- Without doubt, the biggest story on the market on Monday was the Prosus / Naspers results announcement and associated buzz around strategies to unlock value. The share prices jumped by between 20% and 25%, depending on which company you look at. I have a contrarian view here, based on years of watching the group invest good money in bad business models. For a detailed look at why I feel this way, be sure to read this feature article.
- Invicta managed to close flat for the day, despite releasing results for the year ended March 2022. Volumes are thin even for R3 billion market cap companies. In FY22, Invicta grew revenue by 15% and profit by a whopping 141%. If we focus on continuing operations, we find that headline earnings per share (HEPS) increased by 99.4% i.e. practically doubled. Cash is always important, so the dividend per share increasing by 50% to 90 cents per share is healthy. Notably, Invicta is now reporting its group results under six reporting segments, which is a lovely level of disclosure for investors.
- KAP Industrial Holdings provided an operational update for the 11 months ended May 2022. There’s a full capital markets day being held on Tuesday 28th June, with the presentation due to be released on the company website. It’s been a mixed bag for KAP, with strong results in PG Bison and Safripol, whilst Restonic has struggled with retail demand and supply chain disruptions. Feltex has been hit by the floods at Toyota in Durban, a key local customer. Unitrans performed well in South Africa but had challenges in Rest of Africa. The group balance sheet is healthy. The capital markets day event should be interesting!
- Kore Potash has released the outcomes of the Kola Project optimisation study. This is a potash project found in the Congo. In case you’re wondering, potash refers to minerals with potassium, an important ingredient in fertiliser. Optimisation is the word indeed, with the latest study suggesting a reduction in capital cost by $520 million to $1.83 billion. The construction period has decreased by 4 months to 40 months. The suggested internal rate of return is 20% on an ungeared, post-tax basis using the price per tonne from the earlier study. If that price is updated to be closer to current levels, the IRR jumps to 49%. This explains why higher prices drive increased investment in mining. The next steps are to finalise the construction proposal and the financing proposal from the Summit consortium.
- Accelerate Property Fund has released a trading statement for the year ended March 2022. The property fund expects to pay a distribution per share of between 18 cents and 22 cents. This announcement was released after the market closed, so the share price of R1.11 doesn’t yet reflect this information. At the mid-point, that’s an 18% yield!
- PPC has released its financials for the year ended March 2022. Revenue increased by R1 billion but EBITDA fell by R0.1 billion, so that’s an unhappy margin story. Importantly, cash generated from operations improved to R1.5 billion from R1.4 billion in the prior year, so PPC is clearly very focused on its bank accounts. Net debt was reduced in the period by R1.2 billion. The headline loss from continuing operations was -3 cents per share, a trip into the red after reporting HEPS of 3 cents in the prior year.
- Rand Merchant Investment Holdings released a trading statement for the year ending June 2022. The group has been through significant changes, like selling the stake in Hastings and unbundling Discovery and Momentum Metropolitan. The focus now is on OUTsurance (in which RMI holds 89.3%), with the update noting exposure to the KZN floods of between R400 million and R450 million for the insurance company. This is covered by the catastrophe reinsurance programme, but there are certain amounts that still apply, like co-payments with your medical aid. For OUTsurance, this means net exposure of between R160 million and R200 million. The Youi business suffered natural disaster exposure in Australia, with the earthquake in Melbourne and floods elsewhere. The gross loss is the highest in Youi’s history at A$140 million. Youi has catastrophe reinsurance, but will suffer some losses based on retention levels (the minimum loss required to trigger the catastrophe reinsurance).
- Ascendis Health and Apex Management Services have decided to terminate the sale of Ascendis Medical by mutual agreement. Sabvest Capital has a 44.8% stake in Apex and also made an announcement about this, noting that Ascendis had repaid all capital and interest to Apex. The separate deal to dispose of the Pharma business to Austell Pharmaceuticals is theoretically still underway.
- Texton Property Fund has agreed to sell the Hermanstad Industrial Park in Pretoria. Texton has received an offer at a slight premium to the last disclosed book value. The fund has decided to exit its industrial assets to focus on repurposing office assets and pursuing its SME strategy. The price has been agreed as R133.5 million. The yield is around 6.5% based on annualised net rental income, so I’m not surprised that Texton sold it.
- Adcorp isn’t the most liquid company around and I’ve been on the wrong end of the bid-offer spread, so it’s bittersweet seeing the company executing buybacks. Fewer shares in issue can only mean lower liquidity. During the past couple of weeks, Adcorp repurchased 1.281% of shares in issue for around R8.5 million, an average price of R6.20 per share.
- Kibo Energy has released its results for the 12 months ended December 2021. The loss after tax of £23 million includes a £20.7 million impairment on the coal projects in the group. Kibo plans to dispose of its coal assets and focus on renewable energy. Through equity capital raisings of around £6.5 million, the group has adequate cash to continue as a going concern. Credit to Kibo – the company has been exceptionally busy operationally and has made some interesting announcements, like the deal with CellCube to deploy the energy storage solutions in Southern Africa.
- The external auditor of Chrometco, Moore Cape Town, has resigned. The reason given is the existence of a self-interest threat and an engagement that is such high risk that the level of risk cannot be adequately addressed in the audit planning and approach. That’s not good.
- Crookes Brothers is an agriculture business that we don’t often hear from on the JSE. The group has released a trading statement for the year ended March 2022, noting that HEPS has fallen from 272.2 cents to 229.6 cents.
- I know that the CFO of Spear REIT is a keen Ghost Bites reader, so I must point out that his spouse bought shares in the property fund. It can only be interpreted as a positive signal if he’s willing to recommend the shares to his significant other!
- A family trust associated with a director of Fairvest has purchased shares worth R4.9 million in the group. That’s a chunky trade.
- I doubt anyone really cares to be honest, but Oando Plc has announced its 2020 financial results. The group is catching up quickly with its financial backlog.
