already owned) and the integration of new businesses that they’ve acquired (bolt-on acquisitions are core to the growth plan).

Detailed results are due for release on 1 September.

MTN released incredible overall numbers – yet the share price closed over 8% lower (JSE: MTN)

The likely reason for this is very close to home

MTN saw a monumental improvement in its overall business in the six months to June 2025. Driven by the results in the rest of Africa, group service revenue was up 23.2% as reported, or 22.4% in constant currency – and it’s lovely to see such a small difference between those numbers, as currencies in Africa stabilised recently thanks to dollar weakness and other factors.

When it comes to EBITDA, the jump was 60.6% as reported or 42.3% in constant currency. The gap is much larger there, but both those growth rates are fantastic. EBITDA margin was 42.7% as reported or 44.2% in constant currency.

The growth rate in HEPS was a bit daft really, up 352%. It’s easier to understand this as a swing from negative to positive, with a headline loss per share of -256 cents in the prior period and positive HEPS of 645 cents in this period.

As the icing on the cake, MTN upgraded its medium-term guidance to reflect group service revenue growth of “at least high-teens” vs. the previous level that reflected mid-teens.

It’s almost easy to forget a time when MTN was focusing on its balance sheet metrics rather than revenue growth, with huge challenges in getting the cash from the African subsidiaries to the mothership. Thankfully, those problems are largely behind them, with Holdco net debt to EBITDA at 1.5x (stable vs. 1.4x as at December 2024) and group net debt to EBITDA at just 0.5x. Non-rand debt at Holdco level was 17%, well below their upper limit of 40%.

Free cash flow conversion remains a challenge in this sector, as the large companies need to invest a fortune in their networks. Although reported EBITDA was a meaty R46.6 billion, free cash flow was just R6.7 billion. Aside from interest and tax payments, R22 billion in capex is the major reason for that gap.

In South Africa, service revenue growth was just 2.3%. It won’t surprise you that voice was down 2.2%, while data was up 4.3%. Despite a substantial drop in cost of sales, the South African business saw EBITDA fall by 3.6%. This could be why the market reacted negatively to the news, as South Africa is meant to be the steady anchor for the group. There’s also surely an element of profit-taking in the market here, as MTN has been on an incredible run and investors often get jittery in the search for a reason to exit.

In a separate announcement, MTN noted a restructuring of its group into three platforms: Connectivity, Fintech and Digital Infrastructure. There is plenty of reshuffling of chairs at Exco level to make this happen, including a new CEO in South Africa.

Here’s what Monday’s profit-taking exercise looks like on the chart:

For traders, this chart needs to come down and test moving averages that haven’t had a chance yet to catch up to the recent rally. I suspect that MTN is therefore firmly on the watchlist for punters!

Northam Platinum’s recent numbers reflect how rough things got in the PGM space (JSE: NPH)

The rally in share prices in the sector this year has been firmly forward-looking

Although the PGM sector has dished up some massive share price returns in 2025, you certainly won’t find the reason for this in the earnings over the past year or so. Across the board, earnings in the sector have been rough, with everyone looking ahead to hopefully better times thanks to higher PGM basket prices.

Northam Platinum is another perfect example of this, with a 6.9% increase in sales revenue for the year ended June 2025 and an 8.1% increase in the cash cost per ounce. The revenue increase thus wasn’t enough to offset mining inflation, leading to a 25.5% decrease in operating profit.

By the time we reach HEPS, Northam Platinum expects a drop of between 9.4% and 19.4%.

If we dig a bit deeper, the Eland mine is clearly the culprit. The cash cost per ounce jumped by 17.2%. To make matters worse, it was already the least efficient mine in the group, so the cash cost per 4E ounce is now up at R40,562. Compare this to Zondereinde (R26,758) and especially Booysendal (R18,502) and you can see the problem. For reference, the revenue per refined 4E ounce was R32,690, so Eland must have been heavily loss making in this period.

Importantly, Northam expects costs at Eland to normalise over the next two years, with the performance in this period attributed to safety interventions that limited production (even though total production was still up). Either way, the numbers are disappointing for shareholders.

For all the exuberance in the sector, Northam’s outlook statement includes plenty of sobering commentary and a reminder of how cyclical this market is. The share price is up 122% year-to-date, with the market piling into the sector regardless of the risks.

Orion Minerals raised roughly half of the planned amount under the Share Purchase Plan (JSE: ORN)

Under the circumstances, that’s pretty good

Sadly, when companies need to raise equity capital, the default setting is to work through brokers and advisors who bring large institutional investors to the table. This leads to a quick capital raising process that achieves the objectives of the company, but that also tends to shut out retail investors who aren’t given the opportunity to participate.

Full credit goes to Orion Minerals here: they are one of the few companies that give retail investors a fair chance to get involved. The share price has had a rough time this year (down 28% year-to-date), so I was curious to see how the latest Share Purchase Plan would turn out in terms of investor appetite. This was especially the case after the recent Unlock the Stock event with the company, in which retail investors peppered the management team with questions. Getting a wide range of investors onto the shareholder register can be a double-edged sword!

It looks like there’s still strong support from investors, with Orion managing to raise R22.2 million under this initiative. They initially targeted up to R46 million, but that was always going to be a long shot. Encouragingly, they raised R20.6 million from South African investors, so the overwhelming majority of the support came from investors who are close to where the assets are: right here in SA.

Thungela’s profits plummeted, but they’ve maintained the dividend (JSE: TGA)

In fact, the payout ratio for the period is more than 100%!

Things haven’t been pretty in the coal market. Thungela’s revenue fell by 12% for the six months to June 2024, which was enough to drive a rather hideous 80% drop in HEPS. Welcome to cyclical mining companies, particularly those with single-commodity exposure rather than a diversified basket.

Despite HEPS dropping from 952 to 192 cents, Thungela has maintained the dividend at 200 cents per share. This means that they are now paying out more than they earned for this interim period, which is an unusual situation. They would sooner sell their first-born children at Thungela than cut the dividend.

Tempting as it may be to point to the 21% drop in capital expenditure as the reason for the maintenance of the dividend, the reality is that adjusted operating free cash flow fell by 48%. Sure, the capital expenditure decrease helped blunt some of the impact of lower earnings, but there’s still a huge year-on-year drop here that isn’t reflected in the dividend.

The outlook for the second half of the year isn’t exactly bullish, with Thungela referencing risks to the coal price from global economic growth. Much will depend on the restocking activities in the Northern Hemisphere, along with levels of global production and how the supply – demand dynamic plays out.

Not only has Thungela maintained the dividend, but they’ve also approved another share buyback programme. With the share price down 35% year-to-date, that’s probably a sensible allocation of capital.

Nibbles:

  • Director dealings:
    • A prescribed officer of Standard Bank (JSE: SBK) sold shares worth R5.1 million.
    • Des de Beer is back on the bid for Lighthouse (JSE: LTE) shares, picking up another R2.14 million in the company.
    • The CEO of Crookes Brothers (JSE: CKS) sold share awards worth R191k (not just the taxable portion from what I can see).
  • With Hulamin (JSE: HMN) having previously flagged that the poor performance of the extrusions business has led to a strategic review, they’ve now released a cautionary announcement noting that they have entered into negotiations for a potential disposal of that asset. No other details are available yet.
  • Although it is very likely that a deal gets approval from the Competition Tribunal when it has been recommended by the Competition Commission, it’s not a guarantee. It’s therefore an important milestone for Barloworld (JSE: BAW) that the consortium’s offer to shareholders has now been given the green light by the Tribunal. The parties are working towards getting the remainder of the conditions precedent ticked off the list.
  • Omnia (JSE: OMN) announced that its credit rating has been affirmed by GCR Ratings. Although a credit rating isn’t an indication of equity returns, an affirmed rating does mean that the cost of borrowing should be steady (assuming constant rates in the market as well), which helps the company plan for growth and ultimately benefits shareholders as well.
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