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Our opinion on the current state of AECI(AFE)AECI (AFE) is a leading producer of chemicals and explosives in South Africa, supplying products for the mining industry, water treatment, animal health, food and beverages, and the industrial sector. The company has a broad international presence, with businesses in Australia, North America, Europe, Asia, and Africa, employing 7,600 people across 22 countries. AECI also has a property division called "Acacia." The company has successfully diversified away from its exposure to South Africa, with only 40% of its total revenue coming from the country. AECI has demonstrated its ability to make acquisitions that boost turnover and profits. However, in its results for the six months to 30th June 2024, the company reported revenue down 4% and headline earnings per share (HEPS) down 57%. The company noted, "Sales volumes of mining chemicals are expected to improve on the back of an anticipated recovery in mining activity in South Africa." On a P/E ratio of 13.39 and a dividend yield (DY) of 0.9%, there is a belief that the share may fall further. Technically, the share has been trending sideways for most of the last ten years, indicating a lack of significant momentum in either direction. Within this broader trend, it appears to be approaching the bottom of a downtrend and may be ready for some recovery.
JSE:AFE
by PDSnetSA
Our opinion on the current state of MERAFE(MRF)This is a ferrochrome operation controlled by Glencore, which operates mines, furnaces, and smelters in Mpumalanga and Limpopo. The Glencore-Merafe joint venture can produce up to 2.3 million tons of ferrochrome per annum. Merafe gets 20.5% of the proceeds, and the balance goes to Glencore. The problem is electricity supply, as smelters require huge amounts of current. The 15.6% increase in Eskom tariffs last year was a major factor, and the current year's increase of just under 10% from 1st April 2022 is a further problem. The company is concerned about Eskom's ability to supply additional power for expansion. Their Lion 3 expansion has accordingly been suspended until this difficulty can be overcome. All smelters except Lydenburg are operating. The availability of trains from Transnet to move its product is another problem. In its results for the year to 31st December 2023, the company reported revenue up 16% and headline earnings per share (HEPS) of 60.1c compared with 56.4c in the previous period. The company said, "Merafe achieved a record profit of R1 753 million despite a challenging economic environment. Demand for ferrochrome was weaker compared to prior years, which resulted in lower sales volumes and lower realised prices, whilst chrome ore sales volumes were significantly elevated and realised prices increased due to buoyant demand and supply constraints." Obviously, this is a commodity share and has risks, but the world's demand for stainless steel did increase with the economic boom in America, which now appears to be coming to an end. In a production update for the six months to 30th June 2024, the company reported ferrochrome production down 17% due to the Rustenburg smelter being out of operation. The company estimated that HEPS would fall by between 23% and 43%. Technically, the share reached a high of 192c on 4th April 2022 and was trending down until a rally in September 2022. It found some brief support at 104c per share and trended up, but the rally was short-lived. It remains a volatile commodity share.
JSE:MRF
by PDSnetSA
Our opinion on the current state of WOOLIES(WHL)The sad fall of the Woolworths share (WHL) price was occasioned by the decision of previous CEO, Ian Moir, and his board to buy David Jones in Australia for AU$2.1bn, which has now had R12bn written off its original purchase price of R20bn in 2014. The only aspect sustaining the Woolworths group was its food sales. Woollies announced on 14th January 2020 that they had appointed Roy Bagattini, from Levi Strauss, to replace Ian Moir as Group CEO with effect from 17th February 2020. Woolies' fashion and clothing section was also not doing that well in a very difficult trading environment. In its results for the six months to 24th December 2023, the company reported group turnover down 16.7% and headline earnings per share (HEPS) down 31%. The company said, "The Group's results for the first half of the 2024 financial year ('current period' or 'period') are not directly comparable to that of the prior period, given the inclusion of the David Jones contribution in the prior period." In a trading statement for the 53 weeks to 30th June 2024, the company estimated that HEPS would fall by between 27% and 32%—partly because of its disposal of David Jones in Australia. We recommend that you only consider Woolies shares when they break up through its current downward trendline. The current P:E is around 14.21, and the shares are still falling but may be stabilizing.
JSE:WHL
by PDSnetSA
Our opinion on the current state of Pan African Resources (PAN)Pan African Resources (PAN) is a London- and JSE-listed re-treatment gold producer. With its Elikhulu plant, it will be able to produce about 700,000 ounces of gold a year at a cost of about R450,564 per kilogram against a current gold price of close to R1m. This means that over its life, it will produce revenue of approximately R15bn, of which R5.3bn will go back into the economy in the form of mine expenses, creating a highly profitable entity with minimal risks. It will also employ 350 people. The company has approved the construction of a 10MW solar power plant. In its results for the six months to 31st December 2023, the company reported gold production up 6.7% and all-in sustaining costs (AISC) of $1287 per ounce (against a gold price of just over $2000). Headline earnings were up 46.4% and earnings per share (EPS) was up 46.1%. The company said, "Liquidity remains healthy, with access to immediately available cash of US$31.3 million (2022: US$33.9 million) and undrawn facilities of US$86.4 million (2022: US$52.1 million) at the reporting period-end." In an operational update for the year to 30th June 2024, the company reported production up 6.2% with an average gold price of $2021 and all-in sustaining costs of $1350 per ounce. The company said, "Net debt at the end of the Reporting Period increased to US$106.4 million (FY2023: US$22.0 million), mainly attributable to construction costs at the MTR Project." On 4th June 2024, the company announced that it signed a five-year wage deal with the National Union of Mineworkers (NUM) for an increase of 5.3% per annum over the period. Technically, the share has been in an upward trend since its low of 288c in June 2023, and we added it to the Winning Shares List (WSL) on 31st January 2024 at 430c. It has since risen to 673c. We see this as a good operation but volatile, which means considerable risk. We would advise investors to be cautious, but with the gold price having broken convincingly above long-term resistance at $2060, it could be a good speculation.
JSE:PAN
by PDSnetSA
Our opinion on the current state of BOWCALF(BCF)Bowler Metcalf (BCF) is a plastics manufacturing company that began in 1972 and listed on the JSE in 1987. The company's products include tube manufacture, printing, injection stretch blow-moulding, foiling, and extrusion blow-moulding. This is a company which is clearly badly impacted by loadshedding. In its results for the six months to 31st December 2023, the company reported revenue up 21% and headline earnings up 52%. The company's net asset value (NAV) was up 8% at 761,7c per share. The company said, "During the first six months of the previous financial year, the operations of the Packaging Segment, as well as customer operations, were severely impacted by an unstable and unreliable electricity supply. Supply chains were significantly interrupted." In a trading statement for the year to 30th June 2024, the company estimated that HEPS would increase by between 42,5% and 62,5%. Technically, the share has been in a gradual upward trend for many years. It is quite cyclical and fairly thinly traded, with many trading days on which no shares change hands, which tends to limit institutional involvement. The company is on an undemanding P:E of 9,68 and a dividend yield (DY) of 3,14%. Following the sale of Softbev, it has a strong balance sheet and cash for possible acquisitions. It should perform in line with the South African economy going forward, but it is a difficult industry with significant working capital requirements. Fortunately, the company has a significant cash pile with minimal debt. It has also been buying its own shares back - which makes the share's liquidity worse than it already is but should push up its net asset value (NAV). We see this as a relatively solid, unexciting, long-term investment - but relatively thinly traded.
JSE:BCF
by PDSnetSA
Our opinion on the current state of GEMFIELDS(GML)The Gemfields Group (GML) (previously Palinghurst Group) is a mining group that has two major projects: (1) Kagem, the world's largest producer of emeralds (in Zambia) and rubies (at Montepuez in Mozambique); (2) Jupiter Mines, a South African producer of manganese. The group is led by Brian Gilbertson, previously the CEO of BHP Billiton. Gilbertson identified that the semi-precious stones market was under-developed and offered an opportunity for consolidation and professional management - hence the Gemfields' operation. Jupiter was listed on the Australian Stock Exchange (ASX) in April of 2018 and in the process, Gemfields disposed of 60% of that company in line with its decision to cease being a diversified mining company and to focus purely on gemstones. The share is fairly well-traded with approximately R,5m worth of shares changing hands on average every day. Like all commodity shares, it is risky and its fortunes depend on the prices of emeralds and rubies on the international market - as well as the risks associated with mining in third-world countries. It appears to have found a niche for itself where there is very limited competition, and it should do well as the world economy recovers. On 24th October 2022, the company announced that operations have resumed at MRM and key personnel had returned following an insurgent attack on a mine about 12km away on 20th October 2022. On 7th August 2023, the company announced that it would construct a new processing plant that would triple its output from the Montepuez ruby mine. In its results for the year to 31st December 2023, the company reported revenue down 23% and a headline loss of 0,9c (US) compared with a profit of 4,8c. The company said, "The Group’s financial performance was impacted in the year by the withdrawal of November 2023’s higher-quality emerald auction and an unrealised write-down of Gemfields’ non-core 6.54% equity holding in Sedibelo Resources, the platinum group metals mining company." In an update on the six months to 30th June 2024, the company reported total auction revenues of $121m and a net debt position of $44.4m. The company said, "Construction of MRM's second processing plant remains on budget and on track for completion by end of H1 2025." Technically, the share rose off an island formation and entered a strong new upward trend which lasted until July 2023 when the trendline was broken. We recommend waiting until the downward trendline is broken - which has not yet happened. On 11th June 2024, the company announced the appointment of Bruce Cleaver as Chairman. In a report on 19th June 2024, the company said that in June 2024 auctions, it had sold $68,7m worth of rubies at an average price of $316,95 per carat.
JSE:GML
by PDSnetSA
Our opinion on the current state of SEAHARVST(SHG)Sea Harvest (SHG) is South Africa's most popular frozen fish brand with about 38% of the market. It is controlled by Brimstone, which has a 54.92% stake. Sea Harvest catches, processes, and freezes fish for local and export consumption. They acquired the business of Viking, which began 40 years ago and now employs 1600 people with a fleet of 30 vessels operating in Cape Town, Durban, Hout Bay, Mossel Bay, and Maputo. Viking catches, processes, and sells horse mackerel, hake, pilchards, anchovy, prawns, tuna, and rock lobster. As part of this deal, they have also acquired 50% of Viking's aquaculture business, which is one of the largest in South Africa. The cost was a total of R565m, of which R315m was paid in cash and the balance through the issue of 19.2m Sea Harvest shares. Sea Harvest announced the acquisition of the Ladismith Cheese Company for R527m. This company produces cheese, butter, and related products and signals Sea Harvest's intention to diversify away from the fishing industry. The price paid seems quite high since it is based on Ladismith's R58m after-tax profit for the year to January 2018. On 8th March 2023, the company announced that it was increasing its stake in Viking Aquaculture to 82% for R210m. In its results for the year to 31st December 2023, the company reported revenue up 6% and headline earnings per share (HEPS) down 5%. The company's net asset value (NAV) rose 7% to 1216c per share. The company said, "The Group's performance benefited from strong demand across all markets and channels and improved pricing while its 43% hard currency exposure allowed it to benefit from the weaker rand. Performance, however, was constrained by lower volumes as a result of difficult fishing conditions, above-inflation cost increases, load shedding, and prawn prices under severe pressure globally." In a trading statement for the six months to 30th June 2024, the company estimated that HEPS would increase by between 13% and 18%. The company said, "The South African fishing business was challenged by continued low catch rates resulting in lower sales volumes, however, this was offset by strong demand in all markets and channels resulting in firm pricing." The Sea Harvest share is fairly volatile with reasonable volume traded. From its listing in March 2017, the share has moved mostly sideways with a downward trend since June 2022. Obviously, the Viking acquisition has changed the nature of this business substantially, but it remains subject to the weather (which affects the catch) and the regulatory environment (where quotas can be changed by the government). In our view, given the volatility, the share remains fairly fully priced. On 15th May 2024, the company announced that the acquisition of 100% of Terrasan has received approval from the Competition Tribunal.
JSE:SHG
by PDSnetSA
Our opinion on the current state of SEBATA(SEB)Sebata (SEB) is an investment holding company with four divisions: software solutions, water technologies, ICT support services, and consulting. Their software solutions division consists of Sebata, which offers IT services to municipalities and public entities; Freshmark, which provides IT solutions to fresh produce providers; and Rdata, which offers an accounting package for the public sector. The water technologies division consists of Utility Systems, which provides electronic water control and pre-payment devices, and Amanzi Meters, which supplies water meters to the residential market. The ICT support services division includes Turrito Networks, which provides telecommunications and managed solutions to the SME and corporate market, and Dial-a-Nerd, which provides IT support to SMMEs and professionals. The consulting division consists of Utility Management Services, which assists municipalities with meter reading and debt management, and Mubesko Africa, which consults to local government supplying draft policies and long-term financial planning. Its market, which consisted primarily of municipalities, is renowned for being badly managed and for failing to pay their debts. In its results for the six months to 30th September 2023, the company reported revenue down 2,07% and a headline loss of 9,91c per share compared with a loss of 5,27c in the previous period. The company said, "Trading conditions in which the group operates remain arduous. These conditions have been exacerbated by the slowdown in the local economy and resultant slowdown in the spend of local authorities, specifically within the water sector. Local authorities are under pressure, with many being entirely dependent on funding from National Government in order to operate." In a trading statement for the year to 31st March 2024, the company estimated that it would make a headline loss of between 100,75c and 103,65c compared with a loss of 14,48c in the previous year. The value traded in the share is less than R5 000 per day on average, which makes it impractical even for a small investment. Clearly, it does have some prospects in the UK.
JSE:SEB
by PDSnetSA
Will SASOL's market price make a Market Structure Shift?Support and Resistance Levels: All-Time Low: At 2,110c Highlighted Support Zones: Around 12,000c — 13,000c (Green shaded zone) — This has been tested multiple times, indicating a strong support level. Around 10,900c(Recent support zone marked as LL) — Recently established support zone. Highlighted Resistance Zones: Around 15,700c — 16,000c (Red shaded zone near recent highs) — This has been tested, indicating a strong resistance level. Recent peak and major level at around 43,600c Descending Trend Line: Connecting lower highs (LH) from mid-2021 onwards. Potential Reversal: Indicated by the recent break of the descending trend line. Lower Highs (LH) and Lower Lows (LL): Lower Highs (LH): Indicate a bearish trend in the long term, showing that the price is making lower highs over time. Lower Lows (LL): Indicate continued bearish sentiment as lows are lower than previous lows, supporting the trendline. Current Price Action: Current Price: Around 14,900c, showing a significant positive movement (+1,255c or +9.20%). Price Consolidation: The price is consolidating between the support level of 12,000c and the resistance level of 16,000c. Trend Reversal: The recent break above the descending trend line suggests a potential reversal in the long-term bearish trend. Potential Scenarios: Bullish Scenario: Break Above Resistance: If the price breaks above the resistance zone around 16,000c and sustains above it, it could aim for the next resistance level near the 24,600c mark. Continued Lower Highs and Lower Lows: The price making higher highs and higher lows would confirm the bullish trend reversal. Bearish Scenario: Failing to Hold Support: If the price fails to hold the current support around 12,000c and breaks below it, it might test lower support levels around 11,000c or even lower. Resumption of Downtrend: A break below the recent support could signal a continuation of the bearish trend or a more extended correction phase. Sideways Movement: Price Consolidation: The price might continue to consolidate between 12,000c and 16,000c, forming a range-bound movement until a clear breakout direction is established.
JSE:SOL
by PhinduloMakhado
Sasol short about to get stopped out - Ready for a swing longTrades don't always work out. The trick is to prepare for not only the stop loss to be hit but also the counter action immediately afterwards at times. So in this case, the false break below lead to a rounding bottom and following another higher rounding bottom If it breaks above, we will be stopped but the next trade will be imminent for a long position. This is how we do it as active or hyper traders :) R207.16 - New target upside
JSE:SOLLong
by Timonrosso
2
TGA.JSE Thungela Trend Cloud & FIB Study.Since it's last Earning Report - Thungela has shown a remarkable recover of it's Share Price. I've plotted the Fibonacci Levels to see where we could encounter possible Resistance. As always, please get a few outside Expert's Advice before taking Trade or Investment Decisions. Should you appreciate my Chart Studies, Smash That Rocket Boost Button. It's Just a Click away. Regards Graham. PV=FV/(1+r)^t Present Value = Future Value / (1 + R Rate of Return ) ^ Time.
JSE:TGALong
by hitchcoxg
Our opinion on the current state of BATS(BTI)British American Tobacco (BTI) describes itself as a "leading consumer goods company" - which is a euphemistic way of saying that they produce and sell an enormous number of cigarettes and related products worldwide. It is also the second largest company on the JSE after Naspers. In recent decades, cigarette companies have become increasingly oppressed. Their ability to advertise their products and even package them has been severely curtailed in many countries. They are seen to be exploiting an addiction which is clearly anti-social and very bad for the individual's health, and which regularly involves them in lawsuits for damages. BAT owns well-known brands like Camel, Peter Stuyvesant, Rothmans, Benson & Hedges, Dunhill, Pall Mall, Kent, and Lucky Strike. In an effort to get away from the negative perceptions of cigarettes, the company has diversified into "new category" products such as vaping and electronic cigarette markets, which it claims offers it a long-term prospect for growth. Recently, especially in the United States, these products have also come under the spotlight for health reasons leading to a drop-off in sales. As an investment, the company offers some attractions. Roughly 20% of the world's population still smokes - making a truly massive market. Setting aside our distaste for the business which BAT conducts, the share looks like very good value at current levels. This is one of the shares that has performed well and perhaps even benefited from COVID-19. The CEO says that he aims to double non-combustible sales by the 2023/24 year. It is interesting that BAT considers South Africa's illegal cigarette market to be the largest in the world. On 6th December 2023, Business Day reported that BAT had impaired its US operations by GBP25bn (R595bn) leading to a drop of 10% in the BTI share price. In its results for the six months to 30th June 2024 the company reported revenue down 8,2% with smokeless products accounting for 17,9% of revenue. Diluted earnings per share (EPS) rose by 13,8%. The lower revenue was caused by, "The sale of the Group's businesses in Russia and Belarus in the second half of 2023, with £385 million revenue included in the prior year; Lower organic Combustibles volume (down 6.9%) largely due to the challenging Combustibles market and inventory movements in the U.S. combined with the negative impact of the supply chain disruption in Sudan and the headwind on revenue as the Group exited a number of markets in APMEA (largely in Africa); and a translational foreign exchange headwind of 4.5%." The share now looks cheap to us on a P:E of 7,61.
JSE:BTI
by PDSnetSA
1
Our opinion on the current state of ANGLO(AGL)With Anglo American (AGL), the risk normally associated with commodity stocks is mitigated in two ways. Firstly, the company has diversity of different minerals which reduces the impact of any one mineral entering a bear trend. Secondly, the traditional mechanism to avoid risk is to have a very strong balance sheet with plenty of headroom. That way, if things turn bad, you can ride out the storm. Anglo has such a balance sheet. Anglo describes itself as a globally diversified mining company with a portfolio of world-class mining operations and undeveloped resources. It is true that commodity prices as a group tend to move in trends, and since the beginning of 2016, that trend has been steadily upward until the coronavirus caused markets to fall into a new downward trend in March 2020. The upward trend has now resumed, with a strong recovery already taking place. An Anglo project is Quellaveco in Peru which is a massive copper mine in which Anglo owns 60% of. It will have a very rapid payback period now that it has begun producing. It is costing $5,6bn to build which should be recovered in about 4 years - and then the mine has a life of 30 years. We believe that the boom in commodity prices is continuing, and that COVID-19 is substantially behind us - commodity prices will be driven on by the economic expansion which began in America and spread to Europe and the East. Of course, the conflict in Ukraine is pushing commodity prices up, especially precious metals, because of the heavy sanctions on Russia. So, if you are looking for an investment which is likely to be more exciting than buying one of the big banks or property REITs, and which will benefit directly from the growth in the world economy, you could do worse than to consider Anglo American. One of the factors holding the company back has been the poor availability of Transnet’s rail service, especially at Kumba. The company plans to get 100% of its energy needs from renewables in South Africa by 2023. In its results for the six months to 30th June 2024 the company reported earnings before interest taxation depreciation and amortisation (EBITDA) of FWB:5BN - with reduced costs offsetting a 10% drop in its basket of commodity prices. Iron and copper contributed $3,5bn of the EBITDA. Debt was $11,1bn and headline earnings fell to $0.42 per share (HEPS) from $1.35 (US) in the previous period. The company, "...delivered steady volumes and a 4% improvement in unit costs, while still facing weak cyclical markets for PGMs and diamonds." We recommended that you wait for the share to break up through its long-term downward trendline (connecting the peak in January 2023 with that of December 2023). That happened on 2nd April 2024 at a price of 47926c. The share then rose to 63480c - mainly because of an offer first announced on 13th May 2024 from BHP to buy Anglo after unbundling Kumba and Amplats. In terms of the third iteration of the offer, Anglo shareholders would get 0,8860 BHP shares for every share of Anglo that they held which would result in Anglo shareholders owning 17,8% of BHP. Anglo announced that it had rejected this third BHP offer, but opened the door for negotiations. On Wednesday 29th May 2024, BHP withdrew its offer and the downward trend in Anglo shares continued as hopes of a takeover faded. Anglo remains a commodity share linked to the international prices of various commodities. Its restructuring will leave it with Kumba and its manganese interest in South Africa.
JSE:AGL
by PDSnetSA
LONG MTN Group pending trend reversalJSE listed telecommunication entity, one that has a footprint in many African countries has had their share price under some pressure for some time now. Trading near near it's lowest levels pre-covid, which it broke due to panic selling during the pandemic. It then made significant recovery since those lows that hammered values with over 200% gains. All those gains have lost in the past 2 years of trading. MTN is a large South African entity with dominance considering it only has 2 other competitors it wrestles for market share. Earnings should be coming out soon, hopefully these will change investor sentiment positively. Looking for price to close above previous support of R78.32 to signal buying taking place. This will be a value play for me, meaning I'll be looking to hold the stock as part of portfolio till I enough valid reasons to sell it. Current yield is at 4.8%, an increase in the share price would cover the below inflation return
JSE:MTNLong
by ThabangBangstarMolefe
Our opinion on the current state of AECI(AFE)AECI (AFE) is a leading producer of chemicals and explosives in South Africa. It supplies products for the mining industry, water treatment, animal health, food and beverages, and the industrial sector. It has businesses in Australia, North America, Europe, Asia, and Africa. It employs 7600 people in 22 countries. It also has a property division called "Acacia". This company has successfully diversified away from its exposure to South Africa (40% of total revenue) and shown its ability to make acquisitions which boost turnover and profits. In its results for the year to 31st December 2023, the company reported revenue up 5,4% and headline earnings per share (HEPS) down 11,7%. The company said, "In an environment characterised by high inflation and interest rates, supply chain and logistics challenges as well as declining commodity prices; the performance of AECI Mining, our core division, steered the results. Net debt improved to R4 338 million (2022: R5 345 million) driven by stringent net working capital management in the year." In a trading statement for the six months to 30th June 2024, the company estimated that HEPS would increase by between 54% and 60%. The company said, "One-off events, contributed to unusually high operating costs and consequently, the Group's earnings for the period are expected to be lower relative to the record performance achieved in the first half of 2023." On a P:E of 8,36 and a dividend yield (DY) of 1,84%, we believe that the share may fall further. Technically, the share has been trending sideways for most of the last ten years. Within that, it appears to be approaching the bottom of a downtrend and ready for some recovery.
JSE:AFE
by PDSnetSA
Our opinion on the current state of BALWIN(BWN)Balwin Properties (BWN) is a developer of secure sectional title properties in South Africa. The company is now turning its attention to renting out some of the properties that it develops to improve its income. The company reports strong demand for its units and is also moving into supplying solar power and internet fibre. The share was listed 5 years ago at R10 per share but trades today for 270c. Obviously, the property development market is a function of consumers' disposable income and the state of the economy. The last three years have been very tough for consumers and the economy has been in a full-blown recession. In our view, the move to rental is a good one as it will build up a passive income which can be used to meet fixed overheads and contribute to profits. Balwin owns 25% of Balwin Rental which has the right to buy as many as 4544 units developed by Balwin. This should help to stabilise the company's income. Eventually, it is expected that Balwin Rentals will be listed. On 4th October 2020, the company launched its Mooikloof Mega City construction project as a R44bn public/private partnership aimed at middle-income South Africans who earn between R3500 and R22000 a month (known as the "gap housing market"). This caused the share to rise by 13%. In its results for the year to 29th February 2024, the company reported revenue down 29% and headline earnings per share (HEPS) down 48%. The company's net asset value (NAV) increased 4% to 858,49c per share. The company said, "The annuity business portfolio experienced strong growth off a low base and increased its revenue to R132.5 million, contributing 5.6% (2023: 2.3%) to the total group revenue." The group ended the period with a loan-to-value (LTV) of 40,5%. In a voluntary update on 24th July 2024, the company stated its intention to increase its rental portfolio up to 7300 units over the next 8 to 10 years. This is seen as complementing its build capacity of 2000 to 3000 units per annum. Technically, the share has been in a long-term downward trend and we advise waiting for it to break up through its downward trendline before investigating further. We believe it will recover as the economy recovers. It is trading for 22,7% of its net asset value (NAV) - which looks really cheap.
JSE:BWN
by PDSnetSA
Our opinion on the current state of VODACOM(VOD)Vodacom (VOD) is South Africa's largest airtime and data provider for cell phones. It is a subsidiary of the international company Vodafone. Its competitors are MTN, Cell-C, and Telkom. The cell phone industry has been hammered by a steady decline in voice revenue which has to some extent been compensated by a sharp rise in data usage. The disadvantage which Vodacom has as an investment is that a foreign parent owns it. This was graphically demonstrated when its share price fell 7% in two days because it was feared that its parent company would be pressured to sell off its non-European subsidiaries. Vodacom has businesses in Mozambique, Tanzania, the DRC, and Lesotho. Now the group is looking to develop a business in Africa's fastest-growing economy, Ethiopia, with a population of 105 million. On 2nd December 2019, the Competition Commission ruled that Vodacom and MTN had to cut their interconnect fees by between 30% and 50%. Much of Vodacom's revenue comes from interconnect fees and it saw its share price drop by 5%. The company is launching a "super-app" in conjunction with Jack Ma's Alipay to boost its non-voice revenue. On 10th November 2021, the company announced that it was entering into a new venture called "Infraco" with Remgro in which it would own 30% potentially rising to 40%. This venture will incorporate Remgro's Dark Fiber Africa (DFA) and Vumatel and Vodacom will inject R9bn in cash. The idea is to dominate the fibre business in South Africa. It has also spent R4bn to mitigate the impact of loadshedding. We believe that this share will perform well, but may take some time to reach former heights. In its results for the year to 31st March 2024, the company reported revenue up 26,4% and headline earnings per share (HEPS) down 10,8%. The company said, "Our acquisition of Egypt contributed significantly to the 29.1% increase in Group service revenue, supported by a resilient performance in our largest market, South Africa. A 6.4% increase in net profit showcased the robustness of our strategy and our execution track-record of adapting to changes in our operating environments, despite elevated global economic pressures." In a trading update for the 3 months to 30th June 2024, the company reported group revenue up 1,5% in constant currencies and 10% in normalised terms. Egypt grew service revenue by 43,7% in local currency and financial services revenue by 87%. The company said, "We now process US$400 billion in mobile wallet transaction value annually." Technically, the share has been falling since its high of 16214c on 1st April 2022 and we suggest waiting for a clear break up through its downward trendline which may now be happening. It looks cheap at current levels with a dividend yield (DY) of around 4,96% - but it is in an environment where the technology and regulation shift continuously making it risky.
JSE:VOD
by PDSnetSA
Our opinion on the current state of SOUTH32(S32)South 32 (S32) was spun out of BHP Billiton in 2015 and contained all of BHP's South African coal assets. It is, in its own right, a diversified miner of base metals and minerals such as zinc, coal, aluminium, silver, lead, nickel and manganese. It operates in South Africa, South America, and Australia. The company has separated out its coal assets in South Africa and especially those which supply Eskom into a separate entity which was sold on 1st June 2020 to Seriti. At the same time, the company announced that it had bought the remaining 83% of Arizona Mining which it did not already own. Arizona Mining has extensive interests in zinc, manganese, and silver described by South 32's CEO, Graham Kerr, as "...one of the most exciting base metal projects in the world." Clearly, this is another international mining house that is distancing itself from South Africa because of the administrative and legislative uncertainty here. Kerr has stated that "...mining exploration is out of the question in South Africa until the new mining charter is finalised." In moving away from South African investments, South 32 is following in the footsteps of BHP and Anglo. In our view, South32 is an excellent mining conglomerate with good medium-term potential to exploit the recovery in base metals and minerals. The company has said that for the moment it plans to hold onto its South Deep mine. The company is continuing with its $1,4bn share buy-back. The company is working to supply its Hillside smelter with renewable energy and transition away from Eskom over the next 10 years. In its results for the year to 30th June 2023, the company reported revenue down 20% and headline earnings per share (HEPS) of 22,6c (US) compared with 59,5c in the previous year. The company said, "During the year, we delivered strong production growth in commodities that are critical for a low-carbon future. We set three annual production records and realised the benefit of our recent portfolio improvements, increasing aluminium production by 14 per cent, base metals by 17 per cent and manganese by 4 per cent." In a report on the 3 months to 30th September 2023, the company said manganese production was up 4% and alumina was up 3%. The CEO said, "We have maintained annual production guidance for all of our operations with a strong start to the year at our manganese operations, a 34 per cent increase in production at Brazil Alumina and continued growth in low-carbon aluminium volumes." In an update on the 3 months to 31st December 2023, the company reported copper equivalent production reduced by 3% and record aluminium production and zinc production up 13%. In a report on the 3 months to 31st March 2024, the company reported unchanged guidance with the exception of its Australian manganese operations which were impacted by hurricane Megan. In an update on the 3 months to 30th June 2024, the company reported achieving 98% of its copper equivalent guidance. The company said, "Our performance enabled us to capitalise on stronger commodity prices, lift sales volumes and release working capital, boosting cash generation in the quarter." Technically, the share was in an upward trend after COVID-19 but has been falling since March 2023 as commodity prices fell.
JSE:S32
by PDSnetSA