Gavin Wood comments on the Blackstar/Times Media Group transaction, emphasising that it is transformative for Times Media and is being led by highly-rated people.
Abdul Davids is quoted on Metair in this article which highlights certain stocks to watch in 2015.
Investors in South African banks are growing increasingly concerned over proposed legislation stripping them of some rights as creditors, fallout from the August collapse of African Bank Investments Ltd. The Banks Amendment Bill would give the administrator of a failed lender the right to sell assets and change capital structures without consulting investors, according to the document, compiled by the country’s National Treasury. If enacted, the proposal would apply any time a financial institution goes into administration. Gavin Wood comments. View article
Sappi and Edinburgh Napier University have developed a lower-cost, commercially viable way to make potential “wonder material” nanocellulose. The parties say nanocellulose has the potential to be used in a wide range of applications — from packaging and touchscreen displays, to car panels and wound care — with the potential demand for 35-million tonnes a year by 2020. The JSE-listed Sappi group will build a pilot plant to produce Cellulose NanoFibiils following a three-year partnership between researchers from Sappi and the Scottish university. Abdul Davids comments.
Tiger Brands has not been put off buying businesses of scale and its rest-of-Africa strategy has been unaffected by its bad experience in Nigeria, CEO Peter Matlare says. Tiger’s acquisition of Dangote Flour Mills (DFM) in Nigeria two years ago for a “full price” has proved a major drag on the group’s earnings, with impairments and losses from Nigeria featuring prominently in Tiger’s results since. Of its initial R1.5bn investment for a majority stake in DFM, which was made to build scale in the country and serve as a platform for other opportunities, Tiger has had to write off the entire R849m premium paid for the business as well as a further R105m against the value of DFM’s assets. Victor Seanie comments.
The price of brent crude oil has dropped 38% since the end of June to a five-year low this month. Sasol Ltd.’s bonds are signaling investor concern that debt levels of the world’s biggest maker of motor fuel-from-coal are coming under pressure amid a 38% plunge in oil this year. Abdul Davids comments. View article
SABMiller announced weaker than expected interim results, with revenue growing by just 2% and organic constant currency operating profit rising by 3% from the comparable period last year. Group adjusted earnings per share came in at 123.6 US cents per share, up from 120.4 US cents per share last year. Dirk van Vlaanderen comments on the result.
South African fund managers, who have limited opportunity to invest in the residential property market on the JSE, are becoming increasingly bullish on listed housing funds in Germany, which is believed to be the European country with the largest percentage of its population renting instead of owning homes. Investors who want exposure to Germany’s housing market through the German Stock Exchange can choose from at least 10 real estate investment trusts (Reits) that own rental housing portfolios. Justin Floor discusses the investment case for German residential property.
The UK health and life insurance markets are perfect targets for Discovery’s “disruptive” approach based on behavioural economics, CEO Adrian Gore said yesterday. Discovery has bought the remaining 25% of its British business for R2.8bn to take full ownership of PruHealth and PruProtect, paving the way to entrench the Vitality brand in the northern hemisphere market and extend its product range using the Vitality insurance model. Justin Floor comments on the strategic impact of this development.
Tongaat Hulett can grow its annual sugar production by 400 000 tonnes over the next four years without having to invest in new mills, largely on expected improvements in yields and extraction rates, CEO Peter Staude said yesterday. This would reduce unit cost production, given that most of the cost base was fixed, he said after Tongaat Hulett reported a 16.6% rise in headline earnings for the six months through September to R773m. Abdul Davids comments.
Sappi expects prices of dissolving wood pulp to remain depressed for about 18 months, as excess supply and low cotton prices put pressure on the price of the cotton substitute. Sappi has about a 20% share of the world market for dissolving wood pulp, which it ships mainly to clothing and textiles makers in the Far East at far higher margins than its paper products. Abdul Davids comments.
Massmart was feeling the pressure from constant litigation from its competitors which are seeking to block the company’s move in growing its retail food business. In the latest case in the Durban High Court, Judge Peter Olsen granted an interim interdict to prevent Massmart from converting its Game store into their food retailer Cambridge at Senzangakhona Shopping Centre in Ulundi, KwaZulu-Natal. The order was granted after The Spar Group approached the court to complain that it had an exclusivity lease agreement which bars other retailers who compete with Spar including bakeries, butchers, supermarkets, green grocers, wholesalers’ cash & carries, and liquor stores. Dirk van Vlaanderen comments on Massmart’s move into fresh food.
Gold led the rout of commodities as investors unwound their positions, accumulated before the US Federal Reserve announcement to end quantitative easing. Gold, silver and platinum tumbled as the dollar’s rise to a five-year high cut demand, wiping almost $2 billion (1122.1bn) from the value of precious metals-backed funds. The commodity prices declined as the Republicans soared to victory on Tuesday in US mid-term elections to win both US Houses of Congress and Bank of Japan governor Haruhiko Kuroda said he saw no limit to the steps the central bank might take to defeat deflation. Gold, which is perceived to be a hedge for investors, dropped to a four-year low as bullion for immediate delivery slid 2.3 percent to $1 141 an ounce in London. Jihad Jhaveri comments on what gold producers can do to deal with the volatility of the gold sector.
A possible sovereign ratings downgrade could have “severe consequences” for SA, though this has been mitigated by Finance Minister Nhlanhla Nene’s “excellent” first medium-term budget, Imperial Holdings CEO Mark Lamberti says. SA is the source of 66% of Imperial’s revenue. But Mr Lamberti told the diversified logistics and industrial services company’s annual general meeting (AGM) yesterday that “the willingness” of Mr Nene’s Cabinet colleagues to “support the necessary austerity must now be tested”. He subsequently told Business Day that he was not pointing fingers at single ministries, but was talking about government adhering to “general austerity” measures. Qaqambile Dwayi comments on Imperial’s revised guidance.
Recovery in the manufacturing sector is proving more robust than expected with the key leading indicator of manufacturing conditions breaking decisively through the neutral 50-point barrier last month and hitting its best level in a year. The Kagiso purchasing managers index (PMI) rose for a third consecutive month to 51.8 in October from 50.8 in September, indicating that activity in the manufacturing sector continued to improve following months of weakness and that recovery in the sector may be gaining traction. This marks the best level it has reached since November 2013. Abdul Davids comments.
The efficiencies of Famous Brands’ integrated supply chain strategy had helped it to remain resilient during the adverse trading conditions of the past six months. According to Dirk van Vlaanderen, the company reported a solid set of interim results, with a strong performance from the supply chain business offsetting more subdued trading conditions in the franchising division.
MTN’s mobile money service has the potential to contribute 15% of MTN SA’s total revenues in the long term, the company said last week. In June MTN partnered with Pick n Pay, Boxer stores and Visa to re-launch mobile money service that will enable customers to transfer and receive money, and also pay bills. Mobile money is one of the key areas of focus for MTN Group as it focuses on growing data-driven services. Aslam Dalvi comments on this service.
Shares in MTN Group fell 3.79% to close at R235.03 on concerns about regulatory pressure in the mobile operator’s largest market, Nigeria, which dragged down its subscriber growth there for the three months to September. However, MTN expects an improved performance during the remaining quarter of the year, after it resolved a number of matters with the Nigerian regulatory authority. Aslam Dalvi discusses the company’s prospects.
Diversified global mining company Anglo American posted solid production figures in the quarter to September. Anglo raised its full-year iron-ore production forecast to a range of 45 million tons to 46 million tons. Rubin Renecke and Abdul Davids comment on the company’s production numbers.
The volume of cigarettes British American Tobacco (BAT) sold continued to decline in its third quarter ended September, amid contracting smoker markets in countries including Russia, Vietnam, Brazil, Poland and Canada. The JSE’s biggest stock by market value — R1.2-trillion — saw its share fall as much as 4.58% to R585 yesterday after it released interim results for the nine months ended September. Analysts described the performance as “disappointing”. Dirk van Vlaanderen comments.
Faced with a sputtering economy, high levels of consumer debt and a clampdown on unsecured lending, clothing and furniture retailers are under pressure to find new sources of growth. Big retailers reliant on offering credit sales to lower and middle-income consumers have been particularly vulnerable, with financial results reflecting an increasingly cash-strapped and cautious consumer environment. Simon Anderssen comments in this article.
Altron TMT is repositioning one of its telecom businesses, Altech Autopage Cellular, to offer increased internet services with a focus on corporate clients. Autopage’s business of reselling the products and services of various mobile network operators has come under pressure from price competition and the reduction in mobile termination rates. Its rival, Nashua Mobile, which belonged to Reunert, closed shop because of the overall deterioration of the business model. Aslam Dalvi comments on this development.
These days tobacco companies no longer carry the “sin share” badge but are increasingly given the more ominous “death share” tag. Ethical issues aside, the investment proposition, on paper, is preposterous: imagine investing in a company offering a much maligned product to a shrinking consumer market. It’s even more difficult when you consider that brand marketing opportunities for purveyors of cigarette brands are severely restricted and product pricing is loaded with ever rising excise duties. Dirk van Vlaanderen discusses how pricing and gaining profitable market share are crucial elements for BAT in an industry suffering volume declines.
Phumelela Gaming and Leisure — owner of five racecourses with training centres in Gauteng, the Free State, Northern Cape and Eastern Cape — saw earnings per share shoot up 32% in the first six months to July, underpinned by improved international operations. The positive momentum continued in the second half with a weaker rand providing further benefits. Dirk van Vlaanderen is quoted in this article.
Over the past decade, the local listed property sector has experienced stellar average compounded growth in excess of 20%, but does the sector still have attractive longer-term return prospects in the face of higher bond yields and interest rates? Justin Floor gives our view on this asset class.
Pick n Pay was on track with the completion of its central distribution programme, which had already reduced distribution costs by 10 percent, the retailer said. Over the years, the supermarket chain has been criticised for not investing in centralised distribution and has had operational challenges at one of its distribution centres. Abdul Davids comments that the progress in Pick n Pay’s distribution centres would enable it to catch up with its competitors.
Dirk van Vlaanderen is quoted in this company analysis of Cape-based empowerment ventures, Brimstone and Grand Parade Investments.
FirstRand, SA’s largest bank by earnings and market capitalisation, hopes to set up a fully fledged bank in Ghana early next year and has R10.2bn in surplus capital to invest in its growing operations in countries such as Mozambique, Nigeria, Zambia and India. Jihad Jhaveri comments on the company’s annual results.
Sasol allayed the fears of forced retrenchments in South Africa yesterday, as it rolled out its restructuring programme in which it has raised its target for cost cuts to at least R4 billion a year by 2016. Sasol was looking to southern Africa and North America for gas and chemicals growth opportunities and had set aside capital spending of R50 billion for 2015 and R65bn in 2016 as it progresses its growth strategy. Abdul Davids comments.
Seeking a dignified exit from the constrained poultry sector, Pioneer Foods has finally managed to unbundle and list Quantum Foods as a separate entity. Quantum Foods is now a self-contained listed business within the Pioneer Foods group with a focus on animal feeds, eggs, and broilers, among other operations. Victor Seanie comments on the unbundling.
Following a 5.38% rally on Wednesday, shares in Pioneer Food Group shed 4.74% to close at R122 on Thursday, despite the food and beverage group saying its full-year earnings would be more than 20% better than previously. Analysts said Pioneer’s trading update may have disappointed the market, given weak sentiment and expectations for a greater jump in earnings since adjusted earnings at the half-year mark were up 58%. Victor Seanie comments.
Discovery’s business model lends itself to opening new businesses, giving it the potential to grow profit at about 20% a year, CEO Adrian Gore said yesterday. Discovery reported operating profit increased 23% to R5bn in the year to June. Operating profit growth has averaged 22% a year over the past 10 years. The insurer views SA as its primary market and the UK as its second primary market. Both are capital intensive. To grow its global footprint further without incurring high capital costs, Discovery is partnering with global insurers in markets including China, Singapore and Australia. Justin Floor comments on the company’s results.
Trading conditions in SA in the last quarter “became increasingly disruptive, compounded by the detrimental effects of prolonged labour unrest and declining consumer demand”, Bidvest said in its results for the year ended June. Dirk van Vlaanderen comments on the company’s results
South Africa’s key manufacturing index, the Kagiso Purchasing Mangers’ Index (PMI) – for August – reflected slight recovery, rising by 3.1 index points to 49.0 from 45.9 in July. However, it is still below the 50 mark, signalling contraction. Abdul Davids comments.
Massmart’s Game stores are taking a beating from the slowdown in consumer spending, as shopping patterns show a shift towards necessities such as food and clothing. Massmart chief executive Guy Hayward said the consumer environment had dramatically hardened in the past few years, changing the way consumers were shopping. Dirk van Vlaanderen comments.
Massmart’s Game continued to underperform, weighing on profitability, as sales of durable goods fell due to pressure on consumers. “As middle- and lower-income customers are struggling, selling them general merchandise and durables is very, very difficult. Customers don’t have enough money so they’re spending it on food and increasingly less on durables,” Massmart CEO Guy Hayward said yesterday. Dirk van Vlaanderen comments on Massmart’s results.
A burden of debt lies on Sappi, but since the group’s repositioning, faith in it seems to be increasing. Abdul Davids comments on Sappi in this feature article.
Imperial Holdings experienced falling demand in its key European logistics market of Germany in the year to June, but poor gross domestic product growth, rising wage and transport costs, and labour disruptions in SA, its core market, all helped diluted headline earnings per share fall 7%. Abdul Davids comments on the company’s 2014 results.
Construction and engineering are not for the fainthearted, and the state’s lack of understanding of how the sector works is a big part of that. The construction industry contributes just 3.5% to gross domestic product (GDP), and gross fixed capital formation as a percentage of GDP is less than 20%. China, Canada and Australia have investment-to-GDP ratios of more than 25%, and construction sectors that contribute more than 7% to the economy. Rubin Renecke comments on Aveng.
With its feet firmly in the Chilean casino market, Sun International would focus on bedding down its Latin American strategy and seek entry into a very “tough” Asian market, the casino and hotel operator’s chief executive, Graeme Stephens, said yesterday. Over the past year, Sun International had made significant progress on its business strategy to expand its casino business into other emerging markets against the backdrop of a very subdued local economy Stephens explained. Dirk van Vlaanderen comments.
Gaming and leisure group Sun International made the most of the weak hand that it was dealt in the year to the end of June. Results released yesterday showed that a focus on cost efficiencies allowed Sun to record a slightly stronger second half, with a 5% gain in full-year earnings before interest, tax, depreciation and amortisation (Ebitda) to R3bn, coming off a 5% gain in revenue to almost R11bn. Sun executives described trading conditions as subdued, with minimal improvement expected in the medium term. Dirk van Vlaanderen comments on the company’s results.
Metair’s start-stop battery technology is a big market opportunity as original equipment manufacturers (OEMs) across the world race to meet tightening vehicle emissions legislation. Kagiso Asset Management Investment Analyst, Simon Anderssen says OEMs are looking at start-stop engine management systems as a cost-effective solution to vehicle pollution, while investing in better fuel economy and lower exhaust output through engine downsizing, turbocharging and weight reduction.
Global resources group BHP Billiton’s plans to spin off non-core businesses estimated to be worth US$16bn — including most of its assets in SA — will create a new company with flexibility to seek growth opportunities in Southern Africa and elsewhere. Billiton CEO Andrew Mackenzie yesterday confirmed weeks of detailed speculation about Billiton’s plans to dispose of assets that did not fit in with its focus on large, long-life resources in iron ore, copper, coking coal, petroleum and potash. Rubin Renecke comments.
Equity investments are at the heart of most balanced, multi-class investment portfolios. In this issue of the Towers Watson Quarterly Investment Manager Review, investment managers explain what they look for when choosing equities and discuss how they combine these in equity portfolios. Abdul Davids comments.
Mpact was venturing into plastic recycling with plans to build a plant for R350 million in partnership with the Industrial Development Corporation (IDC), the listed packaging group announced yesterday. The plastic recycling plant will process about 29 000 tons of polyethylene terephthalate (PET) bottles a year, generating 21 000 tons of new raw material directly from waste material that would otherwise be sent to landfill sites. Dirk van Vlaanderen comments on the company’s results.
Packaging manufacturer, Mpact, lifted its basic underlying earnings per share 19.2% in the first half to June, saying that the creditable achievement was in the face of considerable economic headwinds. The group attributed this mainly to a favourable sales mix and improved productivity relating to capital expenditure over the past four years. Dirk van Vlaanderen comments on the company’s results.
MTN SA aims to return to the 34% – 35% operational margin range in the full year to December following a dismal performance in the interim period to June. The performance targets may result in the implementation of a cost reduction programme that could result in retrenchments. MTN has been under pressure for some time now due to increasing competition from rivals. Aslam Dalvi comments on MTN’s plans to rationalise costs in this article.
Africa’s largest cellular company, MTN, which reported a 9% rise in half-year profits this week and now has 215 million subscribers across the world, has a plan to boost flagging revenue in South Africa. CEO Sifiso Dabengwa said this week that MTN intended to expand its fibre network to the homes of its wealthier South Africa clients during the third quarter of this financial year. This is an important move because it illustrates that MTN is not just going to let its share of the South African market slip, despite the fact that this remains one of the weakest of its regions. Aslam Dalvi comments on MTN’s strategy in this article.
Mondi says it has seen a steady improvement in all key financial metrics in the six months to June, building on a record performance for the full year to December. Underlying operating profit of €377m in the interim period was up 3%, underlying earnings per share rose 5%, and cash generated by operations was up 2%. Rubin Renecke is quoted in this article.
African Bank Investments’ (Abil’s) shock announcement on Wednesday that it wants to raise at least another R8.5bn to keep the beleaguered business going has spooked major shareholders, and raised questions about its future. Gavin Wood comments in this article.
Nedbank is battening down the hatches with increased portfolio provisioning in case the recent mining and metal workers’ strikes and difficult economic conditions lead to more bad debt among embattled consumers. Jihad Jhaveri comments on the company’s interim results.
Sappi’s share price fell 5.37% to R40.69 yesterday despite the pulp and paper products group indicating it was on track to report a profitable 2014 financial year, as lingering debt worried the market. The group has made $67m profit in the first three quarters of its 2014 financial year, from a $161m loss last year. In its third quarter ended June, Sappi’s net profit was $17m, the company reported yesterday. Abdul Davids, Kagiso Asset Management research head, said Sappi’s $2.3bn net debt is “stubbornly high and the deleveraging is taking longer than management’s guidance”.
The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) has contracted for the fourth consecutive month, signalling the manufacturing sector’s continued subpar performance. However, while the protracted strikes in the platinum mining, steel and engineering sectors had weighed on manufacturing output over the past few months, the industry was expected to recover in the second half of the year as the industrial action ends and production ramps up, said Kagiso Asset Management research head Abdul Davids.
What we are currently seeing on the JSE is certainly out of the ordinary. It is a rare thing for record highs to be met with such a lack of enthusiasm. Investors have benefitted from an incredible bull run over the last six years, but there is a very palpable underlying nervousness about where this is going. With every gain that the market makes, the feeling grows that it is moving towards the edge of a cliff. At current valuations and with a number of technical measures pointing to a market that looks overbought, some sort of a pullback appears to be lurking. Gavin Wood says that investors are right to be cautious, particularly given the manner in which the JSE has made its gains.
Double-digit sales increases in SA and the rest of Africa helped lift SABMiller’s group net producer revenue — or sales excluding acquisitions, disposals and currency movements — by 6% in its three months ended June. A strong Easter trading period in SA boosted domestic beverage sales growth to 12%, while recovering lager volumes elsewhere in Africa contributed to an 11% revenue jump in the region. Dirk van Vlaanderen is quoted in this article.
While the Federal Court of Australia is expected to tie up loose ends on one of the biggest departmental store deals this week, retail analysts said yesterday that the Australian market was the perfect destination for Woolworths to grow its footprint. Woolworths will soon know if the Australian court approves of its R22.3 billion deal to buy department store chain David Jones. Simon Anderssen is quoted in this article.
Food producer stocks have made a strong run since late February, with sector giant Tiger Brands being among the largest gainers despite some negative announcements. “In February, the food producers index was trading at a five-and-a-half-year low relative to the All Share Index.” Kagiso Asset Management analyst Victor Seanie said yesterday.
Right now is one of those tricky times to be in the stock market. While investors have benefited from the strong gains on the JSE and other exchanges around the world, there is nevertheless an underlying uncertainty about how long this can continue. Gavin Wood discusses the market in this article and outlines where we are seeing opportunities.
While the seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) recovered slightly in June, edging up to 46.6 index points from 44.3 in May, the average PMI for the second quarter, at 46.1, was below the neutral 50-point mark and the first quarter’s 50.6 index point average.
When it comes to the big four banks, Barclays Africa Group has in the past few years been the one everyone loves to pick on.
Media giant Naspers continues to be the best performer in the listed media sector. Late last year its share price hit the R1 000 mark, primarily due to the meteoric rise in the Tencent share price.
In his seventh State of the Nation address, President Jacob Zuma acknowledged the country’s stagnant economy and committed to direct personal involvement in addressing the challenges in the troubled mining sector.
Bond investors are rewarding Sasol with record-low yields relative to US debt as the South African automotive-fuel producer benefits from a weaker rand and expansion abroad.
One in every two South Africans with credit is behind on payments, according to the National Credit Regulator (NCR). Little wonder then, that the country’s retailers are reporting slower growth, with those heavily reliant on credit taking the worst beating.
Luxury brands icon Richemont raises the old investment dilemma of the appropriate premium investors should pay for a well established value fortress.
In seven days, international rating agencies Standard & Poor (S&P) and Fitch are expected to downgrade South Africa’s local currency rating. According to a note by Morgan Stanley, the agencies are expected to downgrade South Africa’s sovereign rating to BBB+ from A- next Friday.
Forecasts for thermal coal prices over the next five years are mixed, making it difficult for investors to know whether to buy, hold or sell their coal shares.
Experts warned that insolvency and liquidations rate are likely to spike in months ahead due to poor business activity shown in the latest Purchasing Managers Index (PMI), but some analysts argued that business rescue can create new investment opportunities in SA, with Chinese companies most interested.
South Africa’s costliest mining strike is sending yields on Impala Platinum Holdings Ltd.’s bonds to an eight-month high as lost production cuts the company’s revenue.
The key indicator for the country’s manufacturing sector, the Purchasing Managers’ Index (PMI), continues to tumble, falling to 44.3 index points in May, from 47.4 in April. This is further affirmation of the fragile state of the economy.
If Professor Tim Noakes had his way, people would stop consuming sugar in all of its different forms. Fortunately for sub-Saharan producers Tongaat Hulett and Illovo Sugar, and their roughly 75 000 employees, consumption of the sweet stuff continues to increase.
SABMiller will save about R5.2bn a year by 2018 through its programme to create a groupwide business services unit and a centralisation of various back office functions, the company said yesterday after the release of its full-year results.
Coronation Fund Managers and Kagiso Asset Management are increasing their exposure to the platinum sector, despite the protracted labour strike that saw the JSE platinum index fall as much as 6.7 percent in the three months to March.
Coronation Fund Managers’ share price fell 6.7% to close at R96 on Tuesday after it reported a 69% increase in earnings for its six months to March, again warning this level of growth was unsustainable.
Richemont, the Swiss luxury goods group old controlled by the Rupert family, has declared its preference for re-investing in existing businesses and continuing its share buy-back programme rather than using its huge cash pile for acquisitions.
In this feature on alternative investments for pension funds, Jihad Jhaveri gives his view on how to assess the attractiveness of commodity investments at this time and what the pros and cons are of investing in commodities such as gold and platinum directly, as opposed to the shares of commodity producers.
South Africa’s premier steel maker, ArcelorMittal SA, saw headline earnings back in the black in the first quarter of the year, mainly on increased sales and rising production as it bounced back from a fire at its main Vanderbijlpark facility early last year.
The domestic cement industry is facing tough conditions in the short term, with excess supply expected to keep margins under pressure. As a result, any further investments are likely to be channelled into upgrading dated and inefficient plants.
Anglo American Platinum (Amplats) must mechanise its mines in the long term, Anglo American chief executive Mark Cutifani said yesterday.
Pick n Pay believes it is in a stronger position than a year ago, after opening 111 stores, cutting costs and getting closer to lower-income communities.
Investors were unnerved by Woolworths’ bold plans to acquire Australia’s oldest retailer David Jones, in the process creating the second largest department store in the southern hemisphere and one of the biggest retailers in the world.
Global Credit Ratings this week noted the divergence between the performance of Nampak’s domestic and African businesses, saying the rest of the continent was clearly “jumping ahead”.
Recently appointed Liberty Holdings CEO Thabo Dloti has to convince the investment community that the financial services group is still a force to be reckoned with in the insurance industry.
In an apparent about turn, the UK’s Competition Commission has found that Netcare’s UK operation BMI Healthcare will not have to sell any of its hospital facilities after all.
Banks are starting to reap the rewards from their operations in the rest of Africa, with Standard Bank benefiting the most from its continental footprint. Collectively, the banks earned just under 10% of their total profit from the rest of Africa in their latest set of results.
The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) dropped by 1.4 index points to 50.3 in March, mainly driven by a decline in the new sales orders index, which dropped to its lowest level since 2006.
The big four banks are well positioned for the negative turn expected in the lending cycle, analysts have said after the recent release of their results. Standard Bank and FirstRand have pulled ahead of the pack to compete neck-and-neck for the top position.
Last year’s debilitating strike in the automotive sector cost automotive component manufacturer Metair R87 million in lost profit (before interest and tax), while strikes in the mining industry cost its non-automotive division a further R41 million.
A Tongaat Hulett shareholder believes the group is taking the wrong tack as it battles the “strong headwinds” facing sugar producers, and that it should shift more effort to developing and retaining its valuable KwaZuluNatal property holdings.
The rand’s slide over the past year has persuaded RCL Foods, the country’s biggest chicken producer, to switch out of euro-denominated bonds into rand debt to ease the fallout from the currency’s decline.
In a climate of low economic growth and a declining consumer cycle, banks are not always popular investment holdings. However, one asset manager believes there is value to be had in the sector and not one but two banking stocks are its top holdings across their equity funds.
Branded consumer products group AVI grew its earnings 10% in the six months to December, which CEO Simon Crutchley said was a “solid performance in a pretty constrained environment”.
The restructure underway at Sasol is the biggest organisational and management change the petrochemical company has experienced in its 64-years of operation and is worth taking note of.
With little relief on the horizon to buoy spending, the consumer confidence outlook for the remainder of the year is anything but optimistic. There is little to support expenditure as inflation and living costs continue to rise, putting strain on disposable income.
Rand Merchant Insurance Holdings (RMI), which holds significant investments in four South African insurance groups, grew its diluted headline earnings per share 24% to 93.7c in the half-year to December.
Mpact yesterday reported that underlying operating profit increased 12% and underlying earnings per share shot up 22.2% in the year to December. The company, one of the largest paper and plastics packaging businesses in southern Africa, said the results reflected a “solid” operating performance and “sound” strategy.
MTN is under pressure from regulators in its two biggest markets – Nigeria and SA – with intense competition also threatening its growth, especially in SA.
FirstRand is steeling itself for rising interest rates, which will see bad debts grow as battered consumers face increasing financial pressure.
The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) increased by 1.8 index points to 51.7 in February, helped by a rebound in the new sales orders index.
Walmart-owned Massmart yesterday said the recent interest rate hike seemed certain to make things more difficult for middle-income customers who were in a weak financial position.
Cigarette brands conglomerate British American Tobacco (BAT) has shown its pricing power prowess, managing a 4% hike in revenue to £15.3bn in the year to end-December despite a decline in volumes.
South Africa’s biggest food retailer, Shoprite, has pinned its hopes on its operations outside the country, as local consumers struggle with spiralling costs and competition among retailers is expected to heat up.
Judging from the JD Group’s interim results, the group has a very long road ahead of it before it reaches any kind of financial nirvana.
Financial services group Discovery’s short-term insurance division is on track to be profitable within two years, in contrast with other South African short-term insurers, which are under strain. View article
THE rand’s rally against the dollar over the past few days is too small to halt soaring fuel prices or improve the inflation outlook, analysts told Business Day on Monday. View article
Spending among resilient consumers in the higher income brackets could be hampered by possible further interest rate hikes, Woolworths chief executive Ian Moir said yesterday However, should this happen he said Woolworths, which has outperformed its competitors both in the clothing and food spaces, would be able to cope with the consequences.
The JSE’s construction sector, which is trading at a large discount to in-favour industrial stocks, holds pockets of value and is expected to undergo a re-rating in the medium term. View article
Kumba Iron Ore is in talks with the Department of Minerals and Energy about conditions for securing a mining right over an unallocated stake in its flagship Sishen mine as it contemplates a future free of time-consuming legal battles.
Barclays Africa Group’s share price surged more than 5% to an intraday high of R130.50 yesterday after the bank reported a 14% rise in earnings as it showed bad debt was under control and its retail division’s turnaround plan was gaining traction. CEO Maria Ramos said the group was on the right track after a “tough period”.
Cement firm PPC plans to enter the North African market for the first time by constructing a 2-million tonnes a year plant in Algeria, together with a local consortium. The company’s African expansion drive – through which it aims to nearly double its revenue contribution from north of SA’s borders in three years – has so far focused on sub-Saharan Africa.
Long-term investors should not expect to enjoy this year the spectacular returns they earned last year, but they need not fear the end of the bull market, especially in global equities. This is the view of a number of asset managers, who maintain a tempered optimism in the face of the recent market sell-off and the interest rate hike last week.
Cement firm PPC plans to enter the North African market for the first time by constructing a 2-million tonnes a year plant in Algeria, together with a local consortium. The company’s African expansion drive – through which it aims to nearly double its revenue contribution from north of SA’s borders in three years – has so far focused on sub-Saharan Africa.
Analysts warn that the gold price may deliver a few false dawns in 2014, and that the general picture is a price pretty much where we find it today: $1 200 to $1 300 per ounce. They also expect more price volatility in the year. While this doesn’t make easy reading for the investor, it does give some insight into the broader economic picture, especially for South Africa’s gold producers.
Increased production of cement in South Africa is expected to result in lower prices. Ross Heyns, an investment analyst at Kagiso Asset Management, said the growth in cement demand in South Africa would be balanced by the increased capacity of existing players and the entry of Sephaku Cement to the market. “It is therefore unlikely that cement companies’ profitability will return to previous peak levels in the next growth cycle,” Heyns said.
The possible expropriation of land from Tongaat Hulett in Zimbabwe could see the company’s profit margins suffer as well as signal a need for the sugar manufacturer to expand to other regions, analysts say. Media reports suggest that the company’s problems with the indigenisation law may soon come to a head with local authorities asking the government to sanction land grabs.
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The Kagiso Purchasing Manufacturing Index (PMI) for December, the country’s leading manufacturing indicator, declined to 49.9, from 52.4 in November and 50.7 in October, figures released yesterday showed. Some analysts expressed concern about the outcome, arguing that the figures do not bode well given that a number of PMIs across the globe showed some sign of a rebound over the 50 level mark which indicated positive activity in the sector.
While its competitor spent the better part of a year negotiating its future, Aspen concluded four acquisitions that will add about R9 billion to the top line; advance its entry into 30 new countries and extend both its product range and manufacturing capability.