- Dis-Chem released a cracking set of results for the year ended February 2022. If I were forced to choose between Dis-Chem and Clicks at the moment, I would invest in Dis-Chem. I think both are overpriced though, so I don’t hold either of them. Find out more about the Dis-Chem results and the group’s growth levers in this feature article.
- Barloworld took another knock on the market on Monday after releasing interim results. They were mostly good actually, with pressure on working capital as the likeliest culprit for the market response. Although an impairment of R1 billion has been recognised in the Eurasia division, the group doesn’t plan to exit Russia. Find out more in this feature article.
- Netcare has released results for the six months to March 2022. Operating leverage is clear to see here, with a modest 2.3% increase in revenue driving an 8.1% increase in EBITDA and 19.9% increase in headline earnings per share (HEPS). Normalised EBITDA margin improved to 15.8% from 14.8% in the comparable period. With net debt down by 11.4% (net debt to EBITDA now 1.7x), there’s a return to paying interim dividends with a declaration of a 20 cents per share dividend. I want to specifically point out that occupancy for mental health has increased from 60.6% to 64.2% year-on-year. Look after yourselves, Ghosties. Netcare’s share price is down 8.7% this year.
- Tradehold released results for the year to February 2022. Headline earnings swung from a loss of 1.9 pence per share to a profit of 6.1 pence per share. The tangible net asset value (NAV) per share increased to R20.96 from R19.75 a year ago. A final dividend of 30 cents per share has been declared. The 74.3% stake in Collins Property Group has been a strong performer as the Collins portfolio is focused on industrial space and distribution centres, which is exactly where you wanted to be in the property sector during the pandemic. The UK retail shopping centre and commercial property business Moorgrath has had a tougher time and Tradehold separately announced a potential disposal of its stake in Moorgarth for GBP102.5 million in a related party transaction, as several directors (including Christo Wiese) are also shareholders in the purchaser. This would see Tradehold change its tax residency to South African and its reporting currency to rand. The focus going forward would be on the Collins portfolio. The proceeds from the disposal would redeem preference shares funding issued to RMB and pay a special dividend of around R4.00 per share to Tradehold shareholders. The share price closed 7.9% higher at R10.75, still a discount of nearly 50% to tangible NAV.
- Adcorp is in the middle of a turnaround strategy that it needs to deliver just for investors to get out of the bid-offer spread that was enormous during the pandemic. I know this because I was one of the Adcorp punters who got in after the March 2020 crash, paying R5.58 per share. With a bid-offer spread of as much as 30% from memory, it’s taken a long time for the bid to come up to my offer, closing at R5.50 yesterday. At least I got the turnaround story right, with the latest trading statement reflecting an increase of between 181% and 201% in HEPS for the year ended February 2022. This takes HEPS to between 96.0 cents and 102.8 cents and puts Adcorp on a Price/Earnings multiple of around 5.5x at the midpoint of the guidance. I learnt a lesson here about how to enter positions in illiquid small caps. The bid-offer spread seems to have improved these days.
- Tsogo Sun Gaming shone brightly yesterday, climbing 12.8% after releasing a trading statement for the year ended March 2022. HEPS has swung magnificently into the green, coming in at between 106.9 cents and 113.5 cents per share vs. a loss of 3.1 cents per share in the prior period. After closing at R12.01 per share yesterday, the share price is up just 2.7% this year.
- Steinhoff is trying very hard to keep the contents of the PwC report secret. Tiso Blackstar and amaBhungane won a fight in the High Court to get Steinhoff to provide a copy of the report and Steinhoff has filed a notice applying for leave to appeal the ruling. Steinhoff is arguing that the report is protected by legal privilege and believes that the court overlooked the timing of a demand from the Dutch Investors Association (VEB) which was received before PwC was appointed. In other words, litigation was already contemplated when PwC was engaged. The Steinhoff share price has lost nearly half its value this year. I took profit at the start of 2022 and I’m very glad that I did.
- Invicta released a trading statement for the year ended March 2022. Earnings per share is impacted by substantial once-off gains linked to underlying operations, including a profit on disposal of businesses and a fair value gain on remeasurement of joint venture investments. Headline earnings per share (HEPS) excludes these once-offs, which is why investors tend to use this measure. There’s still complexity here, with HEPS of 316 cents in the prior period including 85 cents attributable to a business that was subsequently disposed of. HEPS is expected to be within 20% of the 316 cents number (i.e. between 252.8 cents and 379.2 cents). The correct comparable base strips out the discontinued operations, which would be 231 cents. This means HEPS is at least 9% higher than last year for continuing operations, provided I’ve interpreted the difficult announcement correctly.
- Alexander Forbes released a trading statement for the year ended March 2022. The group’s retirement operations were negatively impacted in this environment by retrenchments. New business wins and positive market returns helped offset this headwind. HEPS from continuing operations is expected to increase by between 16% and 21%. The share price is down around 5% this year after dropping 3.4% in response to this update.
- Fortress REIT is under pressure to retain that all-important REIT status, which requires the fund to meet distribution requirements under JSE rules. The fund has A and B shares and has had a controversial relationship with shareholders in recent times, with a prior attempt to get A shareholders to give up their preferential right to distributions. The latest news is that a subcommittee of the board has been appointed to explore a merger of the two share classes. This would help the fund maintain its REIT status by only needing to meet the requirements on one class of shares. I suspect that this might get feisty again as there will need to be a great deal of engagement with shareholders.
- Impala Platinum has increased its stake in Royal Bafokeng Platinum by a further 0.21% of total shares outstanding. This takes the shareholding to 37.83%. The offer to Royal Bafokeng shareholders remains open.
- Conduit Capital has updated the market on Constantia Insurance Group, the major asset in Conduit. Claims from the floods in KZN are not expected to exceed R25 million and net exposure is within risk appetite after reinsurance recoveries. For the nine months to March 2022, the Constantia Insurance Group achieved operating profit of R24 million off gross premium income of nearly R1.6 billion. Cash generated from operations was R80.3 million and the cash balance at 31 March 2022 was R172.6 million. Conduit is in the process of raising R500 million in preference share funding.
- Hystead Limited, in which locally listed property fund Hyprop holds a 60% interest, has completed the disposal of its investment in Delta City Mall in Montenegro. The proceeds of EUR70 million will be used to reduce Hyprop’s Euro-denominated debt. Since 31 December 2021, that debt would have been reduced from EUR373 million to EUR111 million.
- Raubex has extended the closing date for its offer to the shareholders of Bauba Resources to 10th June 2022. When the clock strikes midday on that Friday, the R0.42 per share offer closes.
- Hulamin has been trading under a cautionary announcement since 14th October 2021 and renewed that cautionary on Monday. Time will tell what the company is up to and what the “discussions” that necessitated the cautionary announcement entail.
- Irongate has confirmed that its distribution net of withholding tax in Australia is R0.4548671 per share. As a reminder, this Australian property fund is currently under offer.
