Brace yourself for a terrible day in the Aspen share price (JSE: APN)
A somewhat shocking announcement came out at market close
If you’re an Aspen shareholder, prepare yourself for a rough Wednesday. At 5pm on Tuesday, the company released an announcement about “potential risks” – and we aren’t talking about small numbers here.
A material contract dispute in the Manufacturing business could impact EBITDA by R2 billion. In such a case, the EBITDA from the Manufacturing business in CER would be less than 50% of what was reported in FY24. To make it even worse, there would be impacts on subsequent years that Aspen isn’t able to quantify at this stage.
All we know at this stage is that the dispute related to a contract manufacturing customer for mRNA products. Aspen has also referenced the risks of US tariff changes and how this would encourage more production in the US vs. other countries, which would hurt Aspen’s contract manufacturing business. This overall situation is the reason for an expected R770 million impairment to technology in the 2025 financial year.
The long-term impact on Aspen is unclear at this stage, as they might be able to fill the manufacturing capacity with pharmaceutical customers who have a strategy that is more suitable to this world of trade wars. Also, they might not.
The company has scheduled a webcast on Wednesday morning. I have no idea where the bottom will be for the share price in response to this news, but I suspect it’s a long way down from current levels.
Coronation’s AUM went nowhere this quarter (JSE: CML)
And no, they still don’t disclose comparatives
Coronation has released its assets under management (AUM) as at 31 March 2025. As always, they haven’t done any favours for shareholders in terms of releasing the comparatives, so we are forced to go digging.
Will this ever change? I’m not holding my breath.
Something else that hasn’t changed is the quantum of AUM, which came in at R676 billion as at March 2025 – exactly the same amount that we saw as at December 2024. At least there’s growth on a year-on-year basis, as they were at R631 billion as at March 2024.
I’ll say it for the millionth time: in this industry, the best business model is to have a force of advisors out there who are scooping up assets. Focusing on only the asset management profit pool (rather than wealth management / advice) just isn’t lucrative enough.
Inflation-beating growth at Oasis Crescent (JSE: OAS)
As a Shari’ah-compliant fund, there is no debt in this structure
Property funds are known for using high levels of gearing, or debt. In South Africa, where the cost of debt is often equal to or even higher than the net initial yield on acquisitions, the introduction of debt is only beneficial for properties that will grow significantly in value. As time has taught us, not all properties end up doing that.
So, the lack of debt in the Oasis Crescent Property Fund isn’t as much of an impediment as you might expect from an economic perspective. Since inception, they’ve grown the NAV and dividend (i.e. total return) by 11.3% per annum, which is more than double the inflation rate of 5.5% per annum over that period.
In the year ended March 2025, they grew the distribution by 7.1% to 120 cents per share (technically, per unit). Based on the current share price of R20.50, the fund is on a trailing yield of 5.8%.
If we look deeper, we find that the net asset value per unit increased by 3.9% to R28.07, so the fund is trading at a discount to NAV – but that’s not surprising when you see how low the yield on NAV would be. In other words, if it traded at NAV, the trailing yield (based on the distribution of 120 cents) would be just 4.3%. That’s not going to happen.
In fact, the current traded yield is already very low relative to other property funds. I suspect that this is because the investor base cannot buy the usual money market and fixed income instruments due to Shari’ah rules, so this fund plugs an important gap and hence enjoys stronger demand than would otherwise be the case.
Double-digit earnings growth at Standard Bank (JSE: SBK)
The quarterly update looks promising
Although local companies are only required to report earnings on an interim (six months) and full year basis, Standard Bank needs to submit quarterly financial information to the Industrial and Commercial Bank of China (ICBC), its single largest shareholder with a significant minority stake. The good news is that this gives all of us more regular information on the performance of Standard Bank than would otherwise be the case.
The movement in shareholders’ equity for the quarter doesn’t tell us much, as the ordinary dividend was paid in this period and hence total equity actually reduced over the quarter. It’s far more valuable to look at the commentary regarding headline earnings, which increased by 10% year-on-year.
Another important nugget is that the Africa Regions contributed over 40% of headline earnings in the quarter. Despite all the macroeconomic noise at the moment, things are clearly holding up for them.
An even clearer sign of this resilience is that 2025 guidance is unchanged at the moment despite the macroeconomic risks. That’s certainly a bold call.
Is the Karo Project at Tharisa offering a sufficient return? (JSE: THA)
The PGM market is in a tough space right now
If you enjoy digging into the particularly technical elements of mining (and if you understand them), then Tharisa releasing the Competent Persons’ Report on the Karo Platinum project will be of interest. Tharisa owns 65.59% in Karo Platinum, so they control this asset and it is important to the overall story. The report is a 321 page monster that you’ll find here.
Most of the report will only make sense to mining experts. Even the executive summary is a complicated read! Luckily, there are some very important points to highlight from a financial perspective.
For example, it’s important to know that commissioning is expected in Q4 2026. Also, of the total expected capex of $475 million, there is still $338 million to be spent, so there’s a long way to go here.
But now we get to what really stuck out for me: the internal rate of return (IRR) in dollars for the project is 12.68%, which to be honest doesn’t sound like enough to be very appealing. The PGM market is in a difficult space with uncertain supply and demand dynamics going forwards and this is clearly not helping the economics.
And by the way, this is exactly how cyclical industries sort themselves out – the returns on new projects become tight enough that investment in capacity slows down, leading to a shortfall in supply when demand finally picks up. The trouble is that at the moment, the question about demand is if rather than when.
Texton is sending a big chunk of cash back to shareholders (JSE: TEX)
I have to wonder why this isn’t in the form of share buybacks
Texton Property Fund didn’t declare an interim dividend for the six months to December 2024. They didn’t do it in the interim period either, in case you’re wondering. Instead, they’ve declared a special dividend of 20.13 cents per share for the latest interim period. To give you context, the share price is currently trading at R3.50.
The even more important context is that the net asset value (NAV) per share was R6.44 as at the end of December 2024, so the current share price represents a substantial discount to NAV. With excess cash on the balance sheet, this creates the perfect opportunity for substantial share buybacks at the current price, thereby unlocking returns for the shareholders that choose to stick around.
The good news is that Texton is returning capital of 79.87 cents per share to its shareholders, which is a more disciplined decision than allocating the capital in a way that doesn’t make sense. The bad news is that this won’t do anything to improve the discount to NAV – if anything, it might make it worse, as less of the NAV than before will be attributable to cash rather than other investments.
If you want to deal with the discount to NAV, you have to reduce the number of shares in issue and do it at a price that is lucrative – effectively, this means the company is investing in itself at a discount to NAV! Simply handing back the cash to each shareholder proportionately achieves very little.
Nibbles:
- Director dealings:
- An associate of a non-executive director of Sun International (JSE: SUI) bought shares worth R9.8 million.
- The CEO of Ascendis (JSE: ASC) and Calibre Investment Holdings (an associate of a director) each bought shares worth R143k i.e. the total trade was worth R286k.
- A director of York Timber (JSE: YRK) bought shares worth almost R20k.
