Unum Market Commentary: Global Equities Firmer As Dollar Weakens
On Thursday, South African equities managed to bounce back with a 0.38% gain for the All Share Index while the Top 40 Index managed to add 0.35% for the session as emerging market assets found support on the back of a weaker US Dollar driven softer inflation data which also curtailed expectations of aggressive rate increases by the US Federal Reserve. We also saw the Turkish Central Bank raise interest rates by 6.25%, helping the Lira rally which then filtered through to the Rand which saw it's best level for September, testing R14.62 on the day. Stocks that performed well included Naspers (3.31%), South 32 (2.27%) and RMI (2.24%) while Aspen Pharmacare shares experienced aggressive selling pressure as it released it's full year results which came in below expectations which it also announced the sale of it's Nutritionals business to Lactalis Group for EUR739.8 million. On the day the shares closed lower by over 17%, following a slump of at least 25% on an intraday basis. This morning in Europe, futures poit to a positive open, following through from the rebound in Asian equities.
JSE Major Sectors
Resources 10 -0.14%
Industrial 25 +0.61%
Financial 15 +0.21%
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In currencies, the South African Rand trades as follows:
USDZAR -0.03% to 14.76
GBPZAR -0.01% to 19.36
EURZAR +0.02% to 17.26
Gold trades at $1210
Platinum at $808
Brent Crude Oil at $78.18
International Markets
This morning, Asian equities are as follows:
Nikkei 225 (+1.19%)
Hang Seng (+1.01%)
Shanghai Composite (+0.03%)
Latam Markets closed as follows:
Merval 25 (+0.94%)
Bovespa (-0.58%)
INMEX (+0.88%)
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Company News
ASPEN PHARMACARE HOLDINGS LIMITED - Reviewed provisional financial results, announcement of Nutritionals Business disposal and retraction of cautiionary
Aspen improved revenue by 3% to R42,6 billion and grew normalised headline earnings per share ("NHEPS") by 10% to 1 605 cents in the year ended 30 June 2018. At constant exchange rates ("CER") revenue was up 5% and NHEPS increased 10%.
The Group's performance was underpinned by strong operating cash flows with a conversion rate of operating profits to cash of 105% being achieved.
Lower earnings in the second half of the year than in the first half were primarily influenced by the unfavourable impact of the strengthened ZAR. At CER, revenue in the second half of the financial year was in line with that of the first half. However, the stronger ZAR in the second half resulted in ZAR reported second half revenue being lower by R1,3 billion.
Significant factors influencing performance for the year were as follows: - Underlying positive growth in Commercial Pharmaceuticals; - Strong growth in China in the first full year of operation in that country; - The inclusion for the full year of the Anaesthetics portfolios acquired during the course of the prior year and the margin benefit of the residual rights to the Astra Zeneca ("AZ") Anaesthetics acquired with effect from 1 November 2017; - A decline in manufacturing revenue and profitability; and - Additional operating expenditure related to the development of structures in China and Japan.
DIVESTMENT OF GLOBAL NUTRITIONALS BUSINESS TO LACTALIS FOR EUR739,8 MILLION
With reference to Aspen's announcement of 29 January 2018, wherein Aspen advised that it had undertaken a strategic review of its Global Nutritionals Business predominantly carried on in Latin America, Sub-Saharan Africa and Asia Pacific under the S-26, Alula and Infacare brands ("Nutritionals Business") and its cautionary announcement of 11 September 2018, Aspen is pleased to announce that it has concluded an agreement to divest of its Nutritionals Business to the Lactalis Group, a leading multinational dairy corporation' based in Laval, France, for a fully funded cash consideration of EUR739,8 million/R12,9 billion (translated at ZAR17,4/EUR) ("the Transaction").
The Lactalis Group is a privately owned, global leader in the dairy industry with revenue of EUR18,4 billion, sales in over 200 countries, approximately 80 000 employees and 246 industrial plants in 47 different countries. Lactalis' strategic intent is to develop a global infant nutritional business to complement their existing global product range. The transaction is considered to be a compelling opportunity for the transferring Aspen employees, as well as the shareholders of both Aspen and Lactalis.
In terms of the Transaction, the disposal of the Nutritionals Business will comprise the following elements: - Intellectual property and any related goodwill presently owned by: - Aspen Holdings and Pharmacare Limited in respect of the South African and Sub-Saharan Africa Nutritionals Businesses; and - Aspen Global Incorporated in respect of the Latin American and Asia Pacific Nutritionals Businesses; - Tangible assets (including plant, leased immovable property, equipment, associated fixed assets and inventory) presently owned by various Aspen Group companies in respect of the South African, Sub-Saharan Africa and Latin American Nutritionals Businesses; - Product registrations and retail registrations relating to Aspen's nutritional products; - Shares in companies conducting Aspen's Nutritional Business across Asia Pacific (including the acquisition of shares held by joint venture partners in New Zealand and Hong Kong); and - Transfer of dedicated Nutritionals staff employed within each of the geographical regions.
Rationale Aspen's disposal of the Nutritionals Business will allow the Aspen business units in Asia Pacific, Latin America and Sub-Saharan Africa to dedicate all of their time and attention to their core pharmaceutical businesses. This heightened focus is expected to drive increased business efficiency and performance.
Aspen believes that Lactalis' entrepreneurial spirit and commitment to develop a leading global position in infant nutrition will provide the Nutritionals Business and the transferring Aspen employees with exciting future opportunities for growth and development.
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