iOCO has been focusing on margins – and with great success (JSE: IOC)

Life-after-EOH is showing positive momentum

In case you’ve forgotten or haven’t really kept up with this story, iOCO is the renamed EOH. What is in a name, you ask? Well, in this case, quite a bit. Instead of focusing on legacy issues and getting tons of bad press, the company is working on getting its profits to head in the right direction.

This is working, despite a drop in revenue of 6.4% for the six months to January 2025. With gross margin up 300 basis points to 30%, gross profit increased by 2.8%. The real highlight is on the EBITDA level, which improved by a massive 159%. EBITDA margin increased from just 3.1% to 9.2%!

This is the joy of coming off a really low base for margins. Below the EBITDA line, there’s further room for improvement thanks to a reduction in net finance costs. These factors are why HEPS swung wildly from a loss of 11 cents to profit of 19 cents per share.

The share price is up 176% over 12 months, which is obviously immense. At the current share price of R3.16, simply annualising the interim result to get to earnings of 38 cents per share would imply a P/E of 8.3x. This isn’t exactly a demanding valuation, but isn’t a bargain either. To really push the share price beyond this level, they would ideally need to show the market that iOCO can become a revenue growth story, not just a margin story.

With plenty of narrative in the results around plans for revenue growth, they just might get it right!

A wobbly at Kore Potash (JSE: KP2)

There’s a delay to the Summit Consortium term sheet

Oh boy. So it begins. Despite the Summit Consortium having an incredibly long lead time to think about how to finance the Kola project that Kore Potash is putting together, the consortium has missed the communicated deadline to submit a non-binding financing term sheet.

Kore Potash expected to receive it by the end of March. With various excuses linked to religious holidays, the consortium has now asked for more time. They expected to deliver it before the end of April and “hopefully” by the middle of the month.

Hope isn’t what investors want to see here. They want to see a funding deal for the project. Although it’s entirely possible that everything is still on track, this is the kind of wobbly that gets people concerned.

Renergen’s quarterly update comes after a period of extreme price volatility (JSE: REN)

The share price is up 96% over one month and just 2% year-to-date

The latest Renergen quarterly update is certainly one of the more interesting ones. As usual, there’s good news and bad news.

An example of bad news is that Renergen still doesn’t know how to fill large iso-containers at the extremely cool temperatures needed. The good news is that they’ve figured out a plan B with smaller containers. They did at least fill a smaller container during this quarter, which is why the share price went nuts.

Quietly in the background, LNG production increased 22% quarter-on-quarter. That’s clearly good news. It just has little bearing on the long-term investment case.

Speaking of the investment case, we now get to the scary stuff. The dispute between Tetra4 (Renergen’s South African subsidiary) and Springbok Solar was heard in the High Court on 20 February. Judgment has been reserved, which means that the court is taking its time to deliver a ruling. In the meantime, Tetra4 has filed an appeal with the Department of Mineral Resources regarding the approval that the solar developer obtained. The fight continues, with potentially severe consequences if the court rules against Renergen.

Despite the uncertainty, the show must go on in terms of finding funding for the development of the helium asset. Renergen included some commentary in the announcement about working on a liquidity solution to enable the completion of Phase 1, with negotiations expected to be concluded in the coming weeks. That could mean anything, to be honest.

On the exploration side, there was no drilling during this period. Instead, the focus was on analysing previously obtained data.

Never a dull moment then, with all eyes on the court case.

Nibbles:

• Director dealings:
  • The founders of Discovery (JSE: DSY) are fans of putting hedges in place over their shareholdings. This strategy seems to have rubbed off on the CEO of Discovery Bank, who has put a collar in place over R20 million worth of shares. The call strike price is R248.86 and the put strike price is R200.63. For reference, the current price is R205, so this collar is strongly focused on protecting against downside risk from this level. The expiration date is March 2027.
  • A director of Caxton and CTP Publishers and Printers (JSE: CAT) bought shares worth R500k.
  • A non-executive director of Shaftesbury Capital (JSE: SHC) bought shares worth R450k.
  • An entity related to the chairman of Stor-Age (JSE: SSS) bought shares worth R434k.
  • In the recent Fortress Real Estate (JSE: FFB) dividend election, a number of directors of Fortress and/or NEPI Rockcastle (JSE: NRP) elected to receive shares in NEPI instead of a cash dividend. Remember, Fortress holds a substantial investment in NEPI and has been using that stake strategically for capital structure purposes. Receiving the NEPI shares was the popular choice, with holders of 90.57% of Fortress B shares making that election.
  • In one of the smallest director dealings I’m sure you’ll see for a while, a director of Cilo Cybin (JSE: CCC) bought shares worth just R2k.

• Sibanye-Stillwater (JSE: SSW) hasn’t had much in the way of good news lately, although the share price is up a meaty 40% year-to-date based on a run in platinum prices. Although I don’t think the latest announcement is the kind of news that can move the share price, it’s still good news for renewable energy enthusiasts that the Castle wind farm has achieved commercial operation. This is the largest private offtake wind farm in the country, located near De Aar in the Northern Cape and providing power to Sibanye’s operations via a wheeling agreement with Eskom. This is a prime example of Eskom’s infrastructure being used for transmission rather than power generation. This project is expected to supply 5.5% of Sibanye’s energy needs in South Africa at a significant discount to what Eskom power would cost.

• Shaftesbury Capital (JSE: SHC) didn’t waste any time in getting the deal to sell a 25% stake in Covent Garden across the line. It’s all done and dusted, which means that Norges Bank Investment Management is now the proud owner of a minority stake in this excellent London property.

• In similar deal news, Mondi (JSE: MNP) has completed the acquisition of the Western Europe packaging assets of Schumacher Packaging. This adds to Mondi’s existing European network of corrugated solutions plants. Despite the name of the asset being acquired, this deal wasn’t that quick to get across the line, with the initial announcement having been made in October 2024.

• Lighthouse Properties (JSE: LTE) has finalised the price for the scrip dividend. Those who elect to receive a scrip dividend (i.e. more shares in Lighthouse) in lieu of a cash dividend will receive shares based on a calculation that is takes into account a 2% discount to the Lighthouse price on the JSE on 31 March (adjusted for the amount of the cash dividend). In other words, there’s a minor discount.

• The CFO of MAS (JSE: MSP), Nadine Bird, has resigned with effect from 30 June 2025, having been in the role since February 2023. After much was achieved around the debt management strategy, this was a successful, albeit short stint. A replacement has not been named as of yet.