Ghost Bites (enX | Gold Fields | Mr Price | Novus)

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A special distribution at enX (JSE: ENX)

This is being funded from the proceeds of the Eqstra disposal

enX announced that the disposal of Eqstra was completed and the gross proceeds of R1.14 billion (subject to some deductions and escrow amounts) have been received.

The net amount after those adjustments is R990 million. This has triggered the declaration of a distribution by the company of R5 per share.

The weather isn’t being kind to Gold Fields (JSE: GFI)

Salares Norte in Chile has been hit by the earlier onset of winter in Chile

Mining isn’t an easy gig at the best of times. It’s even worse when the weather doesn’t play ball. Gold Fields is the latest example of the weather giving a mining group a hard time, with an earlier-than-expected winter in Chile playing havoc with the commissioning and ramp-up phase at Salares Norte.

Long story short, calendar year 2024 production for the project has been revised down from 220koz – 240koz to 90koz – 180koz. This range is largely independent of weather events until late August.

The impact on group production guidance is a decrease from 2.33Moz – 2.43Moz to 2.20Moz –
2.30Moz. But when production is lower, all-in costs inevitably move higher. The previous range of $1,600/oz – $1,650/oz has been revised to $1,675/oz – $1,740/oz.

And to make it worse, Gold Fields can’t even use the disrupted winter months to capture and relocate chinchillas. If it’s not the weather, it’s the environmental considerations that make mining difficult.

The market didn’t love this obviously, with the share price down 11% for the day.

Mr Price looks to be struggling (JSE: MRP)

This doesn’t look nearly as strong as what we’ve seen from the likes of TFG

When a group has been active with acquisitions, you always have to be careful when interpreting their results. Buying earnings is one thing. Growing them on a comparable basis is quite another.

For the 52 weeks ended March 2024, Mr Price grew revenue by 15.5%. That sounds amazing of course, but it was only 5.8% if you exclude the Studio 88 acquisition. Now we are getting closer to the right lens on these numbers. Comparable store sales tell the real story, as this excludes the growth in the footprint. This metric only increased by 1.8% for the full year, with the silver lining of significant momentum into the second half of the year. The Home segment came under particular pressure, with a negative move in comparable sales.

Mr Price seems to have given up the online fight, especially when you compare it to Bash within The Foschini Group. At Mr Price, online sales decreased by 2.2% and now contribute only 2.1% of total sales. Without Studio88, online sales were down 3.7%. And yet despite this, they talk about how South Africans favour omni-channel shopping. It’s true, they do, hence why it isn’t good to see online sales moving in the wrong direction.

Unlike at Pepkor where the focus is on credit sales, Mr Price only saw growth of 1.7% in that metric. Cash sales excluding Studio88 were up 7.0%.

Gross margin was a tale of two halves. Although it was only 20 basis points higher for the full year, the second-half performance was an increase of 160 basis points to 40.6%.

Another worry for me is the cost growth. Excluding Studio88, it was up 7.8% – and that’s higher than revenue growth.

Profit from operating activities was up 7.9%. This includes Studio88. It’s important to note that operating profit margin contracted by 110 basis points to 14%.

At least inventory was down 4.2% at the end of the period, leading to a better working capital outcome and improved stock freshness.

HEPS for the year was up 6.7%. The second half momentum is what needs to continue, as earnings were up 17.4% in the second half of the year.

My overall feeling on Mr Price is that they find themselves in an awkward strategic position. Acquisitions for the sake of acquisitions make a group bigger, not necessarily better. They aren’t the credit sales powerhouse that Pepkor is becoming, nor have they tackled online in the way that TFG have. It’s hard to really pinpoint the Mr Price strategy and that’s a concern.

Novus updates its earnings range and has an update on the Bytefuse deal (JSE: NVS)

This is a strong period of profitability

For the year ended March 2024, Novus has guided that the range for HEPS is between 78.02 cents and 79.49 cents. That’s a huge improvement from the small headline loss per share in the prior period.

Separately, the group announced that the fairness opinion related to the acquisition of Bytefuse has been finalised. The independent expert has opined that the terms of the deal are fair.

Little Bites:

• Director dealings:
  • A prescribed officer of ADvTECH (JSE: ADH) sold shares in the company worth nearly R950k.
  • A director of a major subsidiary of Shoprite (JSE: SHP) bought shares worth R297k.
  • Des de Beer has bought shares in Lighthouse (JSE: LTE) worth R200k.

• If you are interested in Raubex (JSE: RBX), then check out the site visit presentation related to Bauba Resources. You’ll find it here.

• Impala Platinum (JSE: IMP) announced that all conditions for the B-BBEE transaction have been met and the deal has been implemented.

• Invicta (JSE: IVT) has announced the redemption of its preference shares in issue at a small premium. There has been a trend of preference share redemptions, as this asset class didn’t really work out on the JSE in the way that was intended.

• Conduit Capital (JSE: CND) is going from bad to worse. The headline loss per share has worsened by between 24% and 64%. This is despite the group achieving its first net underwriting profit since 2016.

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