Almost a decade after the disaster, agreement has been reached
BHP and Vale (the co-shareholders in Samarco) and Brazilian regulators have locked in a framework agreement that remains subject to approval by the Brazilian Supreme Court. Unless something goes badly wrong in that process, everyone now has certainty over what will happen.
The total settlement is worth $31.7 billion, of which $7.9 billion has already been spent on remediation and compensation since 2016. $18 billion will be payable over 20 years in the form of instalments and a further $5.8 billion is attributed to the estimated financial value of various activities that Samarco has an obligation to perform.
Remember, BHP is paying up for half of this settlement. Based on the extent of payments to-date and the time value of money, the existing provision of $6.5 billion is sufficient for this agreement.
BHP always reminds the market that this settlement doesn’t resolve legal action elsewhere, specifically in Australia, the UK and the Netherlands.
Dis-Chem gives a masterclass in margins (JSE: DCP)
This is what you want an income statement to look like
The shape of an income statement tells you so much about a company. Ideally, you want to see margins heading in the right direction, something that is by no means guaranteed even when revenue growth is strong. No such issue at Dis-Chem thankfully, where revenue increased 9.6% (an impressive number even viewed in isolation) and operating profit was up 17.5%.
The expansion in margin was thanks to savings in payroll costs after the group implemented a different staffing framework in the stores. The beauty of retail is that if you can figure out a way to do something better, you can then roll it out across all the stores. Like-for-like retail employee costs increased by only 0.7%!
Going back to revenue growth for a moment, retail revenue was up 7.1% and comparable store growth was 4.8%. Wholesale revenue was up 10.1%, with the acceleration vs. retail revenue driven by sales to independent pharmacies up 30.3% and The Local Choice franchises up 21.8%.
Thanks to better gross margins, total income was up 10.4% and expenses were up 9%, leading to the operating margin expansion. If you’re wondering how expenses grew by 9% when staff costs were so flat, the answer lies in the investment in new stores.
Speaking of investment, net finance costs increased by 19.2%, mainly due to the loan facility to fund the Longmeadow warehouse property. Capital expenditure in this period was R330 million, of which R194 million was expansionary expenditure.
With the dividend up 16.1% and so much investment in the core business, this remains one of the most lucrative retail models in South Africa. Things have slowed down in recent weeks though, with sales between 1 September and 22 October only up by 5.6% vs. the comparable period. This might be why the share price took a breather on the day, down 3.7% and taking the year-to-date increase to 17.3%.
Finbond’s cautionary announcement fizzles out (JSE: FGL)
Whatever the potential deal was, it’s not happening right now
Cautionary announcements are exactly that: a cautionary tale for shareholders in which something may or may not happen that could significantly impact the share price. I see it far too often on the market that punters assume that a cautionary announcement will lead to a deal. In reality, many such announcements end up being a non-event.
This is the case at Finbond, where the cautionary has now been withdrawn. They were in discussions with shareholders regarding a potential corporate action, which I’m speculating was a possible offer and take-private of the group. For whatever reason, there’s no deal on the table right now.
A bloody nose in court for FirstRand (JSE: FSR)
This could have serious implications for the motor finance industry
FirstRand is exposed to a review by the UK’s Financial Conduct Authority of the use of discretionary commission arrangements and sales by lenders in the UK motor finance market. The debate here is on whether the commission payments to dealers by financiers meet all requirements and are fair to customers.
As legal reviews are uncertain in nature and can lead to substantial penalties if they go against the company, FirstRand raised a provision of R3 billion for the year ended June 2024.
There’s been a significant development in legal proceedings related to claims brought by claimant law firms. Earlier rulings in lower courts went the way of FirstRand, but it’s all gone wrong in the UK Court of Appeal where a judge found that commission disclosures were inadequate. Even worse, the judge has found that motor dealers have a fiduciary duty of loyalty to customers, which is far more onerous than just treating customers fairly.
Given the potential impact of this ruling on the entire consumer finance sector in the UK, FirstRand is seeking permission to appeal to the UK Supreme Court.
Logically, I can’t see how a fiduciary duty can be imposed on motor dealers. It would turn the industry on its head and probably lead to far greater profit margins needing to be made by dealers to make up for it, so used cars become less affordable for consumers as a result. Stranger things have happened, so this court ruling must’ve created some nervous faces in many boardrooms.
A fire at Mondi’s Stambolijski paper mill has led to permanent closure (JSE: MNP)
Mondi has been consolidating its European operations anyway
In late September, a fire broke out at Mondi’s Stambolijski mill in Bulgaria. It caused such extensive damage that Mondi doesn’t see a business case for repairing the mill, as the prospects for the business just don’t justify the spend.
This affects around 300 employees, so I’m sure it’s not a decision that was taken lightly. Mondi will incur net closure costs of €100 million, so it gives you an idea of how weak the future looks for the mill when you consider that closure is the better route.
A positive tax development for Sibanye-Stillwater (JSE: SSW)
After so much bad luck, here’s something positive
Sibanye sounds thrilled about the changes to Section 45X of the Inflation Reduction Act in the US, with the hope being that they will have a significant positive impact on the group’s platinum operations in Montana.
The legislation was introduced back in 2022, but the wording of the 10% Advance Manufacturing Production credit excluded extraction costs of critical minerals and thus had very little positive impact on Sibanye’s business. After much lobbying, this has now been amended and the extraction costs will be eligible for the credit.
Sibanye doesn’t give an indication of the quantum of the benefit at this stage.
A blow to Sun International’s acquisition ambitions (JSE: SUI)
The Competition Commission doesn’t like the Peermont deal
Sun International is hoping to acquire Peermont in a deal that would bring the flagship Emperors Palace asset into its stable. The market always knew that it would be a tricky one for competition authorities, expecting an approval with disposal conditions rather than a clean approval.
It’s not even as good as that unfortunately, with the Competition Commission recommending to the Competition Tribunal that the deal be prohibited in its entirety.
Sun International and Peermont will receive copies of the recommendation and the Tribunal will use it in its preliminary deliberations. This is where the competition lawyers will earn their fees one way or another. Although it’s not impossible that the Tribunal goes ahead and approves the deal despite the recommendation by the Competition Commission, the risk of this deal failing has now gone through the roof.
The Foschini Group is clearly feeling confident right now (JSE: TFG)
They have announced the acquisition of another UK retailer
The oddly-named retailer “White Stuff” is being acquired by The Foschini Group’s UK subsidiary, TFG London. They are buying the entire thing in one shot, giving them ownership of a clothing and accessories retailer with 113 stores and 46 concessions in the UK, along with 6 stores and 25 concessions in Europe. Online sales are a major part of the story, contributing 43% of total sales.
In the year ended April 2024, the business achieved revenue of £154.8m and EBITDA of £8.6m. That’s only an EBITDA margin of 5.6%, which doesn’t sound terribly impressive to me. Perhaps they are looking at synergies with the existing UK business, although the announcement doesn’t go into any detail on this.
As the deal is too small to trigger a detailed announcement, we also don’t know what TFG is paying for this retailer. Hopefully, they’ve learnt from the many mistakes made by local retailers on the international stage and paid a reasonable price with deferred payment structures.
Nibbles:
Director dealings:
The ex-CEO of Italtile (JSE: ITE) sold shares worth R4.2 million.
A director of CMH (JSE: CMH) has once again sold shares in the company, this time to the value of R416k.
A director of a subsidiary of AVI (JSE: AVI) received share awards and sold the whole lot worth R324k.
The CFO of Spear REIT (JSE: SEA) bought shares worth R150k.
The company secretary of Famous Brands (JSE: FBR) sold shares worth R50.4k.
In a clear sign of succession planning, Octodec (JSE: OCT) announced that Riaan Erasmus will be joining as not just the CFO, but also as the deputy CEO of the property group. One of his responsibilities will be assessing the possible internalisation of the management company.
Southern Palladium (JSE: SDL) has released its quarterly activities report for the three months ended 30 September 2024. The focus in this quarter has been to make progress on the Pre-Feasibility Study, scheduled for release in the 4th quarter. The group is on track for a big end to the year!
Unlock the Stock is a platform designed to let retail investors experience life as a sell-side analyst. Corporate management teams give a presentation and then we open the floor to an interactive Q&A session, facilitated by the hosts.
In the 44th edition of Unlock the Stock, Pan African Resources returned to the platform to talk about the performance and prospects in an environment of favourable gold prices . The Finance Ghost co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.
Getting warm bodies in cinema seats is no easy feat in the age of streaming (just ask the likes of Ster-Kinekor or NuMetro). Yet despite the rising challenge, Marvel managed to create something in 2008 that drew audiences back to cinemas in droves – and they managed to keep that drive going for just over a decade.
You either are a superhero movie person, or you just aren’t. Depending on which one of the two camps you fall into, the period between 2008 and 2019 either felt like a never-ending assault of comic book plotlines, or the best time of your life. For your resident cinephile, the golden age of Marvel movies was less about the content of the films (although I’ll readily admit that I liked that too) and more about my fascination with the big machine that was churning these box office hits out at what felt like an unstoppable pace.
Pay close attention to the story that I’m about to tell you, because I think this might be the last time in our lifetimes (or ever) that we see this kind of success in the cinema game – and it’s worth knowing how it happened.
Born to be rivals
First off, we need a basic understanding of the two big players in the superhero movie space. In the red corner (with the red logo, of course), you have Marvel. In the blue corner, you’ve got DC.
Both of these businesses started with comic books in the 1930s. DC was the first mover, kicking off in 1934. In 1938, they created their most famous character: Superman, believed by many to be the original superhero. The success of the Superman storyline prompted DC to create more superhero plots, and characters like Batman, Wonder Woman, Aquaman, the Teen Titans and The Flash soon joined their ranks.
DC’s success didn’t go unnoticed, and soon a competitor appeared. Marvel published their first comic book in 1939, and soon introduced a steady stream of characters including Captain America, Spider-Man, Iron Man, the X-Men and the Fantastic Four. The legendary Stan Lee took over the reins at Marvel in 1973, and things went well for a while – but the good times wouldn’t last.
The rise of television led to a slump in the comic book industry, and Marvel was caught unprepared. They filed for bankruptcy in the 1990s and quickly changed tactics, experimenting with playing cards and launching Marvel Studios as a way to get their ideas off pages and onto screens. By the late 90s, Marvel Studios had successfully pulled Marvel out of the ditch. Little did anyone know that this hail-Mary gamble would go on to become their greatest win yet.
In the red corner
To distinguish their big screen ventures from their comic books, Marvel created what’s known as the Marvel Cinematic Universe, or MCU. The concept behind this name was to hint at the idea that all of their films would exist within the same shared “universe”. Much like the original Marvel Universe in comic books, the MCU would be established by crossing over common plot elements, settings, cast, and characters. Every film would tell its own story, but elements of that story would ripple into other films in the same universe.
It sounds like a fairly simple idea, but before the release of the first Marvel film in 2008, this had never successfully been achieved on screen, and for good reason. Beyond logistics like studio buy-in and the ability to lock in key actors for the (very, very) long run, the creativity needed to see the big overarching story and the patience required to tell it in pieces through individual films is rarely found.
How does that differ from something like a franchise? Take Rocky for instance, which is a standalone film with sequels (and prequels) that all feature the same characters (usually played by the same actors). So why is Rocky a franchise, not a universe?
I think Patrick Shanley of The Hollywood Reporter said it really well: “The key differences between a regular franchise, such as The Fast and the Furious or Pitch Perfect films, and a shared universe is the amount of planning and interweaving that goes into each individual film. It’s all too easy to make a film that exists solely for the purpose of setting up future instalments and expanding a world, rather than a film that stands on its own merits while deftly hinting or winking at its place in the larger mythos. In that, the MCU has flourished.”
For Marvel, the stars aligned at exactly the right time. They had a rich IP trove of established characters and stories to draw from, plenty of budget to play with and an impressive list of directors and actors locked in. All the ingredients to create something very interesting were right there.
Let’s talk about phases
Once they established their Universe concept, Marvel started talking about phases. Traditionally, comic books would focus on telling one character’s story per book, but every once in a while they would do a “mega event” limited series, which would bring a bunch of characters together into one book to fight a common enemy. Marvel Studios president and chief producer Kevin Feige envisioned that each MCU phase would work the same way: a collection of movies about singular heroes, culminating with an Avengers film (which brings the whole team of heroes together).
MCU Phase 1 was launched in 2008, when Robert Downey Jr. first stepped out as Tony Stark/Iron Man, and concluded with the MCU’s first ensemble film, The Avengers, in 2012. In the five years between Iron Man and The Avengers, Marvel released Hulk, Thor, an Iron Man sequel and Captain America. Each film helped to set up the backstory and motivations of its titular hero, which meant that audiences who had been following along felt a deeper connection to the characters by the time they were thrown together into a big, showy ensemble film.
Phase 1 was well-received by audiences and critics, and superhero fever started to heat up. For a budget of $1 billion total across the 6 films in Phase 1, the MCU raked in $3.8 billion at the box office alone (so not taking into account the profits made on merchandise and streaming). The recipe was working, and Marvel looked unstoppable.
Phase 2 kicked off in 2013 and wrapped up in 2015. Marvel repeated their formula: five individual hero movies, culminating in Avengers: Age of Ultron. This time, they spent $1.79 billion across all the films to bring home $5.27 billion at the box office.
Phase 3, which in my opinion was the peak of the MCU, was its most ambitious endeavour yet. Marvel managed to churn out 11 films between 2016 and 2019: 9 individual character films, and a two-part mega ensemble in the form of Avengers: Infinity War and Avengers: Endgame. Against a budget of $2.4 billion for the whole phase, the MCU delivered an astronomical $13.5 billion at the box office, as well as the highest-grossing film of all time (the grand finale, Endgame)*.
Like all good things, it couldn’t last forever. Phase 4 and onwards shifted the focus onto a combination of films and series for streaming, which led to a mixed bunch of hits and misses. The same audiences who managed to stay mostly hooked through the 23 films of Phase 1-3 were starting to show a bit of superhero fatigue, and with Covid-19 rearing its head and casting disarray over the Phase 4 release plan, it makes sense that things simmered down at this point.
In the blue corner
Behind the blue logo we find DC Comics, providing another excellent example of first mover disadvantage. While we’ve already established that DC started the comic book game, it’s clear that once their competitors got a foothold, they couldn’t quite keep up.
Consider this: DC has the same treasure trove of IP that Marvel does. They even play in the same genre, which means they had the right content at the right time when superhero fever took hold. They had already seen successes with superhero films – just think of the various iterations of Batman and Superman that we’ve seen on screen in the last few decades. So why did they come second in the superhero race?
First of all, let me assure you that DC did come second. After officially launching the DCEU (DC Extended Universe) with Man of Steel in 2013, they released another 15 films, capping the collection with Aquaman 2 in 2023. For a total budget of $2.65 billion across the 16 films, they made a box office return of $7 billion. If you read carefully, that means they made $6.5 billion less across their collection of films than the MCU did for Phase 3 alone. To add insult to injury, 8 out of the 16 films failed to break even at the box office, indicating a 50% miss rate for the DCEU.
Where did DC stumble?
In my opinion (and remember, it is an opinion column), the issue with DC has always been that they lacked continuity. How many Superman actors can you name off the top of your head? Doesn’t it feel like there’s a new Batman, played by a new face, in theatres every five years or so? Every time DC brings in a new actor to play a familiar character like Batman or the Joker, they essentially reset the entire franchise and retell the story. Given their history, it was probably always going to be a challenge to unlearn the pattern and build a universe instead of a franchise.
Continuity plagued them at every step of the journey, from storytelling to talent. One of the outright winners for the DCEU was director Patty Jankins’ Wonder Woman, which rocked the box office in 2017. Audiences loved the movie’s female protagonist, and wanted to see more. Now, here was an opportunity for DC to play to their advantage: DC comics traditionally had a greater number of female heroes and villains, something that their main competitor, Marvel, lacked. DC made bold claims about 6 more female-led superhero movies, featuring characters like Batgirl and Harley Quinn – but ended up cancelling all of them. Instead, they produced a lukewarm Wonder Woman sequel (which didn’t break even at the box office) and shifted the Wonder Woman character into a supporting role in ensemble films like The Justice League.
Perhaps one of the franchise’s most persistent challenges has been the numerous controversies surrounding its cast members. Some DCEU actors have faced well-publicised legal troubles (like Amber Heard), while others have sparked social media backlash (Gal Gadot and Zack Snyder). Even those not involved in scandals have been subject to speculation about potential recasting (Ezra Miller and Henry Cavill). In fact almost every major actor in the DCEU has been touched by some form of controversy, significantly damaging the franchise’s public image.
The idea of a cinematic universe isn’t a new one – in fact, DC planned (but didn’t execute) their first crossover film way back in 2002. They would have launched the DCEU with a Justice League film in 2008 – the same year that the MCU kicked off – but put those plans on hold to focus on their Green Lantern film. When that bombed, they postponed all DCEU plans until 2013.
By the time Man of Steel finally made it to screens in 2013, Marvel was on a roll and getting on with Phase 2 already. DC entered a blood-red competitive ocean with half of a concept and a prayer, and while it’s admirable that they managed to get a few winners on the screen along the way, it really isn’t that much of a surprise that the MCU rained all over their parade.
What’s next for DC, now that they’ve wrapped up their DCEU project? Given what you’ve just read, you probably won’t be surprised to learn that they are relaunching their universe – this time calling it the DCU – with a spate of new actors and directors. 10 films have been announced.
They’re starting with a Superman reboot. Obviously.
*this title was claimed by Avatar upon its re-release in 2019. Not really very fair, if you consider that Avatar essentially got two runs at the box office and Endgame got one… but anyway.
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.
A rerating of SA sovereign bond yields, a stronger ZAR, and sidestepping a fiscal slippage, have sparked optimism for a healthier national balance sheet. But structural challenges persist, impeding the potential for growth. In the latest episode of the No Ordinary Wednesday podcast, Investec Chief Economist Annabel Bishop and Treasury Economist Tertia Jacobs discuss the Finance Minister’s priorities ahead of the mini budget on 30 October.
As luck would have it, the industry suffered a negative swing just as Afrimat took a chance on the Lafarge deal
You need to be harder than cement to manage a business in this industry, as you simply never know when the cycle will bite you. Despite the uncertainty, you have to keep investing in new business lines and riding things out, hoping for decent returns when viewed with a long-term lens.
Historically, Afrimat has done a great job of this. That doesn’t mean that every period will be great, though. The six months to August 2024 are proof of this, with a low iron ore price and major infrastructure challenges locally, as well as pressure on local industrial customers and of course the losses at Lafarge in the early days of the turnaround.
Combine all these factors and you get the unusual outcome of revenue up 44.3%, yet HEPS crashing by around 80%. The jump in revenue is thanks to the Lafarge acquisition. The pain in HEPS was also driven by the Lafarge acquisition, along with a halving of operating profit in the Bulk Commodities segment. Although group operating profit increased 4% to R555 million, this was thanks to a bargain purchase gain related to the Lafarge deal of R263 million (the opposite of goodwill i.e. when you pay below net asset value for an acquisition). Bargain purchase gains, much like goodwill impairments, are excluded from headline earnings.
In terms of outlook, some of the challenges that hurt this period are looking better, like signs of life in the Lafarge turnaround strategy. They also expect local iron ore volumes to improve in the second half of the year. Notably, the GNU hasn’t yet resulted in an uptick in large infrastructure or development projects, a comment that echoes what we saw recently at PPC.
Anglo group companies released production and sales updates (JSE: AGL | JSE: AMS | JSE: KIO)
And yes, lab-grown diamonds continue to hurt De Beers
Let’s begin with Anglo American Platinum, currently the ugly duckling in the group although you would never say it with a 13.8% jump in the share price on the day! Any signs of life in the platinum sector will be met with celebration as everything has been so depressed. Even after that rally, the share price is down 21% year-to-date.
In terms of production, Anglo American Platinum managed 22% growth in refined PGM production for the third quarter despite a decrease in mined volumes. Sales volumes were up 16%, supported by higher production. Refined production guidance has been revised to 3.7 to 3.9 million ounces vs. 3.3 to 3.7 million ounces previously. That’s obviously good news. Further good news is that they are on track for the cost guidance range of R16,500 to R17,500 per PGM ounce, most likely at the upper end of the range.
Moving on now to Kumba Iron Ore, production fell 3% year-on-year but increased sequentially vs. the second quarter. Sales volumes increased 2% year-on-year but fell sequentially, so it follows a different shape to production volumes. That’s what happens when the logistics are so unreliable in terms of trains and ports. Not only is Transnet a source of uncertainty and usually disappointment, but the weather plays a role as well.
Despite Kumba literally curtailing its ambitions to align more with what Transnet is able to actually provide in infrastructure support, they still expect sales volumes to be towards the lower end of full year guidance of 36 to 38 Mt.
We end with the mothership – Anglo American itself. Aside from the obvious mentions of Anglo American Platinum and Kumba Iron Ore and how they roll up to group numbers, Anglo American is highly focused on copper at the moment (they are on track for full year guidance despite a planned closure in this quarter) and also highlighted another record quarter at Minas-Rio iron ore in Brazil.
As for De Beers, my thesis on rough diamonds continues to play out, with words like a “protracted recovery” and a reduction in rough diamond production in response to market conditions. Production fell by 25%. You can safely ignore the corporate spin here – the reality is that lab-grown diamonds have taken a chunk of market share, exactly as I expected.
Overall, there aren’t too many highlights in the Anglo group story right now. The share price is up 21% this year as the market has retained some of the gains linked to the excitement around a potential deal with BHP, even though it didn’t happen.
Cashbuild does indeed seem to have bottomed – there’s finally growth! (JSE: CSB)
I’m long Cashbuild and very happy to see this
I’ve written about Cashbuild extensively in Ghost Bites and elsewhere. The TL;DR is that the stuff that broke the business (high interest rates / poor consumer sentiment / prioritising loadshedding spending on solar) has all improved and should continue to improve. It therefore doesn’t require a leap of faith to think that Cashbuild should benefit.
In the first quarter of the new financial year, revenue is up 5%, with 4% from existing stores and 1% from new stores. Sales volumes were up 3%, so people are gingerly emerging from their caves of despair and spending on their properties once more.
Selling price inflation was 1.4% year-on-year, so that helps drive volumes as most people are getting increases ahead of that level.
Even battered P&L Hardware South Africa is up, with growth of 9%!
The share price is up 6.6%. More importantly, it’s up nearly 30% since the bonkers V-shaped drop in August that I treated like an early Christmas present. I love the markets, especially when they are kind to me.
Clicks looks incredibly strong (JSE: CLS)
Retail turnover growth and better margins have driven this outcome
In the results for the year ended August 2024, Clicks points out that the total shareholder return over the past 10 years has been a compound annual growth rate (CAGR) of 20.7%. That is extraordinary, which is why the group has a strong international shareholder base. As emerging market retail businesses go, Clicks is one of the best.
This is evidenced by growth in the dividend of a substantial 14.3% for this financial year, accompanied by return on equity of 46.4%. These are the kind of numbers that investors just love to see.
Growth is being driven by retail turnover, which increased 11.7% overall. Comparable store turnover was up 8.4%, with pricing up 6.3% and volumes 2.1%. This means that not only is Clicks expanding the number of stores and accelerating growth, but they are achieving excellent numbers in the existing store base as well.
Comparable retail costs grew 7.4%, so there’s margin expansion at store level. Total costs were up 12.5%, with store rollout and other costs running ahead of total turnover growth in this period.
The slower side of the business is distribution turnover, where UPD only grew by 3.3%. This highlights that much of the growth is in beauty and personal care products rather than pharmaceutical products. There’s nothing wrong with that for Clicks shareholders, as the better margins are made in the “front shop” anyway. At least there’s positive momentum in margins in medicine as well, with an increase in the regulated Single Exit Price and a resultant 70 basis points improvement in distribution margin.
With group trading profit up by 15.1% and headline earnings up 11.9%, these numbers are hard to fault. Clicks is a cash generating machine of note, with cash from operations of R6 billion and capital expenditure of R890 million. They plan to keep expanding in the 2025 financial year and I wouldn’t bet against another great set of results coming through, assisted by improved consumer spending as interest rates come down.
The share price spiked during the day and eventually closed only 1.6% higher. Year-to-date, the price is up 17.4%.
Datatec’s earnings are much higher and there’s a dividend (JSE: DTC)
This is despite a 5.5% dip in revenue
Datatec is a lesson in the importance of gross margin. Although revenue was down by 5.5%, a significant improvement in gross margin from 15.1% to 16.6% means that gross profit was up 3.5% on a net basis. Along with efficiencies in the expense base that led to EBITDA margin increasing from 2.9% to 3.9%, this was enough to drive EBITDA 27.2% higher and HEPS a beautiful 66.7% higher.
Now, some of this is due to accounting changes in products, in which only the gross profit is recognised on a net basis vs. the revenue and the cost of sales. That is why Logicalis International, by far the biggest part of the group, saw gross margin jump from 24.4% to 28.5% despite revenue being 10.9% lower.
Either way, EBITDA growth looks fantastic and the group declared an interim dividend of 75 cents per share, compared to no interim dividend last year.
That’s a great set of numbers that will no doubt have investors smiling!
Mantengu Mining is ever so slightly profitable – and angry about its share price (JSE: MTU)
This is an extremely odd narrative to be pushing
Mantengu Mining expects to report positive HEPS of between 1 and 2 cents for the six months to August. That’s a huge improvement vs. the loss of 10 cents in the comparable period, driven by a substantial uptick in chrome concentrate production.
Things are certainly looking better, with the company expecting production to get even better going forward.
This is a great story to be able to tell, so why is management saying outlandish things about the share price? This is worth repeating verbatim from the announcement:
“The Board continues to be of the opinion that its shares are being manipulated downwards and thus the company is pursuing both civil and criminal legal action. Mantengu’s wholly owned subsidiary, Langpan Mining Co (Pty) Ltd, has a JSE approved Competent Person’s Report with a valuation of R851 million using December 2021 market prices. This computes to R3.88 per Mantengu share and excludes Mantengu’s recent acquisitions of Meerust Chrome (comparable size) and Blue Ridge Platinum (Pty) Ltd, yet the current share price is trading at approximately R0.80 cents per share.”
If they can prove market manipulation, then all well and good. Personally, it sounds to me like someone needs to sit them down and explain that (1) markets aren’t fair and (2) companies trade at discounts to the directors’ valuation all the time, especially smaller companies on the market that are barely profitable.
If the shares are so wildly undervalued, then why not calm down on the capex and pursue share buybacks instead?
Comments like these bring the entire market into disrepute. If they don’t have absolute proof of manipulation, then the JSE should be stepping in here.
And by the way, since it closed 35% higher on the day, is that also manipulation? Or is it only manipulation when the price goes down?
A decent second half at Nu-World (JSE: NWL)
Here’s another sign of improved consumer sentiment
Nu-World isn’t a business that you’ll hear about very often. The group is focused on consumer goods, specifically of a more durable nature like appliances. Things got a lot better in the second half of the year, with durable goods sales improving for the first time since mid-2021 based on retail statistics. This can only get better from here as lower interest rates start to have a meaningful impact in the economy.
For the full year ended August, Nu-World managed revenue growth of 8.3% and HEPS growth of 7.1%. When you consider that HEPS was down 5% for the interim period, that’s a huge positive swing in the second half of the year.
This confidence resulted in an 8.3% increase in the dividend and thus a higher payout ratio. Although there are international businesses in the mix here and this isn’t a pure-play on South Africa, these are encouraging signs regarding local sentiment.
Spear sees positive leasing momentum (JSE: SEA)
Tenant sentiment seems to have improved
The positive impact of the GNU is slowly making its way through the economy. It will take longer to land in an uptick in construction projects (as discussed in Afrimat further up), but it has at least had an impact on general business confidence. This leads to more positive decisions on things that are less daunting than large construction projects, like simply entering into a lease. Spear REIT has highlighted optimism in the tenant base and the conclusion of leases where tenants were uncertain before the GNU and then felt inspired to put pen to paper.
This was also a major factor in the group achieving positive reversions of 3.57% for the six months to August, which means new leases are at higher rental rates than the expired leases. Notably, reversions were still negative in the commercial (office) portfolio at -2.19%. Occupancy rates in the office portfolio improved considerably though, so positive reversions can’t be far away.
Overall, Spear managed growth in distributable income per share of just over 2% for the interim period. The distribution per share is up 3.1%, so the payout ratio increased slightly to 95%.
The loan-to-value was under 24% as at the end of August but that was before the Emira deal closed. As Spear announced earlier in the week, this has increased to between 31% and 33% now that the Emira deal has concluded.
The interim distribution represents a six-month yield of 4.1%. You have to be careful just doubling this as an annual yield when there are so many changes to the underlying Spear portfolio, but it gives you an idea at least.
Nibbles:
Director dealings:
The CEO of Fortress Property Fund (JSE: FFB) has pledged shares worth R30.6 million for a loan facility with a limit of R23 million. This isn’t a trade in the traditional form, but can lead to trades if the debt facility is used and something goes wrong. It also shows you how listed company executives use their shares to gain access to financing.
A director of a major subsidiary of OUTsurance (JSE: OUT) acquired shares worth nearly R5 million.
A senior executive of British American Tobacco (JSE: BTI) and a close associate of that executive sold shares worth £73k (roughly R1.7 million)
It would be nice to see better disclosure from DRDGOLD (JSE: DRD) on director dealings, as the company pools share awards, sells shares and allocates the sale based on how much each director wanted to sell. This doesn’t tell us to what extent directors sold only the taxable portion of each award or the entire thing.
Vukile (JSE: VKE) released a cautionary announcement that subsidiary Castellana Properties has entered into negotiations to acquire a shopping centre in Spain. The growth story looks set to continue there, although there’s no certainty of this particular deal going ahead of course.
Salungano Group (JSE: SLG) is currently suspended from trading and expects to release interim results by the end of the month. They won’t be pretty, with a headline loss per share of between 88.04 cents and 91.96 cents, much worse than 19.64 cents in the comparable period.
Pat Quarmby is stepping down as chairperson at KAP (JSE: KAP), with Johan Holtzhausen stepping up from lead independent director to chairperson.
If you are a South32 (JSE: S32) shareholder and looking to learn as much as possible about the company, then they have released the CEO and chair addresses from the AGM over SENS. It won’t give you much in addition to the financial results that the AGM relates to, but by all means give them a read for additional information.
HOSTAFRICA has made its fourth investment in West Africa, announcing the strategic acquisition of Nigerian web hosting provider, webmanager.ng. for an undisclosed sum.
Kenyan electric bus solution provider, BasiGo, has raised US$42 million in a combination of debt and equity. The US$24 million Series A equity raise was led by Africa50 and included Novastar Ventures, CFAO Kenya, Mobility54, SBVI Investment, Trucks VC, Moxxie Ventures and Susquehanna Foundation. The Series A unlocked a US$10 million loan facility from the U.S. Development Finance Corporations and an additional US$7,5 million debt facility from British International Investment.
Morocco’s Colis.ma has closed a pre-seed funding round of US$300,00. The startup, which specializes in cross-border logistics, received the funding from Witamax.
Madica has invested in Nigerian climate tech startup, Earthbond. The company’s marketplace connects SMEs with solar providers and financing options, while generating carbon credits to further reduce costs and support sustainability.
Vantage Capital has fully exited its investment in Egyptian hotel owner and operator, PickAlbatros Hotels. Vantage provided the hotel group with US$18,4 million in December 2020 during the Covid-19 pandemic when the hospitality industry was under sever strain.
Aya Data, a Ghanian B2B AI solutions provider has announced an oversubscribed seed round raise of US$650,000 in equity and US$250,000 in debt. The round was led by 54 Collective and included several angel investors.
In Morocco, Globex has acquired 100% of Logic Transport, with Amethis providing financial backing. The deal marks Globex’s expansion in the road transport and transit segment.
Nigerian B2B ecommerce firm, OmniRetail Technology, has acquired Traction Apps, a payment solutions provider for small merchants in Nigeria. Financial terms were not disclosed.
Raya Holding for Financial Investments announced a US$40 million investment in its portfolio company, Raya Foods. The investment, in partnership with Helios Investment Partners, will see Helios take a 49% in Raya Foods, the largest exporter of frozen strawberries in Egypt.
Nampak Southern Africa Holdings subsidiary has announced the sale of its 51.43% stake in Nampak Zimbabwe to TSL for up to US$25 million.
This article is provided and brought to you by Investec Structured Products
As the global economy shifts from a high inflation and high interest rate environment into the next interest rate cutting cycle, global investors are casting their net wider in their search for returns.
Stock valuations in the U.S. are at all-time highs despite the higher interest rate environment, with momentum crowding and stock market concentration at multi-decade extremes. Developed markets (DM) outside the U.S. also face headwinds on multiple fronts, with a sluggish eurozone recovery and structural constraints in the UK.
In this environment, investors need to look outside these markets for better returns, with many boosting allocations to emerging markets (EM) following positive shifts in the global growth momentum story.
Supportive tailwinds have brought EM equities back in favour, despite the inherent risks, with a weakening U.S. dollar (USD), global monetary easing, rising income levels and the associated increased demand for products and services supporting corporate earnings.
These regions also constitute a larger share of economic activity and are forecast to deliver higher GDP per capita growth than the developed world.
Consequently, EM equities outperformed DM equities in the third quarter (Q3) of 2024, gaining 8.7% versus 6.4%. This marked two consecutive quarters of EM outperformance for the first time since 2020.
Asia (ex-Japan) was the top-performing major region, returning 10.6% over the quarter. The positive shift began as the Federal Reserve (Fed) cut rates in mid-September, and outperformance accelerated in the final week of the quarter as China unleashed a series of stimulus measures.
However, a significant shift has occurred in the Asian market, with India rising as the next regional powerhouse amid the structural and regulatory challenges that have hamstrung the Chinese economy in recent years.
India’s value proposition boasts numerous facets. For starters, it is one of the fastest-growing EM economies in the world. India’s quarterly real GDP growth has averaged 6% year-on-year over the past decade, which is higher than the global (3%) and emerging market (4.2%) averages over the same period.
The International Monetary Fund (IMF) projects that GDP growth in India will hit 7% in 2024/2025 and average 6.1% over the next five years. This growth rate will make it the world’s third-largest economy by 2027 after the U.S. and China, with current annual GDP expected to double from $3.5 trillion to $7 trillion by 2030.
The Reserve Bank of India (RBI) has also kept inflation in check by expanding fiscal policy and implementing proactive monetary measures that have stabilised the economy. The RBI is expected to prioritise growth with additional rate cuts in early 2025, alongside additional economic reforms aimed at improving the business environment.
The other prolific regional growth driver is rising consumption among the world’s largest population. According to the United Nations, India officially surpassed China as the world’s most populous nation in April 2023, with around 1.43 billion citizens.
This population dividend includes a young (average age of 28), educated and expanding workforce, offering a source of cost-effective labour that will help sustain economic growth.
Moreover, the thriving Indian economy supports diverse industries, including growth sectors like technology and IT services, health care and pharmaceuticals, and renewable energy. Robust and highly competitive manufacturing and business process outsourcing sectors make the country globally competitive while abundant natural resources provide a strong foundation for industrial development and export-oriented industries.
These supportive factors have helped the Indian equity market grow steadily over the past decade. In 2024, the market capitalisation of the National Stock Exchange of India (NSE) surged past $5 trillion, making it the fourth-largest market worldwide and the second-largest emerging market after China.
On the back of strong economic fundamentals, the Indian stock market has emerged as a top global performer. For instance, since the low of the pandemic in March 2020, the blue-chip NSE Nifty 50 has climbed over 200%.
Much of the recent momentum in the Indian equity market is attributed to increased liquidity, with local flows rising due to increasing affluence and access among domestic retail investors.
Rising foreign capital inflows have also bolstered market performance, with small-cap inflows driven by a strong IPO boom among Indian SMEs over the last five years, and record inflows from foreign institutional investors.
The Indian government has supported foreign direct investment by facilitating greater trust and certainty in the local stock market with a series of financial policy adjustments and reforms in recent years. For example, the listing rules of Indian exchanges have been improved to enhance the disclosure of financial information of listed companies.
Additionally, the Indian government has continued to relax restrictions on foreign investment in securities, including the relaxation of foreign shareholding ceilings, industry restrictions, and foreign exchange control, among others.
When considered in totality, India offers a compelling proposition for investors looking to boost their EM exposure and catch the upside potential, with a new Structured Product launched by Investec offering efficient access to the Indian stock market.
The JSE-listed Investec Rand India Accelerator offers 1.5x geared exposure to growth in the iShares MSCI India ETF over a 3.6-year term, capped at 40%, for a maximum return of 60% in rand.
The ETF tracks the large and mid-cap Indian market, covering 85% of India’s listed equity universe, and provides a high degree of capital protection to address the inherent risks associated with investing in EMs.
For more information on the Investec Rand India Accelerator, listen to the podcast with The Finance Ghost and Brian McMillan of Investec Structured Products below, or access the full transcript at this link.
In this episode of The Trader’s Handbook, Shaun Murison from IG Markets South Africa joined me once more to explore the fascinating and often misunderstood world of forex trading.
We broke down the complexities of currency pairs, leverage, and volatility while dispelling common misconceptions about the risks involved.
Whether you’re a seasoned trader or just starting out, this episode offers valuable insights into technical analysis, hedging strategies, and how to effectively trade forex using IG’s platform.
Listeners will also learn about the importance of building a solid trading system and why starting with a demo account is key to success.
Listen to the episode below and enjoy the full transcript for reference purposes:
Transcript:
The Finance Ghost: Welcome to episode nine of the Traders Handbook, my podcast collaboration with IG Market South Africa. As you’ve guessed, considering this is episode nine, there are eight other episodes that you should totally go and sink your teeth into. There really is a lot of great content we’ve talked about a lot, Shaun. We’ve done all kinds of things, from all the risk stuff – because obviously we try quite hard to remind people that trading is not easy. Of course, we’ve covered the opportunities as well. We’ve covered how this stuff works with CFDs etc.
Our last show was actually on index trading and why indices are quite popular choices for traders looking to take a view on the market and make some money along the way – hopefully! And this week we’re going to do another asset class, actually a different asset class because indices are really just a collection of stocks and we’ve been focused on stocks for a few shows – an index is just a way to buy a basket of stocks in one shot – but now we’re doing something different. We’re doing a completely different asset class this week, and that is the wonderful world of forex, which is probably the asset class that gets the most abused on social media by, shall we say, unscrupulous individuals advertising all kinds of dicey forex courses and trading signals and all these little things ranging from outright scams through to just questionable things, but at least done maybe with good intentions.
I’m not sure why they do so well, I think it’s because maybe people are just familiar with what a rand is and what a dollar is, so it’s easier to get them to believe they can make money from that. I’ve never seen anyone driving around in a Mercedes that says on the side: “Index trading – follow me for tips” or Telegram signals on indices, on stocks. I’ve literally never seen it. So I don’t know what it is about forex, but it does drive me mildly insane to see people getting scammed out of money and promised these crazy returns.
If you’re listening to this podcast, you are hopefully already very aware that life is not that easy and that IG Markets South Africa is a proper, reputable shop where we focus on a lot of educational stuff on this podcast. And you can go and then sign up for a demo account on the IG Markets platform, get started in trading and learn what it’s all about.
So, Shaun, welcome to episode nine. Thanks for doing this again with me. Pretty excited to do forex today.
Shaun Murison: Great being here.
The Finance Ghost: I think forex is probably one of the harder asset classes to trade, or at least that’s my perception coming in, which might just be a relative lack of understanding versus my understanding of how equities behave. I think at one point when I was studying, it could have been one of the CFA exams, I actually can’t remember, but I distinctly recall reading that forex goes on what they call a random walk statistically, which kind of tells you that it’s not so easy to guess where currencies are going. I would imagine that makes it quite a hard thing to trade, although maybe it just makes it hard to invest in and maybe it’s not so hard to trade.
I’m keen to start there. From your perspective, how hard is forex relative to some of the other asset classes that are on offer at IG?
Shaun Murison: Look, I don’t think it’s hard or easier. I think when you start looking at forex, a lot of people have the misconception that forex is a lot more volatile. But if you actually look at individual equities and shares, they’re going to move – remember we talked about volatility, that range of price movement – they move a lot more than a forex pair will move over the course of a day or an hour, most of the time.
So, it’s a misnomer that the forex market is more volatile. But where the risk comes from in the forex market is that it carries a higher degree of leverage. We’ve talked about leverage in the past, the amount that your profits or losses are magnified in the market. When you’re trading products like indices and forex, what happens is those profits and losses are magnified by a lot more than they are in the stock market when you’re trading them as derivatives, like CFDs, which we’re talking about today. If you don’t have a handle on understanding your exposure in the market, how big your position is, and that when you’re putting down a deposit, it’s just a fraction of that actual position size, then you can get yourself into trouble in the forex market.
But I think if you can get yourself a handle on understanding leverage and exposure in the market, then I think forex is quite an interesting one to trade because forex markets – we talked about random walk earlier on, but I think for me it’s really just about looking at the interest rate differentials and the outlook towards interest rates across the different regions, which is going to cause directions within those currency pairs.
The Finance Ghost: Yeah, exactly, that’s an interesting point, right? It’s less volatile in terms of the range of moves. That makes sense. You’re not going to see a currency pair move 10% in a day. It’s just not going to happen, whereas stocks can easily do that, actually. But to your point, if there’s more leverage, then bearing in mind your deposit is effectively your exposure, the money you’ve actually put into the market, then a smaller move with higher leverage is effectively still quite a big range, right? I mean, that’s basically what you’re saying in terms of the risk.
So, there must be advantages, obviously, to trading forex, because otherwise it really wouldn’t be nearly as popular as it is. Obviously you can go long or short like equities. You’ve got to be very careful on these pairs because long the dollar would be short the rand, on a US dollar rand pair. Actually, I’m quite keen to understand that, are you trading the pair? How does that actually work on the platform? I haven’t done forex trading myself, so I’m curious to understand the long and short dynamics of a traded pair. And then of course, you’ve got 24 hours trading as well here, right? That’s another difference to equities, is you can technically do this whenever you want.
Shaun Murison: So like any other trading – equities, indices – you can take long or short positions, so you can take a view of whether the market is going to rise or fall, like you correctly said. Where it becomes a little bit trickier, is that you’re trading two things. So, I mean, if we look at something that’s familiar, I mean, the dollar versus the rand, in that pair you always look at the first currency as the base currency. So if we say USD ZAR, the base currency would be the dollar and the paired currency would be the rand. So if you’re taking a long position on that, essentially what you’re saying is you’re expecting the dollar to strengthen and the rand to weaken. I think the easy way of looking at it is that it’s really always about taking that base currency so the dollar and viewing that as one. And then it’s how many rands is it costing to buy $1? If you think it’s going to cost more rands to buy $1, then you’re taking a long position because the value of the dollar is going to go up in rand terms. If you think it’s going to cost less rands to buy $1 in the future, then you take a short position. So if that moved down, then your rand would be strengthening and your dollar would be weakening.
Sorry, you asked about the 24 hours market. So that is the interesting thing about the forex market is that, yes, it does trade very close to 24 hours, close to six days a week. You have your Asian session that starts in Australia on a Sunday and a Sunday afternoon or Sunday evening, and then all the way through to the end of the US session, which is about 10:00, 11:00 our time, depending on daylight saving.
The Finance Ghost: So just on those currency pairs, just to finish the point around long shorts. So is it the same trade if I’m long USD/ZAR as short ZAR/USD, if you mirror the pair and you’re long one and short the other, is it the same trade?
Shaun Murison: Effectively that would be the same trade, but most platforms, including IG, would only quote the major currency first. So it would be USD/ZAR. But yes, in theory what you’re saying is correct.
The Finance Ghost: Okay, so that makes sense because otherwise I thought you’ve got all these different options, but actually it’s the same trade. You’re going to quote the pair in one style, stronger, I think you said stronger currency first, so it would be USD/ZAR and then you either go long or short depending on what you want.
Shaun Murison: Yeah, the major currency.
The Finance Ghost: Yeah, okay, that makes sense. We can only dream of a world in which the ZAR is the major currency! It’s going to take more than the GNU to get us there, unfortunately. USD/ZAR is going to be the way it is forever, unfortunately.
So moving on from that, are you still actually trading CFDs in this case when you are doing forex trading, or do you end up owning the foreign currency itself, as opposed to like a CFD play on it? How does that actually work?
Shaun Murison: Okay, so everything IG offers is a type of CFD. You’re not actually taking delivery, essentially like you would of an asset if you’re trading the futures market or something like that. Or if you’re trading shares, you wouldn’t take ownership of the actual shares, but you’re benefitting from the price movement. When we talk about the DMA side of things, remember that the forex market doesn’t have a formalised exchange, like the stock market. When you have direct market access, it’s DMA to the orders on an exchange, like on the Johannesburg Stock Exchange, or on a US stock exchange. On the forex market, that exchange and that forex market is actually dictated by an interbank market, but it’s not a formalised exchange. So most brokers won’t offer a DMA-type offering where you can actually see the market depth for currencies. So it is slightly different and it’s mostly traded OTC.
IG does actually have a product where you can see that interbank market, something called forex direct. But the default way that most people trade is OTC.
We’re just looking at the primary bid and offer, you see the quoted price movement. You’d look at the base currency, that first currency, and you generate a profit and loss in the second currency. If you’re trading the USD/ZAR, you are generating profit or loss in ZAR, that second currency. If you’re trading something like the EUR/USD, the euro is the base currency, the dollar is your paired currency. You’d be generating a profit or loss in that paired currency.
The Finance Ghost: Okay, that makes sense. Thank you for the additional details there. It makes a lot more sense then in terms of how all these pairs work and what you’re actually buying, etc. Now, obviously, when you’re trading equities and maybe even indices, you’ve got a whole lot of things to choose from. Tons, actually. I would guess in the forex world, you’ve got very, very liquid pairs, and there will be pairs that are particularly popular, but people are probably not going and trading really unusual forex pairs on the platform, I would imagine. This is not like foreign currency when you’re traveling and you need to go and buy some of whatever the local currency is in whatever interesting little frontier market you’re traveling to. In the world of trading, I would imagine that it’s a set number of pairs with very deep liquidity, very tight spreads. And that’s the appeal, right?
Shaun Murison: Yes. So very, very liquid market. The size of the forex market actually dwarfs that of stock markets. I think I had a stat here – when you look at something like the forex market in particular, I know it’s over 6 trillion. You look talking about trillions and when you’re looking about stock exchanges, you talk about billions. So substantial difference in size, and obviously that equates to a substantial difference in liquidity. Most popular traded currencies are generally the majors, the currencies that represent major economies around the world, those majors include things like the US dollar, the British pound, euro, Japanese yen, Australian dollar, and the Swiss franc. Now, other currency pairs that are also quite popular is when you take those majors and you cross them against other exchange rates.
Minor currency pairs are also quite popularly traded. And the minors are generally taking one of those major currencies, like the dollar or the yen or the British pound and crossing it with decent sized currencies like the rand. So, USD/ZAR would be considered a minor currency. EUR/ZAR would be considered a minor currency pair.
The Finance Ghost: Interesting. Okay, cool. So the rand itself just makes it a minor pair immediately, even though we’re such a liquid emerging market currency?
Shaun Murison: Yeah. And obviously, we are the most developed economy in the African continent.
The Finance Ghost: Yeah, absolutely. Moving on to just the reason why you might want to be doing forex trading. Obviously, there’s the speculative side, which is you’re looking to make a profit. You are looking to take a view on a currency pair moving in a particular direction. And if you get your long or your short right, you make some money. That’s the sort of 101 of trading.
I would imagine that there’s a hedging element as well. If you’re sitting with, I don’t know, big offshore exposure in equities, for example, that’s going to move for two reasons. It’s going to move because of the underlying equity price in that market, and then it’s going to move again because of what happens to the currency on translation into where you are sitting, which in this case is likely South Africa. So that’s where the forex trading can also be a hedging mechanism. And there you’re not trying to make a quick buck here or there. You’re actually taking a longer-term view of trying to protect a position or lock in some kind of profit and stop it changing based on forex moves, right?
Shaun Murison: Yeah, I think you’ve explained that quite well. But you know, it doesn’t have to just be stock markets. Most traders are speculative traders when it comes to forex, the retail traders. But that hedging aspect is a definite use and a common use for the currency. So, you know, if you wanted to buy something in US dollars at a future date, let’s say you wanted to – whatever the product is – and you’re worried about the rand weakening up until the time that you might have to pay for that product, then you might actually just take a currency position, a long USD/ZAR position of equal size. It’s not there to benefit from the change in the currency price, but it’s really just to protect that future spend. So yeah, hedging out possible weakness within the currency.
The Finance Ghost: When we spoke about index trading last week, we talked about the efficiencies across leverage and costs. I think you’ve already mentioned on the show that forex has more leverage built into it in terms of the way trading it actually works. I think let’s go into the detail there just on number one, what are the costs of trading forex? Is it cheaper than trading equities and then how does it compare to trading indices?
Shaun Murison: So if you’re for example taking a EUR/USD mini-contract, every point that it moves is four decimal places to the right, referred to as a pip. One pip is worth $1. The cost of that trade is 0.9 pips, so not even a full $1 for the trade. It’s 90 cents for the trade, entry and exit costs combined. On a mini-contract, the value of your position is 10,000 of your base currency, in this situation the EUR, so the cost of 10,000 EUR exposure would be just $1. That’s cheaper than indices and certainly cheaper than single stocks.
If you hold positions overnight, there are interest rate calculations, which is the differential between the two currencies, interest rates, which is one of the reasons why we don’t hold for extended periods of time, any of the short-term trading, any of the CFD-type trades, but it’s not a high cost unless you’re holding on for months to years on a position. Yeah, very, very appealing in terms of costs.
The Finance Ghost: And then secondly, just how extensive is that leverage so that people are aware of what they are buying?
Shaun Murison: In terms of the leverage restrictions, a lot of regulators in different jurisdictions, like European regulators, the ESMA and FCA and that, have clamped down on leverage because sometimes it got a little bit irresponsible. We had some providers at some stage offering 500:1 times leverage and even more than that. Now, the standard is generally 30:1. If you’re trading stocks and your deposit requirement for a trade is 10%, then on the currency position it’s just over 3%. Your profits and losses are magnified by 30 times, whereas in shares, while it does vary between shares, your profits or losses will be magnified by, let’s say, ten times.
The Finance Ghost: The costs are relatively low compared to equities, and the leverage is relatively high, so you need less money in order to make money. That’s basically why this is appealing. And maybe that takes us all the way back to what I mentioned at the start of the show, which is, why does forex appeal to people? And, you know, even in a context where it’s not done in a positive way and not explained in a positive way, I guess it’s that ability to do well. And it’s the one or two stories of people who have done well, whether by luck or design, it kind of encourages other people to have a go. But I think it is just so important to understand what you’re actually buying and the best way to do that.
We keep encouraging people to try out a demo account first. I think on the forex side, even more so, because you’ve got to try and figure out how these things move. I would imagine there’s lots of technical analysis that goes with it. Yes. Interest rate differentials and all of that, absolutely, they give you a good idea of long-term where a currency pair is heading, but trading is not long-term, it’s short-term stuff. It’s going to be news driven, it’s going to be risk-on, risk-off, it’s going to be all that kind of stuff, right? And lots of technicals I would think, Shaun.
Shaun Murison: Yeah, I agree. I think good technicals reflect the fundamentals. So I think if you do a top down approach where you compare the different trends of these currencies, you can see what’s the strongest and you can see what’s the weakest, and essentially it will reflect what’s happening with interest rates anyway. When we talk about things like the news, like you’ve had mentioned, obviously a lot of the news, like when you start looking at inflation, interest rate announcements and GDP, the major types of news events, they change sentiment around what to expect from interest rates going forward. So you’ll see those reflecting on this currency markets as well. And like I said, I’m a technical trader predominantly myself, and I think those good technicals will reflect what’s happening, will summarise that information for you if you’re using them correctly.
The Finance Ghost: Perfect. So let’s get into the technical section of the show. As we’ve done for the last few episodes, we kind of end off with doing some techs because it’s just too much to do in one show. It’s a bit overwhelming to listen to. And this week it sounds like we are sponsored by a shampoo brand because we are doing “head and shoulders” – but it means something completely different in the world of trading. It’s a pretty interesting chart pattern. And what’s particularly interesting with it is you can use it in the normal way or you can invert it actually and then use it to give you the opposite signal. It’s quite a lot harder to spot it on an inverse basis. We’ll obviously talk about that now. But if you just use it in the sort of traditional head and shoulders manner, then this is a way to identify potential trouble, right? This is something going from bullish to bearish, and this is a way to guess how that might play out, isn’t it?
Shaun Murison: All right, so head and shoulders. Very, very commonly recognised pattern in technical analysis terms. I think the important thing here is that I think we’ll give the listeners a link to the article when they can actually visualise what we’re talking about.
But if I can just cover the principles of what we’re actually looking at here – we talk about markets that move in trends, and when we talk about a head and shoulders, it’s a pattern that generally comes after a trend, and it’s a warning sign that that upward trend – it comes after an upward trend – is changing direction.
So if you’re trading that type of pattern and you start to see that, you might see that pattern as a warning. If I’m long in the market, maybe that’s a signal that I could be looking at exiting my position. And if I was looking to short the market, maybe I’d wait below a break of a neckline or key support level, because it’s showing you when the market’s actually moving into a new downtrend to possibly short that market. But the key point is it’s a reversal pattern. And what is it reversing? It’s showing you that an uptrend is now reversing into a downtrend which can inform your sort of trading direction in the market.
The Finance Ghost: Okay, fantastic. And then if you use it on an inverse basis, it’s telling you the opposite thing, right? You’re basically flipping it on its x axis and then looking for that pattern in reverse.
Shaun Murison: Yeah. So again, it’s still acting as a reversal pattern. So that shape, that head and shoulders shape, is showing us that a market that’s moving in a downtrend, a series of lower highs and lower lows, has now started to change direction, started to make higher highs and higher lows. So, moving from a downtrend into a new uptrend. Again, if you’re short into the market and you saw this inverse head and shoulders, which is that pattern upside down, you might consider looking at exiting some positions. And, you know, when we break above that neckline or the key resistance point, we might consider taking new long positions within that market in line with the new trend which is developing.
The Finance Ghost: And then just a general question around these trading strategies. It’s something that I’ve learned from you and from this show, which I’ve started to apply even when I’m doing normal equities now, you know, non-CFD type stuff, because it’s really, really helpful, is to what extent do you wait for confirmation instead of trying to be a hero and trying to be a little bit early. To what extent do you wait for confirmation that something is playing out before you actually have a go? Because I think that’s something traders are quite good at. They’re not trying to always get 100% of a move. They’re just happy to get a piece of a move and to nail that more often than not. And then your win ratio is great.
Shaun Murison: Yeah. So I think you’ve got to have a defined set of rules and criteria for your trading, especially in the short term game. For me, it’s something as simple as you have a lot of intraday activity, let’s say you were waiting for a breakout, a market moving above a key level might go up and down and up and down through that level. I like to see it settle there, I wait for a close. It might be different for different people, but I think you need to be consistent in what you’re doing rather than pre-empting your signals, because sometimes your signal that you’re waiting for doesn’t actually confirm and so you’re actually just trading on a hunch, trading with your gut.
You need to set out some mechanical rules with your trading: when to get in, what are your confirmations? For me, it’s if I’m looking at key price levels, it’s a close above, I’d like to see the price settle above a particular level if I’m looking for a long, or settle below a certain level if I’m looking for a short. If I’m looking at stocks, I’d like to see strong volume accompanying a breakout, showing that there’s a lot of momentum to that directional move.
That subject is quite broad, but I think for the listeners, I’d say that just set out definite criteria and try stick to the rules of those criteria that you place for your trades rather than pre-empting what you think might happen.
For example, another one would be a lot of people like to trade moving average crossovers, and the moving averages look like they’re going to cross over, and that could be a buy signal, but then they don’t actually cross over. You’re actually trading not on a strategy, but on a whim.
Set out some rules for yourself would be the advice there.
The Finance Ghost: Yeah, absolutely. Trading is about building a system. I think that’s been the one consistent piece of feedback that’s really been a feature of these podcasts. Thank you for that.
Shaun, I think that brings us to a close on this one. We’ve done some good stuff here on forex, obviously highlighted the head and shoulders pattern, and in the show notes, I’ll ensure that the links are there. It’s really important to actually go see this with your own eyes. You can’t just listen to that and try and understand what that is. The idea of mentioning the technicals on these shows is really just to highlight that these things exist and to point you in the direction to go and actually engage with those examples and charts and the excellent content that gets put out on the IG Markets academy. Go and check it out.
And of course, as we keep saying, go and open your demo account. Go and give it a try. See if it’s for you. Rather go figure that out with monopoly money than real money, go make your mistakes with monopoly money rather than real money. It’s always better to do that. It really is.
Shaun, thank you for another great show and I look forward to welcoming you back for the next one where we will be dealing with commodities as another example of an asset class that can be traded on the platform, adding to the suite of equities and indices and forex that we’ve now done. Thank you and we’ll do this again soon.
AB InBev in a deal driven by geopolitics (JSE: ANH)
Russian exposure is being swapped for a business in Ukraine
AB InBev announced in December 2023 that Anadolu Efes had agreed to acquire AB InBev’s non-controlling interest in AB InBev Efes BV. Various regulatory approvals were required and were not obtained, so that deal is dead.
There’s a new plan on the table, with Anadolu Efes (a Turkish group, by the way) now acquiring the Russian business out of AB InBev Efes BV, a change from acquiring shares to acquiring assets. This must make a technical difference to the approvals required. As a further step, AB InBev will acquire Anadolu Efes’ interest in the business in Ukraine.
So, a Belgian company loses exposure to Russia and gains exposure to Ukraine by effectively swapping assets with a Turkish company. And you wonder why geopolitical shifts make a difference in markets?
EOH’s revenue is lower and gross margin has dipped (JSE: EOH)
I still can’t find a reason to be invested here
The EOH share price closed 9% higher on volumes in excess of double the average daily volumes. Why? Honestly, I don’t really know. I can’t see the appeal here.
For the year ended July 2024, group revenue dropped 3.1% from continuing operations, or 0.3% if you exclude the sold Nextec legacy entities. Either way, it’s down. There are pockets of growth like the international business, but there are also other areas that are down by double digits.
EOH describes gross profit margin as being steady at 27.3% vs. 27.9% the previous year. Personally, I wouldn’t describe a 60 basis points decline as “steady” but maybe that’s just me.
Operating profit fell 17% including once-off restructuring costs. Adjusted EBITDA was down slightly to R307 million.
Highlights? Well, net finance costs decreased by 28% to R118 million but that’s no real surprise as EOH had to raise money from shareholders to reduce the debt. The headline loss per share reduced tremendously from -21 cents to -0.21 cents (read that carefully again), so EOH is nearly break-even. Yay.
The reality is that revenue went backwards and they have net debt of R644 million vs. EBITDA of R307 million, so the group still has too much leverage in my view and is experiencing margin pressures.
They talk about major cost savings into FY25 and the resumption of “investment for growth” rather than having to focus on legacy items. This must be what got the market excited.
EOH will ask shareholders for approval to change the name to iOCO Limited at the AGM. Given the absolute mess that EOH went through as a brand, that’s probably a good idea.
Famous Brands seems to be in defensive mode (JSE: FBR)
The narrative is very different to rival Spur, which is in growth mode
For the six months to August, Famous Brands tells a story of a group that is inwardly-focused and concentrating on rationalisation and efficiencies rather than outright growth.
Revenue is up just 2% and operating profit was flat, yet HEPS increased by 9.5% and the dividend per share was up 9%. That’s a totally different vibe to Spur at the moment, a group that is busy with acquisitions and exciting growth plans.
Although they are both restaurant groups, the underlying business models are actually really different. Just compare your local Spur to a Steers for example, or one of the more upmarket brands operated by Famous Brands. Spur’s brands are hitting the sweet spot right now, whereas Famous Brands finds itself in a competitive bloodbath among takeaway players at one end and a difficult situation at the other end with consumer affordability issues.
Much of the focus at Famous Brands is on debt reduction, with borrowings down from R1.265 billion to R1.148 billion. Finance costs dropped by 3.2%, leading to the improvement in HEPS relative to such a tame top-line story.
Looking deeper, Leading Brands saw revenue growth of 0.8%, with system-wide sales up by 3.2%. This suggests that the underlying franchisees paid a lower percentage of revenue to Famous Brands in this period vs. the previous period. Signature Brands is the more upmarket offering and saw revenue fall by 10.4%, with restaurant closures impacting the business.
They talk about Signature Brands remaining subscale, which could be a subtle way of inviting bidders for that business.
The SADC region saw revenue grow by 3.8%. AME was up 105% but this was driven by an acquisition of 10 restaurants in Mauritius, so don’t treat that as growth you can extrapolate. In the UK, Wimpy fell by 17% and they blame uncertainty in the election period along with a cost-of-living problem in the UK.
In the supply chain side of the business, manufacturing revenue was flat but operating profit increased by 10.3%, with the group doing a great job there in terms of finding efficiencies. Logistics revenue was also flat, with operating profits down as they couldn’t achieve the same costs miracle in that business as in the manufacturing business.
Finally, retail revenue (the sauces on the shelves at your local supermarket) fell by 8.3%. This actually had little to do with sauces and more to do with frozen potato chips, with a major competitor sorting out stock shortages and the introduction of discounted imported chips in the local market.
Here’s the chart that matters:
Grindrod finally unlocks cash from the KZN property investments (JSE: GND)
This has been a long-standing headache for the group
Grindrod’s exposure to KwaZulu-Natal property has been a cautionary tale of the dangers of non-core assts. The group is a lot more focused these days and thank goodness for that, with the situation about to improve even further thanks to a deal with African Bank.
Although I’m also not sure that African Bank should really be dabbling here, it’s at least a more natural fit to see property deals sitting in a banking group than a logistics group.
African Bank will acquire loans, profit share agreements and equity interests held by Grindrod in respect of certain properties on the KZN North Coast. The total price is a lovely round number of R500 million, unlocking considerable cash for Grindrod to use in the right place: the freight services business.
Suspensive conditions for the deal are expected to be fulfilled by 31 December 2024, which feels a bit ambitious. Let’s see how they do with the regulatory approvals.
Harmony is happy to see the end of a streaming agreement at old gold prices (JSE: HAR)
There’s also good news on one of the projects
Harmony has confirmed that final delivery has been made into the streaming agreement between Franco-Nevada and Mine Waste Solutions (MWS), which mean’s that Harmony’s MWS business will now be able to achieve current market prices for its gold rather than the historical contractually agreed prices.
It makes a big difference – more than R1 billion in annualised free cash flow if the current spot price continues!
In other good news, Phase 1 of the Kareerand tailings storage facility expansion project has been commissioned and delivered on time and on budget, the magic words for any major capex project. This will extend MWS’ life of mine by 15 years, with broader plans to add more processing streams at the operations now that they can get the market price.
In case you’re wondering, the streaming contract originated in 2008 and Harmony assumed the obligations as part of a broader acquisition in 2020. The price was set at the lower of spot or $400 per ounce, so it had become incredibly punitive in recent years.
Nampak to sell its stake in Nampak Zimbabwe (JSE: NPK)
The deal is worth up to $25 million
Nampak previously identified Nampak Zimbabwe as part of the asset disposal plan, so this day was coming. Huge progress has been made on Nampak’s turnaround, but there’s more to do.
The sale of the 51.43% in Nampak Zimbabwe has been agreed at a price of $23 million payable practically immediately and $2million payable in two equal annual tranches. The deal has been denominated in dollars, which is no surprise given the underlying exposure in Zimbabwe.
The net asset value of the 51.43% stake was R292.5 million and attributable audited profits after tax was R84.8 million, so it seems that Nampak got a strong offer here from TSL Limited.
Not that it makes any different to Nampak, but the purchaser is required to make a mandatory offer to all other shareholders in Nampak Zimbabwe once this deal closes.
This is a category 2 deal, so Nampak shareholder won’t have to vote on it. There are of course various other conditions that need to be met before the cash will flow.
Zeder moves another step closer to a special dividend (JSE: ZED)
The Theewaterskloof disposal has been completed
Hot on the heels of the completed Applethwaite disposal, Zeder has now completed the Theewaterskloof disposal. This adds another serious chunk of cash to the Zeder balance sheet and means that a special dividend to shareholders can’t be far away.
Zeder received R283 million for Theewaterskloof, plus agricultural inputs on hand of R1.18 million and 2025 season costs of R22.8 million. It’s a very similar valuation methodology to that used at Applethwaite.
Combined with the Applethwaite deal, Zeder has received just over R500 million for these disposals. For context, Zeder’s market cap is nearly R3 billion.
Nibbles:
Director dealings:
Michiel Le Roux of Capitec (JSE: CPI) fame is never shy to do some serious derivative trades over shares in the financial services group. He has entered into an option trade with a put strike of R2,950.01 and a call strike of R5,572.24 for shares with a value of R736 million. The current share price is R3,204.42. This structure is a hedge related to a legacy financing transaction and it’s interesting to note how close the put strike price is to the spot price.
A director of CMH (JSE: CMH) sold more shares to add to recent sales, this time worth R355k.
The company secretary and a director of a major subsidiary of AVI (JSE: AVI) received share awards and sold the whole lot worth R204k.
Spear REIT (JSE: SEA) has implemented the acquisition of a large portfolio from Emira Property Fund (JSE: EMI). Post the acquisition, Spear’s gross asset value is R5.36 billion and the loan-to-value is between 31% and 33%.
Southern Palladium (JSE: SDL) has completed the Merensky Reef Mineral Resource Estimate, with the Indicated Mineral Resource having increased by 17%. This means there’s a 54% increase since the last Mineral Resource Estimate. This is obviously really helpful news for the mining group as they work to finalise their Pre-Feasibility Study by the end of this month.
Orion Minerals (JSE: ORN) announced drilling results at Flat Mine South. I’m certainly no geologist, but the management team sounds happy with them.
Vunani (JSE: VUN), Ascendis Health (JSE: ASC) and Texton Property Fund (JSE: TEX) have taken advantage of the opportunity to move their listings to the general segment of the Main Board of the JSE, adding their names to the list of small- and mid-caps who recently did the same.
Labat Africa (JSE: LAB) has finally found an auditor, appointing Khumalo Xaba Xulu Auditors as the new independent auditor of the company.
Adcorp’s business seems to be doing better than the earnings would suggest (JSE: ADR)
HEPS has been impacted by once-off costs
Adcorp has released an update for the six months to August. The numbers aren’t fantastic, with HEPS expected to be down between 9.7% and 19.7%. If you read further, you’ll see that once-off restructuring costs of R25.6 million were the major driver of the drop, particularly in the context of operating profit of R59.5 million from continuing operations in the comparable period.
Looking deeper into the businesses, the Staffing Solutions and Contingent Staffing operations achieved growth in both revenue and gross profit vs. the prior year. This is more of a blue-collar offering, so it is less impacted by trends like AI and the increasing use of LinkedIn to connect employers and potential employees directly.
The Professional Services side of the business is facing those headwinds, leading to a need to really specialise in specific sectors. Hopefully things will improve in South Africa thanks to better sentiment, as it’s very hard for this business to do well if the broader economy isn’t growing and people aren’t hiring.
The Capital & Regional CEO isn’t hanging around to see what happens (JSE: CRP)
In case you wondered where some of the synergies will come from, here’s one already
Capital & Regional has released the circular for the NewRiver deal that will see the groups combined to form a stronger UK property business. As I explained earlier this week, Growthpoint will accept the offer and become a major shareholder in the enlarged entity, plus they will take cash off the table.
Normally, executives would wait for the deal to be approved by shareholders before the changes start to be made at management level. Not so in this case, with Capital & Regional CEO Lawrence Hutchings already resigning and immediately going on gardening leave – a wonderful outcome for top executives where they are paid to sit at home and not work for anyone else for a period of time.
The group finance director of Capital & Regional has been appointed as Acting CEO in the meantime. This will be the case until the offer by NewRiver has been completed.
Oasis Crescent banks double-digit growth – and without using leverage (JSE: OAS)
The cycle just keeps getting better for property
Oasis Crescent is a Shari’ah compliant property fund, which means they aim to beat inflation without the use of any leverage as debt is impermissible under Shari’ah rules. As you’re probably aware, debt is a key feature of the business model for traditional REITs, so that’s quite a challenge!
They just managed to grow the distribution including non-permissible income (the rules are complex) by 11.5% for the six months to September, so they are doing a solid job here. The net asset value per unit in the fund increased by 13.8%.
The underlying property portfolio has 75% exposure to the Western Cape and 25% to KwaZulu-Natal. Only around 8% of the rentable area is in office properties. Overlaying the regional and sector exposure shows why the fund has performed well.
Sasfin is trying to shrink into success (JSE: SFN)
The Wealth and Rental Finance businesses are core – everything else isn’t
The sad and sorry tale of Sasfin is likely to finish playing out in the private market, as the group is in the process of trying to delist from the JSE. Investors really won’t be missing much in my view, as Sasfin has struggled to produce decent performance relative to the other banks. In the latest period, HEPS has collapsed into a loss thanks to the administrative sanctions related to alleged forex non-compliance, as well as other pressures in the business.
To be fair, return on equity was only 6.8% in the prior period, so this is hardly a single year of underperformance. Things have just gone from bad to worse.
They are deliberately reducing the size of the business, with Gross Loans and Advances down by 7.2% and Total Core Funding down 1.6%. This has increased net available cash by 10.5%. Whilst I understand the importance of preserving cash for the take-private deal and to support core businesses, they need to be very careful here. Sasfin hopes to sell its banking business and if they allow it to shrink too much, there won’t be anything left worth buying. As it is, Business and Commercial Banking made a loss of R156.09 million in this period, worse than R137.7 million last year.
If you’ve been following the recent news at Sasfin, then you’ll know that there have been major corporate actions like the disposal of Specialised Finance and Commercial Solutions as well as Commercial Property Finance. This is part of the strategy to focus on Asset Finance and Wealth.
Sadly, Asset Finance also went backwards in this period, with operating profit down from R197.7 million to R158.7 million. In Wealth, assets under management decreased from R67.4 billion to R65 billion but at least operating profit increased from R117.3 million to R139.8 million.
Even with the offer on the table at a premium price, the share price is flat over 5 years. When a bank can’t do well in a period of favourable interest rates, then buckle up for the next part of the cycle.
Gloria Serobe, founder and CEO of Wiphold, will have a front-row seat by being appointed as chair of the board of Sasfin Wealth. Wiphold is core to the take-private plan, so they must see opportunities in there somewhere!
A poor day for Sasol investors (JSE: SOL)
The share price has dropped even more based on a production update
Sasol’s share price is down 40% year-to-date. It’s well on its way to having lost three-quarters of its value since the peaks of 2022. Things really aren’t good, with problems ranging from external factors like the chemical markets through to other issues like Transnet.
In a production and sales update for the three months to September, the narrative is negative. Refining margins are down and global chemical markets still have more supply than demand, leading to pressure on prices. There are various internal headaches, like coal quality in the South African business and margin pressure in the international chemicals business despite an improvement in average sales basket prices.
In terms of market guidance, Natref has been revised downwards due to start-up delays after the planned shutdown and other operational issues. They somehow expect Chemicals Africa to achieve FY25 volumes that are 0% – 4% higher than the prior year, despite the year kicking off with a 9% drop in the first quarter.
It’s going to require a significant improvement in the chemicals market to stem the bleeding in this share price. There’s little sign of momentum to the downside slowing.
Vunani’s earnings have gotten worse (JSE: VUN)
This is another perennial underperformer on our market
With a share price down 12% in the past 5 years, there hasn’t been much for Vunani shareholders to smile about. Things don’t seem to be getting better unfortunately, with the company releasing a trading statement flagging a drop in HEPS of between 53% and 73%.
Detailed interim results are expected to be released on 29 October, so we won’t have to wait long to see why this happened.
WeBuyCars: a victim of pie cut into too many pieces (JSE: WBC)
At least core earnings are up
WeBuyCars has released a trading statement for the year ended September 2024. This was obviously a massive year for them in terms of corporate activity, with all the costs for the separate listing on the JSE and the issuance of shares to major institutional investors as part of the pre-listing capital raise.
Core headline earnings grew between 21% and 26%, which tells me that they are still doing a great job where it matters: buying and selling cars. This includes the impact of transaction costs and other once-offs.
Headline earnings is down 55% to 60%, with transaction costs and various once-offs having an impact there. Combined with the additional number of shares in issue, HEPS fell by between 60% and 65%.
The share price has run 72% this year which is beyond even my expectations, and I’m bullish on the underlying business. I’m certainly not complaining as an investor, but it feels like it needs to calm down and consolidate for a while. Detailed results are due for release on 18 November and management’s outlook statements will be the thing to watch.
Nibbles:
Director dealings:
Andre van der Veen and Adrian Zetler, operating through their investment vehicle A2 Investment Partners, sold CFDs over York Timber (JSE: YRK) worth R65.3 million and bought shares for the same value. This moves them from a derivative position to a direct holding position, with a separate announcement noting that they hold 19.47% in the total issued share capital.
A director of CMH (JSE: CMH) sold shares worth R1.1 million.
Two directors of NEPI Rockcastle (JSE: NRP) bought shares worth a total of around R180k.
Equites Property Fund (JSE: EQU) has announced the reinvestment price for the dividend reinvestment alternative. Shareholders who prefer to have shares rather than cash dividends can reinvest at R14.00 per share, a slight discount to the current market price of R14.64.
Unsurprisingly, shareholders of MTN Zakhele Futhi (JSE: MTNZF) voted almost unanimously in favour of the extension of the scheme to give it a chance to deliver decent value to investors.
Back in June, Spear REIT (JSE: SEA) announced the disposal of 100 Fairways, N1 City. The deal has been given approval by the Competition Commission, so the disposal is now unconditional and will become effective on date of transfer. This is expected to be during January 2025.
Prosus (JSE: PRX) shareholders will receive their upcoming distribution as a capital repayment as the default option. It is possible to elect a dividend payment instead of a capital repayment, provided that election is made by 18 November.
If you are a shareholder in Frontier Transport Holdings (JSE: FTH), then be aware that the company has issued a notice regarding a general meeting to vote on proposed amendments to the group employee option scheme.
Eastern Platinum (JSE: EPS) has changed auditor from PricewaterhouseCoopers to Davidson & Company, a name that South African investors probably aren’t familiar with. They are based in Vancouver and Eastern Platinum is a Canadian company, hence why it makes sense.
Chrometco (JSE: CMO) will change its name and start trading as Sail Mining Group with effect from 30 October. The new share code will be JSE: SGP.
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