LONG ON AFRIMATIm looking to take a long position on afrimat, a bullish flag has been broken, additionally by using fibonacci I can see a good risk reward trade
Murray & Roberts (MUR) Down 70% hitting key levels! Opportunity?🚨 Temporary suspension in trading on the JSE as MUR’s South African operations enter business rescue. Liquidity crunch, major contract losses, and debt restructuring are in focus. Big moves ahead. #MUR. Opportunity?
NPH.JSE Northam Platinum Prints a Cup & Handle PatternNortham Platinum Prints a Cup & Handle Pattern which is Bullish.
The Target Zone has been Project Up to show a Potential Upside of +- 19%
Remember these Patterns are only on average about 75% correct, and need Patience and Conviction to play out.
As always, please get a few outside Expert's Advice before taking Trade or Investment Decisions.
Should you appreciate my Chart Studies, Smash That Rocket Boost Button. It's Just a Click away.
Regards Graham.
Our opinion on the current state of MARSHALL(MMP)Marshall (MMP) says the following about their business: "Based in the UK, with strategically located offices globally, Marshall Monteagle PLC is a diversified investment holding company. The company provides procurement, logistics, and trading in various hard and soft commodities, industrial raw materials, consumer food and non-food products. Other non-operational investments include Commercial & Industrial Properties and listed equities.”
In its results for the year to 31st March 2024, the company reported revenue down 13% and headline earnings per share (HEPS) of 5,8c compared with a loss of 4,4c in the previous period. The company said, "Net assets per share attributable to shareholders are US$2.46 (2023 – US$2.38). The increase is primarily as a result of the sale of US investment property. At 31 March 2024, cash balances were US$41,794,000 (2023 - US$23,225,000)."
In a trading statement for the six months to 30th September 2024, the company estimated that HEPS would be 6,2c (US) compared with 2,2c in the previous period.
This share can be relatively thinly traded, and there are days when it does not trade. This can make it more risky for private investors.
Our opinion on the current state of LABAT(LAB)Labat (LAB) is a 57% black-owned investment holding company which listed on the JSE in 1999. The company buys and improves subsidiaries and then sells them for a profit. At the moment, Labat has two operations - South African Micro-Electronic Systems (SAMES) and Labat Logistics.
On 14th April 2020, the company announced that it had acquired 70% of Biodata, an East London-based company focused on cannabis healing. The acquisition is to be paid for in shares. The market for cannabis in South Africa in 2020 was expected to be worth around R27bn. On 5th May 2020, the company issued a profit forecast for the years to 2021 and 2022, stating it was raising R112m by the issue of shares and that it would generate a profit of R60m in 2021 and R162,3m in 2022, resulting in headline earnings per share (HEPS) of 10,9c and 29,9c respectively.
On 8th May 2020, the company announced that it had decided to put Force Fuel into business rescue because of a drop in volumes as a result of COVID-19.
In its results for the year to 31st May 2023, the company reported revenue up 114,96% and a headline loss per share of 7,14c compared with a loss of 7c in the previous period. The company's net asset value (NAV) fell by 89,74% to 1,58c per share.
The company's shares were suspended on the JSE in October 2023 and will remain suspended until the company appoints new auditors and produces interims for the six months to 30th November 2023.
Even when trading, this is a volatile, loss-making penny stock, so investors should leave it alone.
Our opinion on the current state of ARCINVEST(AIL)African Rainbow Capital (AIL) is a BEE investment company that was formed in 2015 and listed on the JSE in September 2017. Since it was formed, AIL has invested in more than forty listed and unlisted investments in a wide range of industries from telecommunications to mining, construction, energy, property, agriculture, insurance, asset management and banking.
ARC Investments is 44.4% effectively owned by African Rainbow Capital Proprietary Limited (ARC), which in turn is 100% owned by Ubuntu-Booth Investments Proprietary Limited (UBI). UBI effectively owns 51.2% of ARC Investments. AIL is thus owned through Ubuntu-Botha Investments by the Motsepe family through their trusts. In the South African context, it has a significant advantage in finding suitable companies in which to invest because it can offer them a solid, reliable BEE shareholder.
AIL has benefited from an investment by Sanlam and owns a stake in the Sanlam subsidiary, Santam. The company acquired 100% of TymeDigital which has launched a digital bank in partnership with Pick 'n Pay. It offers digital banking, especially for those who cannot afford normal banking, via their phones, and had the distinction of being the only bank in South Africa not to charge transaction fees. It competes with other new banks in South Africa like Discovery Bank and Bank Zero.
AIL has taken a hit on its investment in EOH (which may now be improving) but has done well in most other areas. Roughly half of the AIL portfolio is in what it describes as "early lifestyle stage businesses" such as Tymebank, Rain and Kropz. These investments are seen as disruptive in their sectors, but will take time to mature. It also owns 7% of Afrimat having reduced its stake from 18,4%.
If there is a criticism of this investment holding company, it must be its lack of focus. It appears to be invested in a very diverse range of industries without significant synergies or economies of scale. The need of most South African companies to have a stable BEE partner gives it an edge in finding and negotiating good deals, but its lack of focus may eventually become a problem.
The share trades at a fraction of its intrinsic NAV. It was 59% of its NAV after falling about 25% in the last six months to 2023. The discount makes it good value and may result in "unbundling" some of that value into the hands of shareholders in due course. The directors have said that they will consider delisting from the JSE if the discount persists because the listing cannot be used to raise further capital at current share prices.
On 21st November 2023 the company announced a rights issue to raise R742,35m. Shareholders will get 11,06579 new shares for every 100 shares that they hold at a 7,32% discount to the volume-weighted average price on 10th November 2023. In its results for the year to 30th June 2024 the company reported that its intrinsic net asset value (NAV) increased by 8,5% to 1238c per share while Tymebank and Linebroker achieved break-even. Rain which is 26% of the total portfolio is the most preferred network in South Africa. The total value of listed and unlisted investments was R20,2bn.
In an update on 10th December 2024 the company said, "Rain has reported a successful quarter marked by significant growth in mobile customers. Kropz continues making progress at both Kropz Elandsfontein and Cominco. The Bluespec Group continues to be a strong performer within the business process outsourcing (BPO) pillar of the ARC Fund. Consumer Friend, the biggest business unit in the Upstream Group, took two prestigious awards at this year's Debt Review Awards. The Agri portfolio's overall financial performance remains in line with projections. Tyme Group continues its strong growth trajectory, with 14.4 million customers across TymeBank (10m) and GoTymeBank (4.4m) as of September 30, 2024."
The share still trades for 62% of it NAV. Technically, the share has been falling since March 2023. We recommended applying a 200-day moving average and waiting for a clear upside break before investigating further. That break came on 26th April 2024 at 544c per share. Since then the share has moved up to 767c.
KUMBA IRON ORE (KIO) - WEEKLY CHART ANALYSIS CONTINUATION
Building on the previous analysis, since April 2020, this area has served as a consistent support level, aligning with key technical signals. On four occasions, upward MACD crossovers, combined with RSI breaking its downtrend, preceded an average 50% gain.
Our opinion on the current state of TRANSCAP(TCP)Transaction Capital (TCP) is a South African company with two primary divisions: minibus taxis and risk services, following the unbundling and separate listing of WeBuyCars (WBC).
Its subsidiary, SA Taxi, is deeply integrated into the minibus taxi industry, offering financing, repairs, insurance, and vehicle sales. This vertical integration enables SA Taxi to dominate the value chain associated with minibus taxis, a vital mode of transport for over 69% of South African households, facilitating more than 15 million trips daily. The industry, being non-discretionary, is traditionally defensive and less susceptible to broader economic downturns. However, in recent years, SA Taxi faced severe challenges due to rising interest rates, elevated fuel prices, increased costs of maintenance, and declining commuter volumes amid economic pressures.
To mitigate losses, SA Taxi halted the financing of new Toyota minibus taxis, focusing instead on refurbished second-hand vehicles. This shift in strategy follows a R1.8bn bad debt provision and the decision to scale back from financing 600 new vehicles per month to selling around 200 refurbished taxis monthly. As of 2023, SA Taxi was owed R17bn by taxi owners, many of whom were struggling to meet repayments due to increased operating costs and reduced passenger numbers.
The Transaction Capital Risk Services (TCRS) division operates in South Africa and Australia, specializing in debt collection. The company sold its Australian holdings in Nutun for A$58.3m to strengthen its balance sheet.
The company has undergone significant leadership and structural changes. CEO David Hurwitz resigned effective 31st December 2023, and the successful listing of WeBuyCars allowed TCP to return R5.2bn to shareholders and raise an additional R1bn. Despite these moves, the company remains under significant pressure.
In its results for the six months ending 31st March 2024, TCP reported revenue of R981m, down from R1.295bn, and a headline loss of 164.9c per share, improving slightly from the 224.6c loss in the previous period. The full-year trading statement for 30th September 2024 estimates a headline loss of 279.6c to 302.2c per share, compared to a restated loss of 231.9c in 2023. On a positive note, the balance sheet reflects minimal debt and a R100m net cash position at year-end.
Outlook
Much of TCP’s future depends on the recovery of the South African economy following the 2024 elections and the anticipated growth from the Government of National Unity (GNU). While the company is working to stabilize its operations, particularly in SA Taxi, and strengthen its balance sheet, the share remains highly risky and challenging to evaluate, given the uncertain economic landscape and the evolving challenges within its core markets.
Our opinion on the current state of ITLTILE(ITE)Italtile (ITE) is a franchisor specializing in tiles, sanitary ware, flooring, and home finishing products, which it manufactures and wholesales through its integrated supply chain. The company is controlled by the Ravazotti family and operates 206 physical stores alongside six online web stores. Additionally, Italtile owns a property portfolio of retail and industrial properties valued at approximately R4.3 billion.
The company's manufacturing business includes a 95.47% stake in Ceramic Industries and a 71.54% stake in Ezee Tile Adhesive Manufacturers. These acquisitions complement its retail operations by providing a consistent and high-quality supply chain, enabling better stockholding management and working capital efficiency.
Italtile has benefitted from increased demand for home improvement products as people continue to work from home, leading to increased "share of wallet." The company has also taken proactive steps to strengthen its financial position, including a share buyback program totaling around R240 million and the addition of between 10 and 15 new stores annually. However, disruptions such as civil unrest and COVID-19 closures have impacted some of its operations, including the destruction of two stores in Orange Farm and Spruitview and temporary closures in Natal and other regions.
In its results for the year to 30th June 2024, the company reported flat turnover and a 7% decline in headline earnings per share (HEPS). Despite these challenges, its net asset value (NAV) increased by 10% to 707.5 cents per share. The company noted a stronger performance in the second half of the year, recovering market share after earlier challenges.
In a sales update for the five months to 30th November 2024, retail turnover grew by 2.2%, while combined manufacturing sales from Ceramic Industries and Ezee Tile showed a smaller decline of 1.6% compared to a 5.9% drop in the prior comparable period.
**Technically**, the share remained range-bound for two years before dropping sharply to around R10 during the COVID-19 pandemic. It broke upward through its long-term downward trendline on 28th June 2024 at a price of 1107 cents and has since risen to 1426 cents. Italtile stands to benefit from anticipated new building activity associated with the formation of a new Government of National Unity (GNU) in South Africa. This positions the company as a potential investment opportunity, especially as demand for home improvement and building materials continues to grow.
Our opinion on the current state of RMBH(RMH)Rand Merchant Bank Holdings (RMH) is a company which used to own 34,1% of Firstrand and, since 2016, has been investing in property. RMBH was started 41 years ago by GT Ferriera, Laurie Dippenaar and Paul Harris and listed on the JSE in 1992 and split off and separately listed Rand Merchant Investment Holdings in 2011. RMH Property was formed with the acquisition of 27,5% of Atterbury, 34,1% of Propertuity and 40% of Genesis. After the sale of its 34% stake in FNB, RMH is now essentially a property company.
On 9th April 2021, the company announced a special dividend of 80c per share resulting from its failure to implement the Bucharest development. The company recently changed its financial year-end from March to September.
In its results for the year to 30th September 2024, the company reported negative revenue of R57m and a headline loss per share of 10,5c compared with a loss of 1,4c in the previous period. The company said, "Since June 2020, RMH has returned R3.557 billion in cash to shareholders through special dividends as part of its monetisation efforts. Notably, RMH’s market capitalisation on 24 June 2020 was R2.4 billion, demonstrating the effectiveness of its value realisation strategy. The combination of the cash distributions to shareholders and the current share price has yielded shareholders a return of 73% since 24 June 2020."
Technically, the share has been difficult to assess because of its recent divestments, but it has entered an upward trend. The share price remains well below the company's NAV, so we still think it represents good value at current levels.
The company's ongoing strategy of monetisation and its focus on property investments are likely to provide some long-term stability. However, the recent negative revenue and headline losses underline the challenges it faces in achieving sustainable profitability. Investors should watch for further developments in its property portfolio and any updates on its monetisation strategy to evaluate future prospects.
GLN.JSE Glencore Diversified Miner 1W FIB Study.Glencore - a Diversified Miner has recently broken to the downside of the Trading Range.
This is expected due to the weakness in the overall Commodity Market Cycle.
Using the Fibonacci Levels from High to Low, I see a possible retracement to the 50% Level.
As always, please get a few outside Expert's Advice before taking Trade or Investment decisions.
If you appreciate my Chart Studies, Smash That Rocket Boost Button. It's Just a Click away.
Regards Graham.
Naspers NEXT push up to R501 with a Double Motion?W Formation has formed after some consolidation range in the last few months.
The JSE is also showing strong upside to come as it's catching up to American markets as laggards do.
Technicals are also looking promising with Price>20 and 200MA which deems it HIgh Probability as per the last trade idea.
Target R501.59
Our opinion on the current state of AECI(AFE)AECI (AFE) is a leading producer of chemicals and explosives in South Africa. It supplies products for the mining industry, water treatment, animal health, food and beverages, and the industrial sector. It has businesses in Australia, North America, Europe, Asia, and Africa and employs 7600 people in 22 countries. AECI also has a property division called "Acacia."
This company has successfully diversified away from its exposure to South Africa (40% of total revenue) and shown its ability to make acquisitions that boost turnover and profits.
In its results for the six months to 30th June 2024, the company reported revenue down 4% and headline earnings per share (HEPS) down 57%. The company said, "Sales volumes of mining chemicals are expected to improve on the back of an anticipated recovery in mining activity in South Africa."
In an update on the ten months to 31st October 2024, the company reported revenue down 4% and profit from operations down 29%. The company said, "While the Group faced challenges in the Mining segment, including declining domestic volumes and ammonia prices, our international contracts in Asia-Pacific have helped mitigate these pressures."
On a P:E of 11,62 and a dividend yield (DY) of 1,03%, we believe that the share may fall further. Technically, the share has been trending sideways for most of the last ten years and is now at a cycle low. It appears to be approaching the bottom of a downtrend and may be ready for some recovery.
The challenges in the mining segment have weighed heavily on its performance, but the company's geographical and sector diversification offer some resilience. Investors should closely monitor the anticipated recovery in South African mining activity and any updates on its international operations for signs of turnaround potential.
Our opinion on the current state of SPAR(SPP)Spar (SPP) runs a chain of supermarkets across Southern Africa with 2402 stores. It also operates the Build-It chain in hardware and building materials and the Tops Liquor chain. It has operations in Southern Ireland under the name "BWG," which operates through 1392 stores, and the Spar chain of 388 stores in Switzerland. As a group, Spar is a very serious competitor in the South African retail industry, making extensive use of franchising to expand its network.
The development of the new Polish enterprise has been frustrated by COVID-19. Its diversification into Ireland and Switzerland gives it a solid rand-hedge component which does not appear to be reflected in its multiple.
In its results for the year to 30th September 2024, the company reported turnover up 4% and headline earnings per share (HEPS) up 11,1%. The company said, "...gross profit margin for SPAR South Africa, including SPAR, Tops and Build it, decreased from 8.7% to 8.5%. BWG Group saw a slight increase in its overall gross profit margin from 15.1% to 15.2%, driven by a more favourable category mix. Improved margin management within the wholesale and TopCC cash and carry business saw SPAR Switzerland's gross margin improve from 17.8% to 18.3%."
In our view, the share remains underpriced at current levels and represents something of a bargain. We originally advised waiting for a break up through its long-term downward trendline - which happened on 12th June 2024 at a price of 11065c. It has subsequently moved up to 14031c.
On 4th September 2024, the group said that it would pay an estimated R2,7bn to settle the debts of its Polish operations in order to sell them to a local retailer for R185m. At the time, the once-off cost caused the Spar share price to drop sharply. However, this move to exit the Polish market could refocus the group's efforts on more profitable ventures, potentially supporting a recovery in the share price over the long term.
PPE.JSE Purple Group 3 Year Trend Cloud & FIB Study.Purple Group has disappointed many Shareholders.
This is a 3 Year Study.
I'm not Brave enough to call this Long yet, and will rather wait for more definitive Price Action above R0.90
However the Stock is way oversold, at the 7th Wave down.
As always, please get a few outside Expert's Advice before taking Trade or Investment Decisions.
Should you appreciate my Chart Studies, Smash That Rocket Boost Button. It's Just a Click away.
Regards Graham.
Our opinion on the current state of ANGLO(AGL)Anglo American (AGL), the risk normally associated with commodity stocks is mitigated in two ways. Firstly, the company has diversity of different minerals which reduces the impact of any one mineral entering a bear trend. Secondly, the traditional mechanism to avoid risk is to have a very strong balance sheet with plenty of headroom. That way, if things turn bad, you can ride out the storm. Anglo has such a balance sheet.
Anglo describes itself as a globally diversified mining company with a portfolio of world-class mining operations and undeveloped resources. It is true that commodity prices as a group tend to move in trends, and since the beginning of 2016, that trend has been steadily upward until the coronavirus caused markets to fall into a new downward trend in March 2020. The upward trend has now resumed, with a strong recovery already taking place.
An Anglo project is Quellaveco in Peru which is a massive copper mine in which Anglo owns 60%. It will have a very rapid payback period now that it has begun producing. It is costing $5,6bn to build which should be recovered in about 4 years - and then the mine has a life of 30 years.
We believe that the boom in commodity prices is continuing, and that COVID-19 is substantially behind us. Commodity prices will be driven on by the economic expansion which began in America and spread to Europe and the East. Of course, the conflict in Ukraine is pushing commodity prices up, especially precious metals, because of the heavy sanctions on Russia.
So, if you are looking for an investment which is likely to be more exciting than buying one of the big banks or property REITs, and which will benefit directly from the growth in the world economy, you could do worse than to consider Anglo American.
One of the factors holding the company back has been the poor availability of Transnet’s rail service, especially at Kumba. The company plans to get 100% of its energy needs from renewables in South Africa by 2023.
In its results for the six months to 30th June 2024, the company reported earnings before interest taxation depreciation and amortisation (EBITDA) of FWB:5BN - with reduced costs offsetting a 10% drop in its basket of commodity prices. Iron and copper contributed $3,5bn of the EBITDA. Debt was $11,1bn, and headline earnings per share (HEPS) fell to 42c from 135c (US) in the previous period. The company, "...delivered steady volumes and a 4% improvement in unit costs, while still facing weak cyclical markets for PGMs and diamonds."
In an update on the third quarter to 30th September 2024, the company reported copper production down 4% and iron ore up 1%. PGMs were down 7%, diamonds down 21%, and manganese down 45%.
Anglo remains a commodity share linked to the international prices of various commodities. Its restructuring will leave it with Kumba and its manganese interest in South Africa. On 11th September 2024, Anglo announced that it had sold 13,94m shares in Amplats for R7,2bn as part of an accelerated bookbuild. On 27th November 2024, the company announced that it had raised R9,6bn as a result of its accelerated book-build of 17,5m Amplats shares (6,6% of its issued share capital). The objective is to reduce its exposure to platinum group metals (PGM).
The share has broken up through its long-term downward trendline, but it remains a volatile commodity play.
Our opinion on the current state of ARGENT(ART)Argent (ART) is a manufacturer and beneficiator of steel and aluminium products supplying a wide range of businesses in South Africa. It also has operations in the US and the UK. Many of Argent's products are well-known in South Africa, such as Xpanda and Jetmaster. It also supplies bulk steel products and beneficiates to suit specific needs. For example, it sells tube, sheet coil, and plate steel. It modifies these products with bending, slitting, and cutting to length.
The company is the largest distributor for Hulamin and offers a full range of aluminium products. It manufactures ladders, castors, and storage bins. It also produces paint and a range of steel cupboards, desks, filing cabinets, and other office furniture. Additionally, it manufactures and markets a variety of steel fencing and gates. Most of these businesses are directly impacted by the state of the South African economy, so the current conditions have forced the company to restructure substantially.
In its results for the six months to 30th September 2024, the company reported revenue down 3,3% and headline earnings per share (HEPS) up 3,7%. The company's net asset value (NAV) increased 13,4% to 3265,9c per share. The company said, "The optimism in South Africa surrounding the Government of National Unity has resulted in the recent strengthening of the Rand, which created an accounting write-down of 9.7 million in the group’s cash and cash equivalents, whereas the previous period had a write-up of 11.7 million. Overall, the group showed a resilient performance with revenue declining after a 15% strengthening of the Rand."
The average daily value traded in this share is about R874 000, which means that it is viable for private investors. This company is trading on a very low multiple of 6,39 - which we think makes it good value. The share has been rising since its low of 1416c on 8th May 2023. We regard this as a good investment at current levels. Obviously, it will benefit directly from any improvement in the economy.
On 19th August 2022, the company announced that it had acquired 100% of the UK company, Standmode, for R159,3m.
Our opinion on the current state of BRIKOR(BIK)Brikor (BIK) is a company that manufactures bricks, roof tiles, and clay pipes. It was listed on the Alt-X in August 2007 and describes itself as "...a diverse manufacturer and supplier of building and construction materials across a broad spectrum of the market from low-cost housing, residential to commercial, industrial, civil engineering and infrastructure projects and has a brick and coal segment through its subsidiary, Ilangabi Investments."
The company is trying to improve its BEE status. The share was suspended on the JSE from the end of July 2013 to 31st July 2020 at 9c per share. Since it resumed trading, it shot up to 199c before settling back to 15c.
In its results for the year to 29th February 2024, the company reported revenue up 12,4% and headline earnings per share (HEPS) of 1,3c compared with a loss of 0,1c in the previous period. The company's net asset value (NAV) increased 7,8% to 13,9c per share. The company said, "Revenue in the Bricks segment increased by 6,8% to R226,0 million (F2023: R211,6 million). The increase in revenue was a direct result of inflationary increases in selling prices of bricks with sales quantities being in line with the previous reporting period."
In a trading statement for the six months to 31st August 2024, the company estimated that HEPS would fall by between 56% and 63%. The average value of shares changing hands each day has fallen to around R7 700, which makes it impractical for private investors.
The patchy revival of the construction sector since 2021 has been a positive factor. Selling bricks is a tough business in South Africa, and this company seems to have survived COVID-19, which speaks volumes for its management.
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 Grinrod.
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.
It also 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.
In its results for the six months to 30th June 2024 the company reported revenue down 39% and headline earnings per share (HEPS) up 110%. The company's intrinsic net asset value (NAV) fell 5,7% to 1143,6c per share. The company said, "Despite the operating environment, the Group reported headline earnings per share of 71.9 cents (2023: 34.2 cents), up 110% over the comparative period. This was mainly due to fair value gains of R76.2 million compared to fair value losses of R40.3 million in the prior period, and the increase in Brimstone’s share of profits of associate, Oceana, from R94.9 million in the prior period to R187 million in the period under review."
The company disposed of its entire stake in Milpark, and part-stakes in Phuthuma Nathi, MTN Zakhele Futhi, and Equites. Both ordinary and "N" shares are thinly traded, but the ordinary shares are worse.
We regard the ordinary share as too thinly traded for private investors and, unless they begin to unbundle the portfolio, the extra value is likely to remain locked in. On 27th November 2024 the company announced that its intrinsic net asset value (NAV) had declined by 9,6% in the 3 months to 30th September 2024.
Our opinion on the current state of NAMPAK(NPK)Nampak (NPK) is Africa's largest packaging company with interests 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. It produces four kinds of packaging products - plastics, metals, paper, and glass. The great preponderance of its trading profits come from metals - which consists mainly of beverage cans.
Nampak has been able to remove R3,5bn (US$265m) of surplus cash from Zimbabwe, Nigeria, and Angola. Importantly, management appears to have the ability to re-patriate profits from the various African countries where it operates. It has halted its strategy of expanding into Africa after writing down its businesses in Angola and Nigeria by R3bn. COVID-19 and the fall in the oil price have impacted on its results in Nigeria and South Africa.
It is also benefiting from the news that it will not need to sell assets or do a rights issue to pay back debt of just under R6bn. The announcement that it would raise R1,35bn through a rights issue to reduce debt caused the share to fall 30%. The rights offer was reduced from R2bn to R1,5bn and shareholders finally gave permission to raise up to R1bn on 30th June 2023.
On 20th April 2023 the CEO, Eric Smuts, resigned with immediate effect and was replaced by Phil Roux. In its results for the six months to 31st March 2024 the company reported revenue up 7% and headline earnings per share (HEPS) of 5 393.9c per share compared to headline loss of 11 027.3c in the previous period. The company said, "Despite declines in revenue in DivFood and Bevcan Angola, Metals recorded a 6% increase in revenue boosted by growth achieved with Bevcan South Africa, while Plastics and Paper posted 9% and 10% increases in revenue respectively."
In an update on 1st October 2024 the company said, "In September 2024 the group successfully concluded the refinancing of the group, utilising a significantly simplified funding structure, inclusive of only a minor foreign debt component. The Standard Bank of South Africa financed the transaction in full."
On 16th May 2024 the company announced that it had sold its entire Nigerian operation for $68,5m. In a trading statement for the year to 30th September 2024 the company estimated that HEPS would be between 3100c and 3500c compared with 39004,6c in the previous period. This caused the share price to drop sharply.
The share remains in an upward trend, but it is a volatile commodity share.
MTN Group Ltd MTN Group Ltd (JSE: MTN) has been in a downtrend since September, failing to break the resistance around 96.00.
A bullish falling wedge is forming, suggesting a potential breakout with a target around 95.00. The current price is testing a key support zone at 81.70, which has held in 3 out of the last 4 tests. RSI and MACD indicators are showing signs of bullish momentum, with the RSI potentially breaking its downtrend line, similar to past upward movements.
Watch for a breakout above the wedge and RSI trend line for confirmation of a bullish shift.
Target: 88.50 (initial) and 95.00 (major).
Our opinion on the current state of PURPLE(PPE)Purple Group (PPE) is a dynamic player in the financial services industry, offering accessible trading and asset management services with a focus on affordability for private investors. Its three core divisions:
1. Easy Equities: Known for democratizing access to the stock market, it allows small investments at minimal costs, such as just 64c for a R100 transaction. This division has attracted a significant base of first-time investors, with 150,000 active accounts.
2. Emperor Asset Management: This segment provides professional fund management services for clients seeking a managed investment approach.
3. GT247: A platform focused on derivatives trading, catering to more experienced or specialized traders.
In May 2023, Purple Group completed a rights issue to raise R105m, offering shares at a substantial discount to their recent trading price. This move was supported by key shareholders and aimed at strengthening the company’s capital base.
The financial results for the year ended 31st August 2024 showed impressive growth, with a 45.1% increase in revenue and a recovery to headline earnings per share of 1.77c, from a previous loss of 2.05c per share. Key performance metrics included:
- A 24.8% increase in client assets to R58.2 billion.
- A 10.4% rise in active retail clients to nearly 1 million accounts.
- Revenue growth of 51.5% in the Easy Equities segment.
The share has been well-traded, with over R1 million worth of shares changing hands daily on average. Technically, the share price had declined after forming a "double top" at 340c in early 2022, but began a strong rally in March 2024. A breakout through its 65-day moving average on 4th March 2024 at 66c marked the start of its upward momentum, reaching 113c recently. This suggests continued potential for further growth.
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Our opinion on the current state of STEFSTOCK(SSK)Stefanutti (SSK) is a South African construction company which offers roads and earthworks, marine construction, concrete structures, bulk pipelines, piling, geotechnical services, open pit contract mining, affordable housing, mine residue disposal, and other services. It operates in sub-Saharan Africa and the United Arab Emirates (UAE).
The company is considering further down-sizing to match its falling order book, and this will mean retrenchments. The share price has fallen from its high of 2650c in November 2007 to current levels around 56c. The company is not paying dividends. Construction is always a risky investment in South Africa. Much will depend on the progress of the South African economy and the availability of construction work from the government.
This share is probably going to continue its long-term downward trend for the foreseeable future. We consider it to be a poor investment even as a speculation. In July 2020, Stefanutti was accused by Eskom of being overpaid R1bn for work done on Kusile - which the company denies.
In a restructuring plan, the company is selling non-core assets and plant and equipment and trying to obtain further funding of R430m to counter the impact of COVID-19. The company is engaging in a restructuring plan which involves the sale of non-core assets, securing additional short-term funding of R430m, and cutting costs.
The company is technically insolvent, and we think that this company may well be following many of its peers in the construction industry into consolidation or business rescue if the current restructuring does not work.
In its results for the six months to 31st August 2024, the company reported revenue up 2% and headline earnings per share (HEPS) of 13,23c compared with a loss of 22,41c in the previous period. The company said, "Capital repayments of R13 million and R37 million were made in March 2024 and July 2024 respectively, reducing the loan to R947 million. The loan bears interest at prime plus 3,7%."
Technically, the share entered a new upward trend in June 2024 and was added to the Winning Shares List (WSL) on 22-6-24 at 146c. It has subsequently risen to 467c.
