Get started
Our opinion on the current state of LEWIS(LEW)Lewis (LEW) is a retailer of furniture and electrical appliances operating through 807 stores under the Lewis (483 stores), Beares (137 stores), Best Home (144 stores), and most recently, United Furniture Outlets (43 stores) brands. Of these, 126 are in neighbouring countries. The company does 65.7% of its business on credit and offers customers credit insurance and other financial products. The company is exposed by the impact of COVID-19 because of its substantial debtors’ book which may be difficult to collect. The plan is to increase the number of UFO stores from 39 to 70 over the next few years. At current levels, the share is trading on a P:E of just 4.97 and the share price is well below its net asset value (NAV). The company's balance sheet remains debt-free, which is extraordinary among listed retailers in this post-COVID-19 period. The company is in the process of buying back 10% of its issued share capital. We have always said that this share represents a bargain. It will benefit directly from any increase in consumer spending. It is an extremely tightly managed company that has no debt and a huge store footprint. It has been growing both organically and by acquisition. Obviously, as a retailer of furniture and white goods, it is vulnerable to any economic downturn, but we see it as cheap right now and expect its share to rise as the economy improves. Certainly, it is one of the few retail outlets in South Africa that is doing reasonably well in the circumstances. The company is engaged in a share buy-back program in which it has so far bought back 29.9 million shares at an average price of R34.20 per share. In its results for the year to 31st March 2024, the company reported merchandise sales up 4.7% and headline earnings per share (HEPS) up 7.1%. The company said, "The strong credit sales growth trend continued, with credit sales increasing by 15.8% and cash sales declining by 11.8%. Credit sales have grown at a compound annual rate of 16.9% over the past three years and now account for 66.2% of total merchandise sales (2023: 59.9%). The group has maintained its prudent credit granting criteria in the constrained spending environment and the credit application decline rate increased to 35.1% (2023: 34.7%)." The modest results show that consumers are under pressure from high interest rates, but the end of load shedding should be a benefit. This share remains one of the best-run businesses on the JSE at the moment. The company believes that it is under-valued on the JSE by 30% - and we think that is conservative. Technically, the share has broken up through its downward trendline and is in a new upward trend.
JSE:LEW
by PDSnetSA
Our opinion on the current state of NEDBANK(NED)Nedbank (NED) is the smallest of South Africa's five big banks with a client base of just over 8 million. It has (10-10-18) separated from Old Mutual (which is busy selling its remaining stake). In its results for the year to 31st December 2023, the company reported revenue up 11% and headline earnings up by 11%. The company said, "In 2023 we further increased DHEPS to 3 199 cents, up 14% yoy, and we maintained our #1 NPS ranking among South African banks. Growth trends across average interest-earning banking assets (AIEBA) (+7%), net interest income (NII) (+14%), non-interest revenue (NIR) (+6%) and associate income (+64%) remained robust. Levels of productivity improved, evident in our cost-to-income ratio declining to 53.9% from 55.8% in 2022." At current levels, it is on a P:E of 6.9 with a dividend yield (DY) of 6.63% and looks like good value. In an update on the first 4 months to 30th April 2024, the company said, "The financial performance of the group in the first four months to 30 April 2024 compared to the first four months to 30 April 2023 ('the prior period') reflects headline earnings growth of around mid-single digits, supported by strong growth in Retail and Business Banking (RBB), albeit off a low base, and solid growth in Corporate and Investment Banking (CIB), partially offset by a decline in headline earnings in Nedbank Wealth and Nedbank African Regions (NAR)." Nedbank is extremely well-capitalised and is making good progress in managing costs and implementing technical improvements. The company is clearly benefiting from higher interest rates. Overall, we view this share as being a solid blue chip which is undervalued at current prices. Nedbank's share peaked at 31300 in March 2018 at the height of Ramaphoria. The share's price fell to 7320c in March 2020 and is now recovering from these levels in a steady upward trend which we expect to continue. On 22nd November 2023, the company announced that Jason Quinn would take over from Mike Brown as chief executive with effect from 31st May 2024.
JSE:NED
by PDSnetSA
Our opinion on the current state of FINBOND(FGL)Finbond (FGL) is a micro-lending and insurance operation which operates in South Africa and America. This company aims to expand in the US to the point where 70% to 80% of its income is derived from that country within 3 to 5 years. It already has 66% of its income coming from the US and believes that the US offers significant growth opportunities. Including South Africa, Finbond has a total of 694 branches. In its results for the year to 29th February 2024, the company reported revenue up 22.8% and headline earnings per share (HEPS) up 97.7%. The company said, "Profit for the year attributable to owners of the Company increased by 100.2% to R0.6 million (February 2023: loss of R274.8 million). Net asset value per share increased by 82.6% to 182.2 cents per share (February 2023: 99.8 cents per share)." Technically, the share was in a long-term downward trend and has been drifting sideways since March 2022. It trades about R229,000 worth of shares each day on average. We believe that there may be better options than this penny stock, but it has begun to move up recently.
JSE:FGL
by PDSnetSA
Our opinion on the current state of EOHEnterprise Outsourcing Holdings (EOH) was Africa's largest information technology company with involvement in almost every aspect of computer applications. At one point, the company had 11,000 staff members, but that has now been reduced to 6,151. It was, until August 2015, the darling of the JSE because it had a long track record of steadily improving profits. It made a peak of R178 per share at a P:E of 35. An unsuccessful attempt to exceed that high (i.e., a double top) came a year later in September 2016, and since then, the share has fallen steadily to reach a low of 146c in February 2023. This fall was initially accompanied by allegations that the company was involved in and owed its success to state capture in collaboration with the Guptas. The CEO and founder, Asher Bohbot, resigned in May of 2017 and handed over to Zunaid Mayet, who has now handed over to Stephen van Coller. Usually, when a company is run by a strong charismatic leader and that leader (like Bhobot) resigns, it is time to sell the share. The company's 200 subsidiaries have been consolidated into three divisions with centralised debt collection and procurement. On 6th July 2021, Business Day reported that EOH could possibly be "blacklisted" by the government as a result of its past tender frauds. This would obviously be very negative for the company. On 11th November 2022, the company announced a R500m rights issue and a R100m private placement mainly to reduce debt, and on 13th February 2023, it announced that the offer had been 135.8% over-subscribed. In its results for the six months to 31st January 2024, the company reported revenue of R3.1bn, slightly down on the previous period's R3.2bn. The company made a headline loss per share of 11c compared with a loss of 17c in the previous period. The company said, "Operating costs continue to be a core focus, and EOH is on track to eliminate at least R50 million from the FY2023 cost base, on an annualised basis, as part of the efficiency strategy. The Group's interest charge decreased to R68 million (HY2024) from R102 million (HY2023), as a result of the R600 million capital raise and the refinancing of consortium facilities with a single bank." On 31st May 2024, the company announced the resignation of various directors and the appointment of Marius de la Rey as interim CEO. Technically, the share is still falling as investors wait for the company to reduce debt and re-invent itself. To us, it looks like the EOH share may have consolidated at lower levels and now be in a new upward phase.
JSE:IOC
by PDSnetSA
Our opinion on the current state of DIS-CHEM(DCP)Dis-Chem Pharmacies (DCP) listed in November 2016 and competes directly with Clicks (CLS) in the pharmaceutical, medicine, and beauty products markets. It is a family business run by the Saltzman family, who had a controlling stake in the business through a private company, Ivlyn. On 24th August 2021, Ivlyn announced the sale of 7.5% of its shares in a bookbuild, 3.75% to selected management (with a 10-year lock-in) and 10.5% to a BEE consortium. This leaves the Saltzman family's interest at 31.4%. Ivan Saltzman was the CEO but has resigned and will be replaced by Rui Morais. Dischem's objective on listing was to expand its store base from 108 stores, which it has now far surpassed. Theoretically, Dischem can have a store in every shopping mall where Clicks has a store. Clicks had about six hundred stores when Dischem was listed and has spoken of plans to expand its store base to as many as 1200. This means that Dischem has considerable "blue sky" potential - which accounts for its relatively high rating (P:E of around 21.67). The company is buying Springbok Pharmacy and Quenets, which shows that it is growing rapidly. The company now has more than 254 pharmacies countrywide and is opening between 10 and 20 new stores a year. It may be possible for the company to expand into spaces left in malls as a result of COVID-19. These may be available for lower rentals. The company is benefiting from an increased awareness among customers of the need to boost their immunity and general health by buying more vitamins. On 15th May 2020, Dischem announced that it had acquired 100% of Baby City for R430m in a conditional agreement. There are significant synergies between the two companies' product and service ranges. The company is expanding into healthcare insurance with the acquisition of 25% of Kaelo Holdings. In its results for the year to 29th February 2024, the company reported revenue up 11.1% and headline earnings per share (HEPS) down 1.6%. The company said, "...the Group was impacted by the base effects of the prior year's performance, which were distinctly different across the two halves of the year with the first half of the prior year delivering a strong performance when compared to the second half of the prior year. Contributing to the stronger first half performance in the prior year, was the acquisitions of the warehouse properties resulting in a R72 million once-off gain from the release of the lease liability and right-of-use asset as well as the impact of COVID-19 vaccine administration and testing services which has ended and did not contribute in the current financial period." In our view, this is a solid blue-chip company with a good future. Technically, the share moved sideways and downward since making a "double top" in April 2022. We advised waiting for a break up through a 200-day moving average before investigating further. That break appeared to be happening on 3rd November 2023 at a price of 2525c per share. Since then, the share has moved up to 3128c. We consider Dischem to be a solid defensive share with good long-term potential.
JSE:DCP
by PDSnetSA
Our opinion on the current state of CROOKES(CKS)Crookes Brothers (CKS) is an agricultural and property company which was formed in 1913 and listed on the JSE in 1948. The company produces sugar cane, bananas, macadamia nuts, and deciduous fruit, and has a property division. The company owns Renshaw farm, which consists of 1800 hectares between Scottburgh and Umkomaas. Of this, 266 hectares has been re-zoned for development, of which 52 hectares is the subject of a contested land claim. The company has decided to sell the 28 hectares which is being developed as Renshaw Hills, a 500-unit residential development. The deciduous fruit operation consists of 5 farms in the Western Cape with 43 hectares of deciduous orchards. The macadamias are grown on a farm in Mozambique on a 99-year lease. The sugarcane operation is on 4 leased farms in Mpumalanga plus other farms in KwaZulu Natal, Swaziland, and Zambia. In its results for the six months to 30th September 2023, the company reported revenue up 17% and headline earnings per share (HEPS) of 321.2c compared with a loss of 193.7c in the previous period. The company said, "As anticipated, we are starting to experience a welcome reduction in fertiliser and other agricultural input costs, following the runaway cost inflation experienced in the past two years brought about by geo-political events beyond the group’s control. The reduction in the fair value of biological assets from continuing operations was R42.2 million (2022: reduction of R81.2 million)." In a trading statement for the year to 31st March 2024, the company estimated that HEPS would be 334.5c compared with a loss of 708.8c in the previous year. The company said, "The increase in earnings is mainly attributable to an improvement in prices in the Group's sugar cane and banana operations, as well as a reduction in fertilizer and other agricultural input costs, compared to the previous corresponding period." A problem with this share is that it is relatively tightly held. The average value of shares changing hands each day is about R102 000, but on many days it does not trade at all. This generally makes it riskier even for private investors.
JSE:CKS
by PDSnetSA
Our opinion on the current state of ADCORP(ADR)Adcorp (ADR) is an employment company with subsidiaries operating in South Africa and Australia. Managerially, efforts have been made in (1) defining and focusing on the core business, (2) reducing costs, (3) strengthening the brand, and (4) transforming the culture. In its results for the year to 29th February 2024, the company reported revenue from continuing operations up 7.7% and headline earnings per share (HEPS) of 83.8c compared with 61.1c in the previous year. The company said, "Persistent load shedding and other infrastructure issues in South Africa led companies to seek more flexible staffing solutions, thereby boosting demand for our services. The Australian market continues to grapple with blue-collar labour shortages, which in turn has driven demand for Adcorp's contingent staffing offering." Technically, the share has been drifting sideways and downwards for the past 40 months, although the prospect of a special dividend saw the share jump in late May 2023. Obviously, the high unemployment level in the economy had negatively impacted this business, and COVID-19 made the situation worse. It has suffered from the difficult conditions in the South African economy, but the new management team appears to be making the right moves. On a P:E of 6.05 and a dividend yield (DY) of 6.21, we believe that the share is cheap and has potential.
JSE:ADR
by PDSnetSA
Our opinion on the current state of AMEAfrican Media Entertainment (AME) is a company which specialises in running radio stations and whose revenue comes principally from advertising on those stations. It has four divisions - (1) Algoa which broadcasts from the Garden Route to the Wild Coast, (2) OFM which broadcasts in the Free State, North-West province, Northern Cape, Southern Gauteng and Northern Natal, (3) United Stations which sells and creates advertising material for the radio stations and (4) Radio Heads which offers media planning and buying, creative strategy and copy-writing and syndicated programming. AME acquired Moneyweb and a share of Classic FM. The company said, "On 30 September 2019 Classic FM South Africa (Pty) Ltd was placed under voluntary business rescue." In its results for the year to 31st March 2024 the company reported revenue up 8% and headline earnings per share (HEPS) up 63%. The company said, "The group generated cash from operating activities of R64,9 million (March 2023: R43,5 million), paid tax of R15,3 million (2023: R11,6 million), spent R5,4 million (2023: R6,3 million) on capital expenditure and paid dividends of R33 million (2023: R28,7 million) to its equity holders and non-controlling interest holders. The group also repurchased 212 600 shares (2023: 701 775 shares) during the period which resulted in a cash outflow of R6,9 million." The share trades an average of R111 000 per day on average which makes practical for a small investment. Its portfolio of radio stations have relatively small, specialised audiences. Moneyweb has battled for years to produce significant profits.
JSE:AME
by PDSnetSA
Our opinion on the current state of AFINE(ANI)Afine (ANI) is a real estate investment trust (REIT) formed in 2021, specializing in acquiring petrol stations. The company acquired five petrol stations in February 2021 and two more in May 2021. In its results for the year to 29th February 2024, the company reported revenue up 2.7% and headline earnings per share (HEPS) down 4.1%. The company said, "Afine’s balance sheet comprised assets of R408.2 million at year-end, consisting of 10 service stations valued at circa R397.8 million. This showed an increase of 11.6% over 2024. Operating profit before fair value adjustments and tax amounted to R38.9 million. Basic earnings were 94.70 cents per share, a very pleasing increase of 176.66% over the previous period. The growth can be attributed to a Fair Value Adjustment in investment property." Despite these financial results, the company has less than R1,000 worth of shares changing hands each day on average, which makes it completely impractical for private investors. The low trading volume indicates a lack of liquidity, which can pose significant risks for investors looking to enter or exit positions in the stock. Key Points for Investors: 1. Specialization in Petrol Stations: Afine focuses on acquiring petrol stations, providing a niche but potentially stable revenue stream. 2. Improving Financials: The company reported an increase in revenue and a significant increase in basic earnings per share due to fair value adjustments. 3. Low Trading Volume: The very low average trading volume makes the share impractical for private investors due to liquidity risks. 4. Balance Sheet: The balance sheet shows a healthy increase in assets, driven by the valuation of their petrol station investments. Conclusion: While Afine has shown improvement in its financial results and asset valuations, the extremely low trading volume makes it an impractical investment for private investors. The lack of liquidity poses a significant risk, as it can be difficult to buy or sell shares without impacting the share price. Investors should consider these factors and the niche nature of Afine's business before making any investment decisions.
JSE:ANI
by PDSnetSA
Our opinion on the current state of CAPPREC(CTA)Capprec (CTA) is a fintech company offering payments and payment infrastructure as well as software and services. Patrice Motsepe's African Rainbow Capital (ARC) owns a stake in the company. The payments side of the business is managed through African Resonance and Dashpay, while the software side involves systems development and consulting. The company also owns 17.5% of Resonance Australia, a startup business. Capprec counts all the major banks in South Africa among its clients. In its results for the six months to 30th September 2023, the company reported revenue up 3% and headline earnings per share (HEPS) up 105.6%. The company's net asset value (NAV) increased 3.3% to 124.5c per share. The company said, "Headline earnings growth benefited from a reduction in the expected credit loss raised for GovChat in the reporting period." In a business update for the year to 31st March 2024, the company said, "...increased business activity in the Payments division, improved expense management, and strong cash flows resulted in a robust improvement in the Group's financial performance in the second half of the financial year. Both the Payments and Software divisions have continued to attract new clients, diversify their revenue sources, and grow their market shares." In a trading statement for the year to 31st March 2024, the company estimated that HEPS would increase by between 81% and 84.8%. The company said, "...increased business activity in the Payments division, improved expense management, and strong cash flows resulted in a significant improvement in Capital Appreciation's financial performance in the second half of the financial year." The share now trades at a P:E of 10.76. Roughly R1.3m worth of shares change hands each day, which makes this share quite feasible for private investors. The company appears to be well-managed, profitable, and cash-flush, which means that it is beginning to attract institutional interest. Technically, the share has been in a downward trend since January 2022, and we advise waiting for a break up through its downward trendline, which does not look like it will happen anytime soon. Key Points for Investors: 1. Strong Financial Performance: Significant improvements in HEPS and NAV, indicating robust financial health. 2. Diversified Client Base: Major South African banks as clients and growing market share in both Payments and Software divisions. 3. Institutional Interest: Increasing interest from institutional investors due to the company's strong financial performance and strategic positioning. 4. Technical Analysis: The share is in a downward trend; investors should wait for a clear break above the trendline before considering an investment. Conclusion: Capprec presents a promising investment opportunity due to its strong financial performance, diversified client base, and growing institutional interest. However, investors should be cautious and wait for a clear technical signal before investing. The company's ability to continue attracting new clients and managing expenses effectively will be key to its future growth.
JSE:CTA
by PDSnetSA
Our opinion on the current state of TRUSTCO(TTO)Trustco (TTO) is a financial services group operating out of Namibia and controlled by its CEO, Dr. Q. van Rooyen, who holds just over 50% of the shares. The company has three main areas of activity: 1. **Insurance & Investments** 2. **Resources** 3. **Banking/Finance** In its results for the six months to 28th February 2023, the company reported a loss of NAD 250m and net asset value (NAV) down 13.6% to NAD 1584bn. The company said, "The loss per share was 25.38c, compared to earnings per share of 138.07c in the previous corresponding period. As Trustco continues to invest in strategic growth areas, it is expected to deliver improved financial performance in the future." In a trading statement for the six months to 29th February 2024, the company estimated that headline earnings per share (HEPS) would increase by between 134.01% and 154.01%. The company said, "The Group's investment portfolio maintains an average weighting of 38% in US Dollar-based assets and 62% in Namibian Dollar-based assets, providing a stable foundation for growth." This company is diversified both in terms of the various businesses it is in and geographically. Because it is controlled by van Rooyen, its activities can be difficult to predict. The share was suspended in November 2022 until 23rd March 2023 due to not publishing its financial statements. The volumes traded in the share have improved in recent months but still only R38,000 worth of shares are changing hands on average each day, which adds to the share's risk. Given the recent financial performance and trading suspension, potential investors should be cautious. The increased HEPS forecast is promising, but the company's historical volatility and the control exerted by Dr. van Rooyen present significant risks. Investors should monitor the company's future financial disclosures and consider the liquidity risk associated with the low trading volumes before making any investment decisions.
JSE:TTO
by PDSnetSA
Our opinion on the current state of ZEDA(ZZD)Zeda is a car rental company unbundled and spun out of Barloworld, with a fleet of 250,000 vehicles and 14 dealerships around South Africa. It holds the license for the Avis brand in South Africa. The company is 55 years old and listed on the JSE on 13th December 2022, with Ramasela Ganda as its CEO. In its results for the six months to 31st March 2024, the company reported revenue up 19%, while headline earnings per share (HEPS) decreased by 15.8%. The company said, "Despite the challenging trading conditions, the EBITDA margin and Operating margin remained strong at 34.0% and 15.0% respectively, underpinned by a healthy and diversified mix of product offerings from both the rental and leasing businesses. The Net debt to EBITDA ratio improved from 1.6x in March 2023 to 1.5x in March 2024." By November 2023, the share was showing signs of a new upward trend and trading on a P:E of 3.12, which looks like very good value. The company is benefiting from the problems at Transnet, which have caused many mines to transport their goods to port by road. Zeda has a fleet of rental trucks that have been impacted by the truck attacks on the N3 highway. Given the current trading conditions and Zeda's strong margins, the company appears to be well-positioned despite the challenges. The low P:E ratio suggests that the share is undervalued, making it potentially attractive for investors. However, the risks associated with the transportation sector, including the recent truck attacks, should be carefully considered. Investors should monitor Zeda's ability to maintain its margins and manage its debt while navigating the ongoing challenges in the transportation sector. If the upward trend continues and the company can capitalize on the issues faced by Transnet, Zeda may present a compelling investment opportunity.
JSE:ZZD
by PDSnetSA
Our opinion on the current state of WOOLIES(WHL)The sad fall of the Woolworths (WHL) share price was largely due to the decision of previous CEO, Ian Moir, and his board to buy David Jones in Australia for AU$2.1bn. This acquisition 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. On 14th January 2020, Woolworths announced 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 performing 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 at least 20% - partly due to its disposal of David Jones in Australia. We recommend that you only consider Woolies shares when they break up through their current downward trendline, which does not look like happening anytime soon. The current P:E is around 13.18, and the shares are still falling. Given the challenging retail environment, the significant write-downs on the David Jones acquisition, and the ongoing issues with its fashion and clothing segment, Woolworths faces significant headwinds. Investors should be cautious and look for signs of a sustainable turnaround, such as improved financial performance and breaking the downward trendline, before considering investing in Woolworths shares.
JSE:WHL
by PDSnetSA
Our opinion on the current state of SANTOVA(SNV)Santova (SNV) is an international logistics company with 19 offices in 7 countries. The company designs, implements, coordinates, controls, and monitors international supply chain activities. Through a virtual client-centric information system, the company facilitates inventory management to provide far more than simple tracking and tracing services. Santova has offices in the East in Thailand, Vietnam, and Malaysia, in Europe in Germany, the Netherlands, and the UK, and in major cities in South Africa. It also has offices in Mauritius and Sydney, Australia. In its results for the year to 29th February 2024, the company reported revenue of R617.7m, down from R654.4m in the previous period. Earnings per share (EPS) was 111.81c compared with 154.74c in the previous period. Technically, the share had been in a steady upward trend from May 2020, which ended in August 2023. It has since fallen back down to 752c per share but may be at the start of a new upward trend. The share is fairly well-traded, making it practical for private investors, and it should benefit from any improvement in the South African and UK economies. Given its international presence and robust supply chain solutions, Santova is well-positioned to capitalize on global trade recovery and economic growth. Investors should keep an eye on the broader economic indicators in the regions where Santova operates, particularly any signs of recovery or growth in the logistics and supply chain sectors. Additionally, monitoring the company's ability to adapt to changing global trade dynamics and its ongoing performance will be crucial for assessing its long-term investment potential.
JSE:SNV
by PDSnetSA
Our opinion on the current state of REINET(RNI)Reinet (RNI) is an investment holding company whose main asset is a holding of roughly 2.12% of British American Tobacco (BAT) worth about $1.8bn, which now accounts for 31% of its net asset value (NAV) - down from 85% ten years ago. This decline from a year ago is because the price of BAT shares has fallen. Most of this reflects the more difficult legal environment for tobacco, especially in the US where the Food and Drug Administration is considering changing the laws on menthol cigarettes. In our view, Reinet shows no great urgency to divest itself of the BAT stake - which continues to contribute good dividends from growth in third world countries, while cigarette sales in first world countries fall. As the price of BAT has fallen, the other assets in the Reinet portfolio have become more significant. The largest of these is its 46% stake in Pension Insurance Corporation (Penscorp), which now represents 36.8% of its portfolio. Aside from Penscorp, the company also owns a spread of private equity investments, accounting for around 15% of the portfolio. In its results for the year to 31st March 2024, the company reported its net asset value up 8.1% at 3402 euro cents per share. The company has a compound growth rate of 8.8% per annum since March 2009. The share is obviously a rand-hedge and, although it fell from its high of R343 in February 2020 to lows in January 2021, it has since recovered. We advised waiting for a break up through its long-term downward trendline. That break came on 16th September 2019 at R270 per share. It is now trading for R490.50. It obviously took a hit as a result of the BATS announcement that it was writing the value of its US operation down by GBP25m (R595bn), resulting in a 10% fall in the BATS share price. This share benefits from any weakness in the rand, and investors should consider the rand's future prospects before buying. Given the diversification of its portfolio and its rand-hedge properties, Reinet remains an attractive investment option for those looking to hedge against local currency risk. However, the dependence on BAT and the volatile legal environment for tobacco should be taken into account. Investors should weigh these factors alongside the broader economic context and their own risk tolerance before making a decision.
JSE:RNI
by PDSnetSA
Our opinion on the current state of PEPKORH(PPH)Pepkor Holdings (PPH), previously known as Pep, is 71.01% owned by Steinhoff International. Following the collapse of the Steinhoff group due to admissions of "accounting irregularities," the directors of Pep decided to change their name back to Pepkor Holdings to avoid negative publicity. The group includes Ackermans, PEP Stores, Bradlows, and HiFi Corporation. Since the problem began in December 2017, and with the COVID-19 pandemic, the share price fell as low as R10 per share in May 2020. Over the next year, the share staged a remarkable recovery, more than doubling. The company raised R1.9bn in an accelerated book-build, with the proceeds used to reduce debt as a precautionary measure. On 3rd February 2022, the company announced the acquisition of 87% of the Brazilian clothing retailer Avenida. On 13th April 2022, the company announced that its Isipingo distribution center had suffered significant damage due to the flooding in the Natal area and had to be temporarily closed. The company has adequate insurance to cover the damage. In its results for the six months to 31st March 2024, the company reported revenue up 9.5% and headline earnings per share (HEPS) down 3.8%. The company said, "Sales growth strengthened further in the second quarter - Market share expansion on three-, six- and 12-month basis (Retailers' Liaison Committee (RLC) March 2024) - Recovery in retail gross profit margin - Avenida expansion accelerated and ahead of plan." Technically, the share has been moving sideways and downwards since November 2021 and remains vulnerable. Despite this, Pepkor Holdings is seen as a good quality investment, but it is potentially vulnerable to lower levels of consumer spending. Investors should consider the broader economic context and the company's exposure to consumer behavior, especially in times of economic uncertainty.
JSE:PPH
by PDSnetSA
Our opinion on the current state of GTCSA(GTC)GTC is a property group operating in Central and Eastern Europe, with properties in Poland, Bucharest, Budapest, Belgrade, Sophia, and Zagreb. The company manages forty-seven office buildings and six retail properties with a gross lettable area (GLA) of 829,000 square meters, worth about 2.35 billion euros. It is listed on the Warsaw Stock Exchange (WSE) and the JSE. In its results for the year to 31st December 2023, the company reported rental revenue up 10% and a loan-to-value (LTV) of 49.3%. Occupancy was 87%, and the company ended the year with 60 million euros in cash. The company stated, "As of 31 December 2023, the book value of the Group's total property portfolio, including non-current financial assets (related to investment property), was EUR 2,449.2m." In an update on the three months to 31st March 2024, the company reported rental revenue up 7% and a loan-to-value (LTV) of 48.1%. The company noted, "46 completed commercial buildings, including 40 office buildings and six retail properties, with a total combined commercial space of approximately 755 thousand sq m of GLA, an occupancy rate at 86%, and a book value of EUR 2,008.5m, which accounts for 85% of the Group's total property portfolio." Unfortunately, the share on the JSE is extremely thinly traded, which makes it impractical for private investors. Despite the company's strong financials and attractive property portfolio, the lack of liquidity on the JSE presents a significant risk for private investors looking to enter or exit positions efficiently.
JSE:GTC
by PDSnetSA
Our opinion on the current state of AYOAYO is a black-owned technology company that was spun out of AEEI, which still holds 49.4% of the company. There were suspicious circumstances surrounding a massive R4.3bn investment by the Public Investment Corporation (PIC), which has been the subject of a court action by the PIC. This was finally settled on 31st March 2023, with AYO paying the PIC R619m. In effect, PIC pensioners appear to have been fleeced out of billions of rands. Ayo shares listed at R43, fell to as low as 105c, and are now around 305c after their latest results. Volumes traded are very thin, with many days where it does not trade at all. The company has 1,400 employees. What income it received appeared to be from interest on the remainder of the PIC loan. Assessing this share is difficult, and it is considered potentially dangerous, especially after testimony from the former financial director, Siphiwe Nodwele, before the Mpati Commission, that the company is probably only worth R700m. Additionally, Naahied Gamieldien, previously the CFO, testified that she had to "...adjust margins to increase the company's profit," resulting in the profit doubling. In October 2019, the Financial Sector Conduct Authority (FSCA) conducted a raid on Surve's offices as part of an ongoing investigation. FNB has closed Ayo's bank accounts at Ayo Technology Solutions, citing reputational risk. Ayo is opposing this in a court action and, in an announcement on 30th April 2021, claims to have put in place "alternative third-party solutions" to enable the company to continue trading. Investors are advised to stay well clear of this share until the uncertainties surrounding the Mpati Commission can be resolved. On 1st June 2021, British Telecom (BT) announced that it was severing ties with Sekunjalo due to "misrepresentation of facts" before the standing committee on finance in parliament. On 10th February 2022, the JSE announced that two Ayo directors had been barred from being directors of a listed company for five years because of failing to carry out their oversight duties, leading to incorrect, false, or misleading financial statements. On 22nd December 2022, the JSE published a censure of Ayo because of their involvement in related-party transactions without complying with the JSE rules on such transactions. On 24th March 2023, the company announced that it had reached an undisclosed out-of-court settlement with the PIC, but it seems unlikely that the PIC will recover the R4.3bn it advanced to Ayo. In its results for the year to 31st August 2023, the company reported revenue up 28% and a headline loss per share of 176.46c compared with a loss of 60.25c in the previous year. The company said, "The Group’s gross profit percentage decreased from 22% in the prior year to 16% in the current year due to lower margins achieved in the managed services divisions as a result of fewer service contracts and more procurement of equipment distribution contracts in the public sector." In a trading statement for six months to 29th February 2024, the company estimated that it would make a headline loss of between 25.21c and 41.03c compared with a loss of 79.13c in the previous period. On 6th September 2023, the JSE publicly censured a director of Ayo, Khalid Abdulla, for breaching the listing requirements and failing to exercise his fiduciary duties. He was fined R2m, and Ayo was fined R6.5m. Given these circumstances, we cannot recommend this share to private investors due to concerns about the company's financial reporting and the overall uncertainty surrounding its operations and governance.
JSE:AYO
by PDSnetSA
Our opinion on the current state of AMEAfrican Media Entertainment (AME) is a company specializing in running radio stations, with revenue coming principally from advertising on those stations. It has four divisions: 1. **Algoa FM**: Broadcasts from the Garden Route to the Wild Coast. 2. **OFM**: Broadcasts in the Free State, North-West province, Northern Cape, Southern Gauteng, and Northern Natal. 3. **United Stations**: Sells and creates advertising material for the radio stations. 4. **Radio Heads**: Offers media planning and buying, creative strategy and copywriting, and syndicated programming. AME recently acquired Moneyweb and a share of Classic FM. The company said, "On 30 September 2019 Classic FM South Africa (Pty) Ltd was placed under voluntary business rescue." The share is extremely thinly traded, making it impractical for private investors. In its results for the six months to 30th September 2023, the company reported revenue up 11% and headline earnings per share (HEPS) up 39%. The company said, "The group generated cash from operating activities of R23.4 million (September 2022: R18.2 million), paid tax of R7.6 million (September 2022: R5.5 million), spent R2.6 million (September 2022: R3.8 million) on capital expenditure and paid dividends to its equity holders and non-controlling interest holders of R20.2 million (September 2022: R15.7 million)." In a trading statement for the year to 31st March 2024, the company estimated that HEPS would increase by between 53% and 67%. The share trades an average of R85,000 per day, which makes it practical for a small investment. Its portfolio of radio stations has relatively small, specialized audiences. Moneyweb has battled for years to produce significant profits. Despite the company's improved financial performance and optimistic outlook, the thin trading volume and the specialized nature of its audience and services mean it remains a niche investment. Investors should be cautious and consider the liquidity risk and the challenges faced by the media and advertising industry.
JSE:AME
by PDSnetSA
Our opinion on the current state of ANGLO(AGL)Anglo American (AGL) mitigates the typical risk associated with commodity stocks in two ways. Firstly, the company has a diverse portfolio of different minerals, reducing the impact of any one mineral entering a bear trend. Secondly, it maintains a very strong balance sheet with plenty of headroom, allowing it to ride out economic downturns. Anglo describes itself as a globally diversified mining company with a portfolio of world-class mining operations and undeveloped resources. Commodity prices tend to move in trends, and since the beginning of 2016, the trend has been steadily upward until the coronavirus pandemic 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. One of Anglo's key projects is Quellaveco in Peru, a massive copper mine in which Anglo owns 60%. This project 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 four years, and 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 by the economic expansion that began in America and spread to Europe and the East. Additionally, the conflict in Ukraine is pushing commodity prices up, especially precious metals, due to heavy sanctions on Russia. If you are looking for an investment that 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 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. Anglo’s share price went up six-fold in under three years and rose to R425 before the coronavirus epidemic. It fell to R210 and then recovered to over R800 before the problems at Los Broncos. The current fall in the share price is also a result of the drop in commodity prices. It is clear that the company is being impacted by both the increased load shedding and problems with the South African rail service. In its results for the year to 31st December 2023, the company reported revenue down 13% and earnings per share (EPS) down 94% in US dollars. The company said, "Quellaveco fully ramped up and produced 319,000 tonnes of copper at a unit cost of 111 c/lb. On track to reduce annual costs by c.$1 billion and capex by c.$1.6 billion over 2024–2026. Underlying EBITDA of $10.0 billion, a 31% decrease; 2% volume increase and unit costs held to +4% despite high inflation, more than offset by $5.5 billion revenue impact of PGMs and diamonds at cyclical lows." The company has debt of $10.6bn and is involved in a complete review of all its assets. Technically, the share appears to have completed a head-and-shoulders formation and broken down through the neckline at R525, setting the stage for further falls. On 11th December 2023, Business Day reported that Anglo had announced capital expenditure cuts of R1.8bn, causing the share price to drop by 13.3%. We recommended waiting 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. Since then, the share has risen 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. Our view is that there may be other offers, perhaps from Rio Tinto or Glencore.
JSE:AGL
by PDSnetSA
BHP Group Takeover Bid for Anglo American PLC: Deadline ApproachThe clock is ticking as we approach the 6pm deadline Friday for Anglo American PLC to respond to BHP Group's takeover bid. This is a significant moment for both companies and the mining industry as a whole. Let's dive into the charts and analyze the current situation. Daily Timeframe Analysis 📉 Looking at the daily chart, the price of Anglo American PLC has been in a long-term decline. Recently, it touched the supply zone between 64.32 and 66.77. This contact resulted in a strong reaction, indicating a potential reversal or at least significant resistance at these levels. From my perspective, buying this stock right now doesn't seem prudent. If BHP proceeds with the acquisition at these prices, they could face substantial financial challenges. Weekly Timeframe Insights 📊 Switching to the weekly chart, we observe a different story. There's a demand zone between 40.137 and 45.846. Historically, buyers have stepped in aggressively when prices reached these levels. Should the price decline to this range before Friday, it might present a more attractive entry point for potential buyers. This area could see significant buying pressure, providing a stronger foundation for a potential turnaround. Key Takeaways 🔍 Daily Chart: Long-term decline, strong reaction at supply zone (64.32-66.77). Weekly Chart: Potential demand zone (40.137-45.846) where buyers might step in. While the market's reaction and the final decision of Anglo American PLC remain to be seen, these technical levels provide critical insights for traders and investors alike. 📈💼 Remember, this analysis reflects my personal views and should not be taken as financial advice. Always do your own research before making any investment decisions. Happy trading! Disclaimer: The views expressed in this article are my personal opinions and should not be considered as financial advice. Please conduct your own research and consult with a financial advisor before making any investment decisions.
JSE:AGL
by Mike_SnD
Our opinion on the current state of COLLINS(CPP)Collins (previously Tradehold) has a portfolio of more than 140 properties with a total gross lettable area of 1.6 million square meters. Most of these properties are industrial, including major distribution centers and industrial complexes let on long-term triple-net leases to leading corporate clients. Collins also manages Tradehold’s Namibian portfolio, consisting of sought-after properties in that country’s main towns such as Windhoek, Walvis Bay, and Gobabis. Tradehold was a real estate investment company in Southern Africa, which is 48% owned by Christo Wiese. More than 40% of its assets were in the UK, held through its 100% holding of the Moorgarth Group, which owns 23 properties in the UK that have now been sold. It owns 100% of Tradehold Africa, which owns properties in Africa outside of South Africa, and 100% of the Collins Group, which owns 153 properties inside South Africa. It has spun off its financial services business interests into a separately listed entity, Mettle, which is now listed on the Alt-X of the JSE. The South African economy is facing difficulties with the cost of 10 years of state capture and corruption coming to light, followed by the impact of COVID-19 and now the civil unrest. In a report on the unrest, the company said, "...a total of 21 of Tradehold’s properties in KwaZulu-Natal were damaged during the recent unrest in South Africa. The estimated cost of damage is R41 million, excluding loss of rental. This represents approximately 0.5% by value of Tradehold’s property portfolio in South Africa." In its results for the year to 29th February 2024, the company reported revenue up 6.3% and headline earnings per share (HEPS) up 149%. The company had vacancies of 3.9% and a loan-to-value (LTV) of 51%. Technically, the share has been in a downward trend since April 2016 and is now trading at a significant discount to its net asset value (NAV) per share. In our view, this share is mostly a local property play which will probably perform better as the South African economy recovers, but we do not see it as an exciting investment prospect - mainly because of its high LTV. The company is selling off its Mozambique properties. Volumes are around R98,000 worth of shares changing hands each day, which makes it more risky for private investors.
JSE:CPP
by PDSnetSA