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Our opinion on the current state of STANBANK(SBK)Standard Bank (SBK) is 160 years old and is South Africa's second-largest bank by market capitalization, after First National Bank. It has widespread interests across Africa, which now contribute 34% of its headline earnings. 20% of its shares are owned by the Industrial and Commercial Bank of China (ICBC), and it owns 40% of ICBC Standard Bank—previously Standard Bank Plc in the UK (ICBCS). Following COVID-19, the bank had about 70% of its staff working from home. Like most businesses in South Africa, it is affected by load-shedding and the lingering economic effects of the coronavirus pandemic. We see Standard Bank as an excellent investment for private investors at current levels, but it is a long-term play. As COVID-19 fades, the economy will pick up, and Standard Bank's profits will improve. On 15th July 2021, the company announced an offer for the ordinary and preference shares in Liberty Holdings (LBH). Liberty shareholders received 0.5 Standard Bank shares and R25.50 in cash for each LBH ordinary share, implying a valuation of just under R90 per LBH share—a 33% premium to its price (R67.48) before the announcement. The bank is benefiting from increased client numbers and rising interest rates. In its results for the year to 31st December 2024, the company reported headline earnings per share (HEPS) up 4% and a return on equity (ROE) of 18.5%. The company's net asset value (NAV) increased from 14269c per share to 15281c, compared to its current share price (13-3-25) of 23051c. The 2024 financials were far less positive than those of 2023, when the company increased HEPS by 27%. The share price has been falling since its cycle high on 26th September 2024 at 25042c, but it now looks like very good value with a dividend yield (DY) of 5.23%. The stock has just completed a "saucer bottom" and may be entering a new upward trend.
JSE:SBK
by PDSnetSA
Our opinion on the current state of RANGOLD(RNG)Rangold (RNG) is a mining exploration company with a strong asset base, which is now mostly in cash. This cash is being used to pursue legal claims and may also be applied to investment opportunities. Since the death of Brett Kebble, the company has been actively pursuing legal claims against various entities. In early 2011, it paid a dividend of 90c following a British court order against Paul Main, who was forced to repay GBP4m. In July 2014, the company was able to pay out a dividend of 225c due to a R150m settlement with auditors PWC. There are still various legal matters outstanding, which could potentially result in further settlements of around R3bn. In its results for the six months to 30th June 2024, the company reported an operating loss of R10,9m and a headline loss per share of 11,6c compared with a loss of 16,61c in the previous period. The company stated, "The majority of income recognised in the period under review was derived from interest earned on cash investments in unlisted securities and funds. R&E had a net asset value of R0.79 per share at 30 June 2024 (R0.90 per share at 31 December 2023). The decrease in net asset value was due to the loss incurred during the period." In a trading statement for the year to 31st December 2024, the company estimated that it would make a headline loss of between 15,28c and 18,48c per share compared with a loss of 32c in the previous year. The company said, "The reason for the improvement in the current reporting period is mainly due to less legal expenditure incurred." The share is thinly traded and has been drifting down on low volumes for many years. It is of little interest to private investors.
JSE:RNG
by PDSnetSA
Our opinion on the current state of EXXARO(EXX)Exxaro (EXX) is a BEE coal company with interests in iron and heavy minerals. It has operations in Australia, America, and Europe and is a provider of coal to Eskom's Medupi power station. The company has been working to increase coal production from 48 million tons to about 60 million tons by 2022, but this strategy might be reconsidered due to lower global demand for coal. Exxaro is a highly cash-generative operation that is usually profitable, depending on the price of coal. While demand for coal has been strong both locally and in the export market, the shift toward renewable energy is seen as a long-term threat to the business. The difficulty of obtaining funding for new coal-fired power stations is growing, as banks face pressure from environmental groups. On 9th April 2021, the company announced that it had sold its interest in Exxaro Coal Central (Pty) Ltd and the Leeuwpan Coal Mine operation. The Ukraine conflict initially had a beneficial impact on Exxaro due to rising commodity prices, but that effect has now disappeared. The company announced that, with lower coal prices, it was no longer viable to transport coal to port by truck, a measure it had been forced to take due to inefficiencies in South Africa’s rail and port systems. In its results for the year to 31st December 2024, the company reported revenue up 5% and headline earnings per share (HEPS) down 36%. The company said, "In line with our production guidance, overall coal production volumes, excluding buy-ins, reduced by 7% to 39.5Mt in FY24, from 42.3Mt in FY23. The decrease in production volumes was largely driven by lower Eskom demand at Grootegeluk mine. Belfast mine production improved by 21% to 3.5Mt in FY24 compared to 2.9Mt in FY23, after operating for the full year." Exxaro remains a commodity play. Technically, the share is volatile but has been in a volatile upward trend since November 2015. Within that, it has been moving sideways and downwards since April 2022.
JSE:EXX
by PDSnetSA
Our opinion on the current state of ADVTECH(ADH)ADvTECH (ADH) is one of three listed commercial educational companies on the JSE (the others are Curro and its separately listed sister company, Stadio). ADvTECH has two divisions - a schools division (including Crawford, Trinity House, and Abbots) and a tertiary division (including Varsity College, Rosebank College, and a variety of specialist tertiary offerings). The group includes 109 schools and thirty-three campuses with 78,500 students. In the past, the company was supported mainly by its schools division, but in the last few years, the schools division has faced increasing competition, which has squeezed margins. At the same time, the tertiary division has become the company's primary source of profits. The company's acquisition of Monash College with its IIE campus in the West Rand has added 6,500 students in a state-of-the-art facility that includes laboratories, four residences, and sports facilities. In its results for the six months to 30th June 2024, the company reported revenue up 9% and headline earnings per share (HEPS) up 16%. Total group enrollments were up 6%. The company said, "Group operating profit increased by 15% to R865 million (2023: R754 million) with the education division’s operating profit increasing by 16%. Resourcing’s operating profit increased by 3%, notwithstanding the decline in revenue. The group operating margin improved to 20.2% (2023: 19.2%). The operating margin in the education divisions improved to 23.5% (2023: 22.8%)." In a trading statement for the year to 31st December 2024, the company estimated that HEPS would increase by between 13% and 18%. Technically, the share has been in a strong upward trend since the end of May 2020. It is now on a multiple (P:E) of 16.92, and we think it still has upside potential. In our view, this is a solid, blue-chip company with good medium-term prospects, and it is relatively cheap. Any significant improvement in the South African economy will benefit this company directly, and it will benefit directly from the newly appointed GNU. Traditionally, parents have always been willing to make significant sacrifices to pay for their children's education, which makes this share very defensive in times of low growth. On 1st October 2024, the company announced that it had acquired FNB's 47,000 square meter training and conference center in Sandton. On 21st November 2024, the company announced that it had acquired an Ethiopian school group for $7.5m.
JSE:ADH
by PDSnetSA
Our opinion on the current state of CAFCA(CAC)Cafca (CAC) is a cable manufacturer that produces over 900 cable and transmission products. Most of its business is conducted in Southern Africa. The company is 70% owned by Reunert. Cafca is listed on the JSE as well as the London Stock Exchange and the Zimbabwe Stock Exchange. Cafca is also involved in recycling copper and other materials. In its results for the year to 30th September 2024, the company reported volumes up 10%, but revenue and operating profit in Zimbabwean Gold (ZiG) were lower than the prior year by 5% and 18%. The company said, "The trading environment has been volatile during the year under review. The decline in commodity prices of most metals and alloys, as well as the impact of the drought for the 2023/24 agricultural season, dampened aggregate demand. Currency instability reflected by the inflation rate at 37.5% in September 2024, and exchange rate fluctuations, remain a significant challenge to value preservation." In a trading update for the 3 months to 31st December 2024, the company reported volumes up 23% and revenue up 29%. The company said, "In the first quarter ended 31 December 2024, we have witnessed industry and commerce adjusting to various changes, including the September 2024 currency devaluation, reduced expansionary spending on road infrastructure, increased power disruptions, and a rise in informal retail." The enduring problem with this share from a private investor's point of view is the very low volumes traded, which makes it completely impractical as an investment.
JSE:CAC
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, because 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. 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, but that now appears to be coming to an end. In its results for the year to 31st December 2024, the company reported revenue down 9% and headline earnings per share (HEPS) down 29%. The company said, "Weaker commodity prices and increasing costs made for a challenging year for Merafe. Earnings slumped by 62% to R667 million, after the full impairment of the Boshoek smelter of R575 million. Ferrochrome prices were impacted by surplus supply as a result of new Chinese production capacity." The company's net asset value (NAV) decreased by 7%. Technically, the share reached a high of 192c on 4th April 2022 and was trending down or moving sideways since then. It has found some brief support at 104c per share. It remains a volatile commodity share.
JSE:MRF
by PDSnetSA
Our opinion on the current state of MPACT(MPT)Mpact (MPT) is a large producer of paper and plastics packaging in Southern Africa. It recycles paper and cardboard and makes corrugated cardboard containers for a variety of industries as well as polystyrene trays for the food industry. It has 20 manufacturing operations, with South African sales accounting for 86% of its business. It employs over 5000 people. The business is impacted by the general level of consumer spending (which has been depressed because of COVID-19 and was improving at least until the advent of the Ukraine crisis) as well as weather considerations, which affect the demand for corrugated containers for fruit and other agricultural products, especially in the Cape. Like many businesses in the current environment, Mpact has been working to preserve cash, but it has benefited from a switch to local suppliers during the pandemic. In its results for the year to 31st December 2024, the company reported revenue up 3,6% and headline earnings per share (HEPS) down 29,9%. The company said, "Trading was hampered by a weak economy underpinned by high interest rates, cost inflation, load shedding and other service delivery failures, negatively affecting consumer and business confidence." The share fell from a high of R51 in April 2016 to levels around R8 in March 2020 but has since recovered to R29. At the current level, it is on an earnings multiple of 8,43 - which looks cheap. Technically, the share looks like it may be entering a new upward trend, but it has been moving sideways since August 2022.
JSE:MPT
by PDSnetSA
Our opinion on the current state of SUNINT(SUI)Sun International (SUI) is a casino and hotel operator with interests in South Africa, Chile, Peru, and recently, Argentina. The depressed economy in South Africa impacted the performance of South African casinos and hotels even before COVID-19. The company increased its stake in Sun Dreams in Peru by 10% to 65%. It also bought a hotel and casino in Argentina for $25,5m. The company invested R4bn in the Time Square casino near Pretoria, which was beginning to perform before COVID-19. The group also owns well-known South African casino/hotel operations like Sun City, Carnival City, and Grand West. The share has fallen from a high of R142 in February 2015 to current levels around R18.24. At this level, its debt was close to double its market capitalisation. The company plans to sell its Nigerian interests and has received a number of offers. It has not paid any dividends in the past two years and only expects to resume dividends in a further two years or so. The company retrenched 2195 staff and its debt fell sharply. In its results for the six months to 30th June 2024, the company reported income up 5% and adjusted headline earnings per share (HEPS) up 9,1%. The company said, "The group's 5.0% increase in income, combined with effective cost control, yielded a continuing adjusted EBITDA margin of 27.3% which was in line with the prior period. This consistency highlights the effectiveness of cost optimisation initiatives implemented by the group and lower diesel costs following the reduction in load shedding. The group is in a strong financial position with South African debt (excluding IFRS 16 lease liabilities) at R5.4 billion." In a trading statement for the year to 31st December 2024, the company estimated that HEPS would increase by between 14,1% and 19,8%. The company said, "Sun International retains a strong financial position as it continues to de-gear, with debt (excluding IFRS 16 lease liabilities) decreasing from R5.7 billion in FY23 to R5.2 billion as at 31 December 2024." Technically, the share has been in a volatile upward trend since its low point in May 2020. It should continue to recover.
JSE:SUI
by PDSnetSA
Our opinion on the current state of Sea Harvest (SHG) is South Africa's most popular frozen fish brand with about 38% of the market. It was controlled by Brimstone, which had 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 1 600 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 2024, the company reported revenue up 16% and headline earnings per share (HEPS) down 45%. The company said, "The Sea Harvest Group experienced its most challenging year since listing in 2017, impacted by hake catch rates at historical lows, weak market conditions in abalone, continued soft global prawn pricing, and high interest rates. This was offset by strong demand and improved pricing in hake, a solid performance from the newly acquired Sea Harvest Pelagic business, and a firm result from Ladismith despite challenges from foot-and-mouth disease (FMD), resulting in the Group delivering EBIT of R609 million (2023: R577 million, up 6%) and HEPS of 55 cents (2023: 100 cents, which included a once-off gain on purchased loans of R93 million that contributed 34 cents to HEPS)." The Sea Harvest share is fairly volatile, with reasonable volume traded. From its listing in March 2017, the share has moved mostly sideways and more recently downward 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 had received approval from the Competition Tribunal.
JSE:SHG
by PDSnetSA
Our opinion on the current state of HARMONY(HAR)Harmony (HAR) was probably South Africa's most marginal gold mine until it got Mponeng gold mine working effectively. The development of this mine and its processing plant are expected to cost around US$2,8bn - and Harmony does not at this stage have its share of that cash (about R20bn). During 2021 the company purchased Mponeng gold mine for R4,2bn. Mponeng is the world’s deepest mine and has all the problems of ultra-deep level mining. The company is building a 30mw solar park in the Free State and has plans to build a further 80mw of green power. On 6th October 2022, the company announced that it had agreed to buy 100% of the Eva copper project in Australia for R4,1bn. Harmony remains a volatile gold producer and hence risky - although recent acquisitions could change its direction significantly, taking it out of precious metals. Eva is only expected to commence production in 3 years and is expected to add 260 000 ounces of gold and 1,7 billion pounds of copper to Harmony's reserves. On 3rd April 2024 the company announced that it had signed a wage deal with all of its unions for the next five years. In its results for the six months to 31st December 2024 the company reported gold revenue up 19% and headline earnings per share (HEPS) up 33%. The company said, "Operating free cash flow, up 46% to R10 392 million (US$579 million) driven by the high average gold price received. Strong, flexible balance sheet in a record net cash position of R7 283 million (US$386 million)." Technically, the share, while volatile, is in a strong upward trend. It is a play on the gold price and the rand/US dollar exchange rate. It was added to the Winning Shares List (WSL) on 16-11-23 at 9920c. It is now trading for 18586c. On 5th February 2025 the company announced that two employees had lost their lives at the company's mines.
JSE:HAR
by PDSnetSA
Our opinion on the current state of MUSTEK(MST)Mustek (MST) is South Africa’s largest assembler of personal computers under its *Mercer* brand and also imports various computer products, including Samsung, Acer, and Microsoft. Historically, the company has traded well below its net asset value (NAV). The company has been exploring growth opportunities in the fibre-to-the-home market and has seen strong sales in cables supporting this sector. CEO David Kan has expressed optimism about the potential exponential growth in this area. Additionally, Mustek is positioned to benefit from increased demand for remote education and work-from-home technologies post-COVID-19. However, in its results for the year to 30th June 2024, Mustek reported revenue down 16% and headline earnings per share (HEPS) down 82.1%. The company attributed this decline to weak corporate and government spending and the sudden end of the *green energy boom*, which had previously driven strong sales. Mustek found itself with surplus stock in an environment of high interest rates and declining demand for alternative energy products. In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would fall by between 70% and 80%, citing *"the adverse impacts of the prevailing local and economic challenges."* Despite these negative results, the share appears undervalued. It has recently broken above its 200-day moving average, which could signal the beginning of a recovery. If economic conditions improve and corporate/government spending resumes, Mustek may see better performance in the medium to long term.
JSE:MST
by PDSnetSA
Our opinion on the current state of HOMCHOICE(HIL)HomeChoice (HIL) is South Africa's largest home shopping retailer, operating through two divisions: retail and financial services. It offers a broad range of home appliances, clothing, fashion, footwear, and related products through showrooms and online channels. The share is tightly held, with over 92% of issued shares controlled by Richard Garrat and his family. A planned share issue, which would have improved liquidity, was shelved due to challenging retail sector conditions. This has left the stock thinly traded, making it unsuitable for most private investors despite its potential as an investment if liquidity improves. HomeChoice has been expanding into brick-and-mortar retail, with five stores already open and another twenty-five planned. These stores help attract new customers for both retail sales and micro-loans. The company has also extended its financial services offering to include micro-loans, insurance products, and funeral cover. Given the tough economic climate, it has had to increase provisions for impairments on both its retail credit and micro-loan books. The company primarily serves women in Living Standards Measure (LSM) categories 4 to 8 and has over 870,000 active customers. It continues investing in its digital platform to enhance online shopping and financial services. Online loans are seeing strong growth, with 20,000 new customers signing up each month. Additionally, it is rolling out "bright pink" container shops in townships, allowing customers to collect online orders or apply for business loans. In its results for the six months to 30th June 2024, HomeChoice reported revenue up 14.6% and headline earnings per share (HEPS) up 37%. The company said, *"HIL has delivered a strong financial performance, with exceptional growth from Weaver Fintech, which is contributing 95% of the group's operating profit. Our digital-first approach continues to provide scalability and efficiency to our businesses and outstanding customer convenience."* In a trading statement for the year to 31st December 2024, the company estimated that HEPS would increase by between 20% and 30%. While the company shows strong financial performance and growth potential, its limited trading volume makes it highly risky for private investors.
JSE:HIL
by PDSnetSA
Our opinion on the current state of METROFILE(MFL)Metrofile (MFL) is a company specializing in records storage and management, image processing, and backup services. Listed since 1995, it has a 57.4% Black ownership, with the Mineworkers Investment Company holding 38.64% and Sanlam 5%. The company's record management division operates 52 facilities across 27 locations, offering over 100,000 square meters of office and warehousing space. A US-based firm, Housatonic Partners, made an offer to buy 100% of Metrofile at 330c per share but delayed the transaction due to COVID-19, awaiting financial results and market stability before proceeding. In its results for the six months to 31st December 2024, Metrofile reported revenue down 7% and headline earnings per share (HEPS) down 38%. The company said, *"Revenue decreased by 7% to R537 million (1HFY2024: R577 million), mainly due to the reduction in product sales following the exit of the Tidy Files manufacturing operation. Excluding the Tidy Files contribution, revenue was up by 4%, mainly due to growth in secure storage and cloud services."* While Metrofile remains a high-quality small business, it is facing challenges in a difficult economic climate. Technically, the share appears to be in a new downward trend. On 5th September 2024, the company announced that CEO Pfungwa Serima would resign, effective 30th September 2024, and be replaced by Thabo Seopa.
JSE:MFL
by PDSnetSA
Our opinion on the current state of SANTAM(SNT)Santam (SNT) is South Africa's largest short-term insurer, holding about 22% of the market. Unlike life insurers, it does not engage in endowment insurance, annuities, or investment-linked policies. Instead, Santam insures assets such as buildings and vehicles, as well as individuals against risks they cannot afford, such as income loss due to disability or death. The company covers the first R150m of any claim before relying on its reinsurance policy. It has Level 1 BEE status and employs over 6000 people. Following the Ma-Afrika judgement, Santam increased its provision for contingent business interruption (CBI) claims by R1,7bn. Santam is widely regarded as one of the JSE's most reliable and high-quality shares. The company was impacted by the civil unrest in July 2021 but has continued to show resilience. In its results for the year to 31st December 2024, the company reported revenue up 12% and headline earnings per share (HEPS) up 51%. The company said, *"Conventional insurance net earned premium (NEP) growth of 10% to R32.2 billion. Conventional insurance net underwriting margin of 7.6% (3.5% in December 2023). Alternative risk transfer (ART) profit before tax of R781 million (R516 million in December 2023). Return on shareholders' funds of 31.9%."* The share trades on a P:E of 11,46. Santam exemplifies a blue-chip stock with a strong balance sheet and a long history of steadily improving earnings. Its share price has followed a consistent upward trajectory for the past 39 years—trading at 90c in 1985 and now around R398. Given its stability and long-term performance, Santam remains a solid choice for any private investor's portfolio.
JSE:SNT
by PDSnetSA
Our opinion on the current state of AFRO-C(ACT)Afrocentric (ACT) is a black-owned investment holding company that focuses on health administration and insurance. Sanlam recently acquired 28,7% of the company, which will help with its financing and marketing. The group owns: - 100% of Pharmacy Direct (a courier company). - 100% of Curasana (a pharmaceutical wholesaler). - 100% of Activo Health, having recently acquired the remaining 74% for R588m in cash and shares, at a multiple of 9,3 times Activo's most recent after-tax profit (R63m). Its largest asset is its controlling stake in Medscheme, which administers medical schemes covering 3,2m lives in South Africa, Namibia, Kenya, Botswana, Zimbabwe, and Swaziland. Afrocentric is intent on leveraging the Medscheme client base to sell its other products. On 11th October 2022, Sanlam made an offer to buy between 36,9% and 43,9% of Afrocentric for R6 per share, causing the share price to rise sharply. In its results for the six months to 31st December 2024, the company reported revenue down 51,8% and headline earnings per share (HEPS) down 90,6%. The company said, *"The directors have no reason to believe that the Group will not be a going concern in the foreseeable future based on review of forecasts and budgets and available cash resources."* Technically, the share bounced off support at around 280c, but the recent results disappointed, and it has fallen further to 143c. We advise waiting for it to break up through its downward trendline before investigating further.
JSE:ACT
by PDSnetSA
Our opinion on the current state of BRIMSTON(BRT)Brimstone (BRT) is a black-controlled investment holding company with a diverse portfolio of holdings. It owns: 1. 54,2% of Sea Harvest, which is a listed fishing company and has a market capitalisation of just over R4,5bn. 2. 100% of Lion of Africa, a loss-making insurance company, which decided in November 2018 to cease operations and close its doors. 3. 100% of House of Monatic, a loss-making clothing manufacturer. 4. 24% of Oceana, the largest fishing company in South Africa, with a market capitalisation of R8,6bn. Brimstone is increasing its shareholding by buying 8m shares from Tiger Brands, which will take its holding to 22,9%. 5. 6,1% of Grindrod. 6. 18% of Aon Re Africa. 7. 25% of South African Enterprise Development. 8. 49,8% of Vuna Fishing company. 9. 12,8% of Milpark Education. 10. 25% of Obsidian (a black-owned investment holding firm positioned to benefit from the roll-out of the NHI), which, in January 2020, it increased to 80% for R35,7m. Additionally, it holds a variety of other smaller shareholdings in property, healthcare, 3,9% of Long4Life, and 5,3% of Stadio. The company has been selling down its stakes in Life Healthcare, Lion of Africa, House of Monatic, Equites, Multichoice, and Phuthuma Nathi. It has used the proceeds to pay down R1bn of its debt. The company disposed of its entire stake in Milpark and part-stakes in Phuthuma Nathi, MTN Zakhele Futhi, and Equites. In its results for the year to 31st December 2024, the company reported revenue down 66% due to the deconsolidation of Sea Harvest and headline earnings per share (HEPS) up 51%. The company undertook a share buy-back of 4,5m shares for R21,7m and, in the current financial year, has bought a further 861 325 shares for R4,3m. We regard the share as too thinly traded for private investors; however, they have been unbundling and releasing value, so volumes are improving.
JSE:BRT
by PDSnetSA
Our opinion on the current state of DISCOVERY(DSY)Discovery (DSY), developed and built by Adrian Gore over the past 25 years, offers the A/B income group of people a matrix of financial services that are inter-linked and cross-selling. Thus, a customer can begin with his/her medical aid and then add a variety of insurance products and, most recently, personal banking products. Discovery's "Vitality" concept, which rewards clients for looking after their health in various ways, is extended to their driving record and a rewards system that ensures attractive benefits for taking the full range of Discovery debit-order products. The Vitality platform tracks over 1000 customer activities and 50 biometrics a minute using the Apple Watch in South Africa, the UK, China, Europe, and the US to ensure a process of healthy aging and retirement planning. Discovery's Chinese company, Ping An Health, in which Discovery has a 25% stake, saw membership grow by 60% over the year, and written premiums increased by 87% to $753m. Ping An is rapidly developing into Discovery's "Tencent." Discovery's move into banking offers existing clients a range of banking and credit card facilities. The banking license was approved in November 2017 and should significantly increase the profits generated by the group in time. This is a disruptive development that will seriously shift the banking of A/B income group consumers away from existing banks. Discovery Bank's aim was to bring in 1000 new accounts per day from the end of August 2019. The company has seen a drop in car accident claims and medical insurance claims since the lockdown. This is a highly rated share despite the decline in its share price over the past two years. Discovery Bank has now reached 700 000 active clients, and those clients are mostly of very high quality—but the progress has been relatively slow, partly because of the pandemic. Discovery shares remain expensive, but we regard this as one of the best shares for a private investor to hold for long-term growth. CEO Adrian Gore says, "I am a great believer that opportunities are not in good times," indicating his belief that growth comes from investing during the difficult times South Africa is currently experiencing. Gore has also stated that the NHI, as it is proposed, is unaffordable for South Africa and that there are insufficient medical resources to implement it. Discovery became the first large, listed company to require all its staff to be vaccinated. On 20th June 2022, the bank reported that it had more than 1 million accounts and was taking on about 750 new accounts per day. In its results for the six months to 31st December 2024, the company reported total revenue up 42% and headline earnings per share (HEPS) up 33%. The company said, "Capital ratios remained strong across every business and liquidity at each regulated entity, and at the centre, remains well in excess of the required buffers. The cash conversion ratio remained steady at 75% of after-tax normalised operating profit compared with the prior period, notwithstanding the strong growth in normalised profit from operations." Technically, the share has been in a strong upward trend since June 2024. We added it to the Winning Shares List (WSL) on 1st August 2024 at 14280c. It has subsequently moved up to 20882c. Due to the quality of its management and business model, we see this as a "must-have" share for any private investor's portfolio.
JSE:DSY
by PDSnetSA
Our opinion on the current state of CLIENTELE(CLI)Clientele Life (CLI) is a small insurance company selling short- and long-term policies and underwriting insurance products. Their products are sold through agents and brokers as well as through tele-sales. On 3rd November 2023, the company announced that it had acquired 1Life Insurance for R1,914bn, to be paid by issuing 117,815,756 ordinary shares in Clientele. In its results for the year to 30th June 2024, the company reported headline earnings per share (HEPS) and net profit down 4%. The company said, "The total net insurance service result increased by 4% to R171.6 million. The total net investment result of R254.9 million is double the prior year figure. Net insurance finance income is 19% higher than the prior year at R207.3 million. Revenue from contracts with customers increased by 11% to R380.4 million." In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would increase by between 2% and 17%. The company said, "...shareholders are encouraged to appreciate the noteworthy impact of the once-off recognition of a bargain purchase gain of R469 million arising from the fair value measurement at the date of acquisition of 1Life." The share trades on a P:E of 12,7, which seems cheap to us. The share is heavily traded enough for most private investors. In our opinion, this share continues to represent reasonable value at the current P:E. It should benefit directly as and when the South African economy improves as a result of the newly appointed government of national unity (GNU).
JSE:CLI
by PDSnetSA
Our opinion on the current state of NAMPAK(NPK)Nampak (NPK) is Africa's largest packaging company, operating in South Africa and ten other African countries. About 60% of its turnover comes from South Africa, but only 36% of its trading profit. The rest of Africa accounts for 59% of trading profit and only 31% of turnover. The company also has small interests in the UK and Ireland. Nampak produces four kinds of packaging products—plastics, metals, paper, and glass. The majority of its trading profits come from metals, primarily beverage cans. The company has successfully repatriated R3,5bn (US$265m) of surplus cash from Zimbabwe, Nigeria, and Angola, demonstrating strong management in navigating African markets. However, it has halted its African expansion strategy after writing down its businesses in Angola and Nigeria by R3bn. The company was affected by COVID-19 and the decline in the oil price, impacting its operations in Nigeria and South Africa. However, it avoided selling assets or conducting a rights issue to pay down debt of nearly R6bn. The announcement of a R1,35bn rights issue to reduce debt caused a 30% drop in the share price. This was later reduced from R2bn to R1,5bn, and shareholders approved raising up to R1bn on 30th June 2023. On 20th April 2023, CEO Eric Smuts resigned with immediate effect and was replaced by Phil Roux. On 16th May 2024, the company announced the sale of its entire Nigerian operation for $68,5m. In its results for the year to 30th September 2024, the company reported revenue from continuing operations up 1% and headline earnings per share (HEPS) of 3361,1c, compared with a loss of 39004,6c in the previous period. The company said, "The Beverage category continues to grow, in particular beverage in cans, a format which is growing in terms of consumer preference. Challenges faced in the second half relating to the installation of the new 500ml production line at Springs meant that Nampak was unable to fully capitalise on this increased demand." On 31st January 2025, the company announced the sale of Bevcan Nigeria for $68,2m. The share remains in an upward trend but is a volatile commodity share, and the trend may be coming to an end.
JSE:NPK
by PDSnetSA
Our opinion on the current state of SABCAP(SBP)Sabvest Capital (SBV) is an investment holding company that listed on the JSE in 1988. Previously, the company had both ordinary and "N" shares, which were very thinly traded. To rectify this situation, a new company was registered called Sabcap, and the shares of Sabvest were swapped out for Sabcap shares. This happened on 12th May 2020. Sabcap has investments in five private companies, by far the largest of which is SA Bias, where its investment is 60% and worth R673m. SA Bias is predominantly involved in the textiles industry but also has an interest in a company involved in handling equipment and parts. The other private companies in which it has an interest are: Classic Food Brands (30%), Flexo Line Products (47,5%), Mandarin Holdings (30%), JAA Holdings (35,7%), and Sunspray Food Ingredients (28,2%). Aside from this, Sabvest has a listed portfolio worth about R700,000 and offshore investments worth about R573,000. It also owns 11,7% of Metrofile, worth R82,3m, 300,000 shares in Net1 UEPS, and 31% of Rolfes. In its results for the six months to 30th June 2024, the company reported net asset value (NAV) up 7,8% to 11,786c per share. Headline earnings per share (HEPS) increased by 63,2%. The company said, "The compounded annual growth rate in NAV per share over 15 years with dividends reinvested was 18,5%." In a trading statement for the year to 31st December 2024, the company estimated that the company's NAV would increase by between 17% and 21%. This share is very difficult to analyze because of its diverse and constantly changing portfolio. The restructuring of the business does appear to have increased the volumes traded a little, with an average of about R248,000 worth of shares changing hands each day, and the share does appear to be in an upward trend. Like most investment holding companies, it trades at a significant discount to its NAV.
JSE:SBP
by PDSnetSA
Our opinion on the current state of SALUNGANO(SLG)Salungano, previously Wescoal, engages in the mining and trading of coal. The company began production in 2021, producing coal from its Moabsvelden mine for Eskom. Today, the company produces 300 million tons from five coal mines. Mining accounts for 82% of revenue, but it owns 50% of the Arnot Mine and is looking to broaden its business into other parts of energy. In its financials for the six months to 30th September 2023, the company reported revenue down 30% and a headline loss of 90c per share compared with a loss of 19,64c in the previous period. The company's net asset value fell to 37c per share from 178c in the previous period. The company said, "The Group continued to operate with only one Eskom contract, with the Elandspruit and Vanggatfontein Collieries continuing to supply Eskom through rectification into the Neosho contract." The company will apply for the lifting of the suspension now that the FY2023 financial results and integrated annual report, as well as the FY2024 interim financial results, have been published, but that has not yet happened. On 4th July 2023, the company announced that three of its directors had resigned, resulting in a sharp drop in the share's price. On 21st August 2023, trading was suspended in Salungano shares by the JSE. It appears from a quarterly update that the 2024 financials are now only expected to be published by 30th June 2025—so the share remains suspended.
JSE:SLG
by PDSnetSA