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Our opinion on the current state of OUTSURE(OUT)OUTsurance (OUT) took over the listing of Rand Merchant Insurance (RMI) with effect from 7th December 2022. RMI unbundled its stakes in Discovery (DSY) and Momentum (MTM) and sold its 30% stake in Hastings Plc for R14,6bn. By March 2023, all that was left was the insurance business of OUTsurance. In its results for the year to 30th June 2024, the company reported earnings up 20.3% and a special dividend of 40c per share. Earnings per share (EPS) rose to 265.5c compared to 194.5c in the previous period. The company said, "The Group sold its stake in AutoGuru, an Australian-based associate, for R68 million. OHL acquired Youi shares from a minority shareholder for AUS$42.5 million, thereby increasing its stake in Youi from 92% to 94.6%. The Group capitalised its Irish subsidiary with a total of R1 870 million (€91.1 million)." In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would increase by between 42% and 48% due to, "...significantly lower natural perils claims incurred compared to the six months ended 31 December 2023 (comparative period) by particularly Youi and also OUTsurance SA; the strong premium growth of the operating segments." Technically, the share has been climbing steadily since the unbundling, and we believe it will continue to perform. We added it to the Winning Shares List (WSL) on 15th June 2024 at a price of 4457c. It has since risen to 7034c - a gain of 57.8% in just over 8 months.
JSE:OUT
by PDSnetSA
Our opinion on the current state of SANLAM(SLM)Sanlam (SLM) is one of the largest insurance and financial services groups in South Africa. It was established in 1918, demutualised in 1998, and then listed on the JSE and the Namibian Stock Exchange. It has operations in South Africa, the UK, America, Europe, India, and Australia, as well as a range of other African countries. Its product range includes general insurance, life insurance, asset management, banking, credit, health, and bancassurance. The business has four essential elements: 1. Sanlam Investment Holdings (SIH) - now 25% owned by African Rainbow Capital. 2. Sanlam Emerging Markets - which includes its 84.5% interest in Saham. 3. Sanlam Personal Finance. 4. Santam - in which it owns 61%. Outside of South Africa, it has operations in 11 other African countries and Malaysia. Saham has operations in 33 French-speaking countries with 3,000 staff members operating out of 700 branches, offering a similar product mix to Sanlam. Sanlam also owns 26% of Shriram, a leading provider of insurance products and financial services in India. It also made a deal to acquire 69% of Catalyst Fund Managers, a Cape-based manager of listed property assets, and 100% of an Irish company, CIG Fund Management. About 50% of Sanlam's profits come from its personal finance operation, which is primarily based inside South Africa. It is therefore impacted by the low levels of consumer spending in this country as well as the economic recession. Sanlam is 18% black-owned and has initiated a partnership with African Rainbow Capital (ARC), in which it intends to focus on lower- and middle-income consumers and small companies. Sanlam will provide R2bn of seed capital. On 14th June 2021, the company announced that it had acquired the Alexander Forbes group risk and retail life business for R100m. The company announced that, like Discovery, it would require employees to be vaccinated against COVID-19 from 2022. In its results for the six months to 30th June 2024, the company reported headline earnings per share (HEPS) up 40%. The company said, "The group's earnings momentum continued, growing net result from financial services (NRFFS) by 14%, reflecting strong trading performances across our businesses. Our life and health insurance operations grew net results from financial services by 14%, general insurance reported a 16% rise, investment management performance was satisfactory with 10% growth, while the group's credit and structuring operations recorded growth of 9%. NRFFS per share increased by 19% due to a lower adjusted weighted average number of shares in 2024 relative to 2023." In a trading statement for the year to 31st December 2024, the company estimated that HEPS would increase by between 30% and 40%. Sanlam is one of the JSE's foremost blue-chip shares with a history of steady growth over a long period of time. After recovering somewhat from the fall in markets due to the coronavirus pandemic, it is currently trading on a P:E of 10.55. We consider it to be good value at these levels. In a joint announcement on 18th June 2024, Sanlam agreed to buy 60% of MultiChoice’s insurance business for R1.2bn in cash.
JSE:SLM
by PDSnetSA
Our opinion on the current state of SPAR(SPP)Spar (SPP) runs a chain of supermarkets across Southern Africa with 2,402 stores. It also operates the Build-It chain in hardware and building materials and the Tops Liquor chain. Additionally, it has operations in Southern Ireland under the name "BWG," which operates through 1,392 stores, as well as the Spar chain of 388 stores in Switzerland. As a group, Spar is a serious competitor in the South African retail industry, making extensive use of franchising to expand its network. The development of its new Polish enterprise has been frustrated by COVID-19. Its diversification into Ireland and Switzerland provides it with a solid rand-hedge component, which does not appear to be reflected in its valuation. 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 stated, "...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 an update on the 18 weeks to 31st January 2025, the company reported group turnover down 1.6% and retail sales up 3.4%. The company stated, "Growth was particularly robust in our lower-income grocery stores with subdued growth in our middle- and higher-end stores. Sales growth was impacted by the planned closure of 13 grocery stores in our South Rand Region." In our view, the share is now underpriced at current levels and represents 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 11,065c. It has subsequently moved up to 13,450c. On 4th September 2024, the group announced 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.
JSE:SPP
by PDSnetSA
Our opinion on the current state of TRUWTHS(TRU)Truworths (TRU) is a clothing, footwear, and accessories retailer that operates in Southern Africa and the UK and is listed on the JSE and the Namibian Stock Exchange. It makes 70% of its sales in South Africa on credit, making its credit management strategies critical. The company operates in a highly competitive industry where numerous retailers, including Woolworths, Checkers, Pick 'n Pay, the Foschini Group, Mr. Price, Ackermans, and Pep, offer similar products. The industry is also challenged by the entry of international brands like Cotton On and is entirely dependent on consumer confidence and spending. Additionally, its sales are influenced by rapid changes in the fashion industry, making profitability difficult. Truworths follows a conservative approach and continuously refines its business model. It operates 767 stores in South Africa, 37 in the rest of Africa, and 132 stores in the UK, Germany, and Ireland. The company acquired Barrie Cline Ladieswear, a supplier for 30 years, and is in the process of launching a new low-cost value chain called "Primark" to compete with Mr. Price and Jet. It plans to roll out 15 to 20 new value stores in the coming months. In its results for the 26 weeks to 29th December 2024, the company reported merchandise sales up 2,5% and retail sales up 2,4%. Headline earnings per share (HEPS) fell 4,6%, while the company's net asset value (NAV) increased by 21,9%. The company stated, "Truworths Africa’s retail sales decreased 1.1% relative to the prior period. Account sales decreased by 0.9% and comprised 70% (Dec 2023: 70%) of the segment’s retail sales for the current period. Cash sales decreased by 1.6%. Online sales continued to show good growth in the current period, increasing by 38% and contributing 5.8% to Truworths Africa’s retail sales." The share reached a high of 11,212c on 4th November 2024 before entering a new downward trend. Our advice is to wait for the share to break up through its downward trendline before investigating further.
JSE:TRU
by PDSnetSA
Renergen $JSEREN Almost Time to Load-upThe price for Renergen has been in a downtrend since rejection on the upper resistance of the broadening wedge. Ideally price must find support at the lower support trendline in blue. This should give price a good bounce initially to more than R30 or some 40% capital gain where profit can be harvested leaving some capital invested with increased price action monitoring. Recent volume shows capitulation which is somethin you always want to see near the bottom or turning point. Risk : If the broader market turns downwards then Renergen risks falling out of the broadening wedge preparing price to visit the pre-covid levels. These risks will be assessed into 2023 with updates.
JSE:RENLong
by runyamhere
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Our opinion on the current state of PUTPROP(PPR)Putprop (PPR) is a property company that was spun out of Putco (the bus company) and separately listed on the JSE in July 1988. The company owns 16 properties in the industrial, retail, and office sectors, with a gross lettable area (GLA) of 97,601 square meters and a total value of R1,095 million. In its results for the year to 30th June 2024, the company reported rentals and recoveries of R140,3 million compared with R128,4 million in the previous period. Headline earnings per share (HEPS) was 46,54c compared with 93,22c in the previous period. The company's loan-to-value (LTV) was 36,9%, and its net asset value (NAV) was 1,668c per share. The company said, "The property currently has a vacancy of 274m². Rentals per m² continue to be substantially below pre-COVID rates. However, there appears to be a slight increase in demand for office space, which should translate into higher future rates." In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would increase by between 16,7% and 36,7%. From a private investor's perspective, the main problem with this share is that it is very thinly traded, with many days on which there are no trades at all. It is clearly not a share that institutional investors are interested in. We believe that there are better counters in the property sector.
JSE:PPR
by PDSnetSA
Our opinion on the current state of NEPIROCK(NRP)Nepi-Rockcastle (NRP) is a R124bn real estate investment trust (REIT) which operates more than 56 shopping malls in 9 central and eastern European countries, mostly in Poland (24%), Romania (35%), Slovakia (9%), Bulgaria (8%), Croatia (5%), and Hungary (11%). The share fell with the rest of the Resilient group (as a result of the 360ne report in January 2018) from its high of R217 in December 2017 to as low as R99 in November 2018, and then the COVID-19 pandemic took it down to under R55 in March 2020. Since then, it has staged a recovery to around R103,06. The company's total portfolio is worth 6,3bn euros (R124bn), and it ranks as the largest property share on the JSE. On 1st February 2022, the company announced that it had to pay 30m euros in a civil judgment by the Arbitral Tribunal in Poland. In its results for the year to 31st December 2024, the company reported rental and related income up 13,2% and headline earnings per share (HEPS) up 14,9%. The company said, "Distributable earnings (both in absolute terms and per share) and net operating income ("NOI") were the highest in the Group's history. The 11.8% increase in distributable earnings (5.6% on a per share basis) exceeded the guidance communicated." Technically, the share recovered convincingly from the pandemic and has been in a strong upward trend since 1st November 2023. We still regard it as good value at current levels and expect the upward trend to continue. On 18th October 2024, the company announced that it had raised 300m euros through the sale of 41,7m ordinary shares (6,2% of its issued share capital) at 7,191 euros (R137,85) per share, a discount of 4,36% to the closing price on 17-10-24 (R144,13). Technically, the share remains in an upward trend.
JSE:NRP
by PDSnetSA
Our opinion on the current state of GRINDROD(GND)Grindrod (GND) is an international freight and financial services company which operates in twenty-eight countries. In mid-June 2018, Grindrod unbundled and separately listed its loss-making shipping division (Grinship - GSH). This accounts for the "cliff" in the share price at that time. The company is now focused on its two remaining divisions - freight and financial services. Grindrod owns the North-South railway line from Beitbridge to Victoria Falls as well as port terminals at Richards Bay, Natal, Walvis Bay, Namibia, and Maputo. The company is positive on the growth of its financial services division, which is about 30% of the business. It is focused on getting its retail banking division involved with small and medium-sized businesses. The conflict in northern Mozambique is a problem for this share. The flooding in Natal caused five of their sites to be suspended for several weeks. In its results for the six months to 30th June 2024, the company reported revenue down 1% and headline earnings per share (HEPS) flat. The company said, "Port of Maputo grew its own handled volumes by 18% to 6.9 million tonnes underpinned by strong demand for chrome. Grindrod's dry bulk terminals handled 8.4 million tonnes. Richards Bay volumes rebounded to 1.6 million tonnes for the period, reflecting a 20% growth on the prior period. Ships agency and clearing and forwarding businesses achieved strong headline earnings growth of 38% on the back of a higher customer base and port calls. This growth was, however, dampened by the continuing negative impact of logistics constraints on the container handling depot throughput and transport, resulting in the overall logistic earnings growth of only three percent." On 6th November 2024, the company reported that it had closed down all its rail, port, and terminal operations in Mozambique because of the closure of the Lebombo border post due to violence on the Mozambique side. A few days later, on 8th November 2024, the company reported that the restrictions at Lebombo had been lifted - but the event showed Grindrod's vulnerability and exposure to unrest in Mozambique. In a pre-close trading update on 19th December 2024, the company reported that the average price of its dry bulk commodities had fallen by 28%, but chrome, copper, and manganese were up 10%. The company said, "Gross debt as at 30 November 2024 was R3.1 billion (2024 June: R2.9 billion), an increase of R0.2 billion deployed mainly on bulk infrastructure and rail." In a trading statement for the year to 31st December 2024, the company estimated that HEPS would fall by between 25% and 28%. The company said, "HEPS and earnings per share ("EPS") were impacted by the fair value and expected credit losses of R522.9 million which resulted from the disposal of the non-core North Coast property-backed loans for R500 million, and R165.5 million additional provision for warranties on specific non-core loans that were sold as part of the Grindrod Bank deal." Technically, the share made a descending triple top between July and October 2024 and then began a sharp downward trend. The share then fell to a low of 1143c on 19-12-24 before beginning a recovery, which is ongoing. We expect the share to continue to perform well despite being volatile.
JSE:GND
by PDSnetSA
Our opinion on the current state of CURRO(COH)Curro (COH) is a private education group that concentrates on building and running schools for children up to matric. Their tertiary division was unbundled with effect from 3rd October 2017 and separately listed on the JSE as Stadio (SDO). Curro has taken advantage of the general decline in government education since 1994. It is a spin-off from PSG (which now holds 17.2%). On 30th December 2015, it reached one of the highest price:earnings (P:E) ratios ever recorded on the JSE at 245. This was mostly because of its perceived "blue sky" potential. There seemed to be no limit to the expansion of its business model as it acquired or built more and more schools. Curro runs 178 schools and 76 campuses with an average of just over 72,000 students. The company has reported falling pupil numbers and parents under financial pressure to pay school fees. It has also impaired the value of its schools by R202m and increased its bad debts provision. On 1st March 2022, PSG announced that it would be unbundling its holding in Curro (63.6%) into the hands of PSG shareholders. The objective is to release value into the hands of PSG shareholders. The company is engaged in legal actions with the City of Johannesburg to prevent schools from being classified as businesses for the purposes of rates. This action was found in their favour on 2nd March 2023. In its results for the six months to 30th June 2024, the company reported revenue up 8.3% and headline earnings per share (HEPS) up 16.2%. The average number of learners increased by 0.5% to 72,758. The company stated, "The total school fee revenue increased by 6.8% due to the growth in learners, coupled with the annual increase in school fees for this year, which averaged about 6.0% per learner for this year. The group recorded a strong increase in ancillary revenue, which was 17.2% higher than the previous period." In a trading statement for the year to 31st December 2024, the company estimated that HEPS would increase by between 9.3% and 17.5%. EPS was expected to increase by between 117.1% and 217.1% due to the reversal of impairments worth between R340m and R380m. Technically, the share is in a strong upward trend which has been in place since June 2023. Education is generally a good investment because parents tend to pay in advance for their children's education, which means the education companies have lower working capital requirements. While they do not tend to have union problems, they are capital intensive as each school requires significant infrastructure to function, and this adds risk.
JSE:COH
by PDSnetSA
Our opinion on the current state of ARM(ARI)African Rainbow Minerals (ARI) is a diversified mining company controlled by Patrice Motsepe, involved in a variety of mining ventures. Its interests include platinum group metals (PGM), iron ore, manganese, chrome, coal, and copper. It also owns 12.2% of Harmony Gold. There has been some speculation about a possible acquisition. One possibility is an involvement in the Wafi-Golpu copper and gold resource, which is jointly owned by Harmony and Australian mining company, Newcrest. Harmony is looking for help in financing its share of the development cost of this massive resource—estimated at around R21bn—so ARM could potentially be part of that solution. The company is also looking for acquisitions of "green metals" mines that produce metals used in the move to avert climate change. In its results for the year to 30th June 2024, the company reported headline earnings down 43%. The company stated, "The decline in headline earnings was mainly due to the decline in the average US dollar 6E PGM basket price and the lower thermal coal prices. This was partially offset by a weaker average rand/US dollar exchange rate and higher average realised export iron ore prices." In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would fall to between 678c and 829c compared with 1507c in the previous period, "...due to a 22% reduction in average realised US dollar iron ore prices, lower iron ore and manganese ore sales volumes, higher cash costs and a stronger rand/US dollar exchange rate." Technically, the share has been falling since July 2024 due to weaker commodity prices. We think that this is a good mining share that is gaining stability from its diversification into base metals—but it remains risky and volatile.
JSE:ARI
by PDSnetSA
Our opinion on the current state of SIBANYE-S(SSW)Sibanye (SSW) is a mining house that has been on a rapid acquisition trail, accumulating platinum and gold mines in South Africa and America. It is now broadening its scope to include base metals and minerals, especially so-called "green" metals. The company is run by Neal Froneman, who is well-known in the mining industry for his toughness, expertise, and experience. Froneman has said that he intends to retire in about 2024/5 but aims to double the size of the company before he does. Sibanye is also considering moving into the base minerals used in motor vehicle batteries, such as vanadium, copper, nickel, and lithium. On 1st June 2021, the company announced a share buy-back program to repurchase up to 5% of its issued shares. On 3rd July 2024, *Business Day* reported that Sibanye had retrenched 11,000 workers over 18 months. In its results for the year to 31st December 2024, the company reported revenue up 7% in the final six months, with a gold price that "...drove a 216% increase in adjusted EBITDA1 to R3.6 billion." South African PGM costs were up 6%, and "US PGM - consistent production and 27% reduction in AISC to US$1,367/2Eoz for 2024..." The CEO, Neal Froneman, stated, "Our strategic diversification and proactive actions in response to many of the forces currently driving global change have ensured that the Group is well positioned to sustain a longer period of low prices." Technically, the share has been in a downward trend since March 2022, mainly due to falling commodity prices. On 13th February 2024, the company announced that CEO Neal Froneman will be retiring on 30th September 2025 and will be replaced by Richard Stewart.
JSE:SSW
by PDSnetSA
Our opinion on the current state of EUROMET(EUZ)Europa (EUZ) is a European metals developer that operates primarily in Spain, where it mines lead, zinc, and silver. The company owns 100% of the Toral project in Leon Province, which has a three-year investigation permit. In December 2018, a comprehensive scoping study was completed, and Europa is now pursuing infill drilling in high-grade areas toward a full feasibility study. This is a mining exploration company included in the JSE's fledgling index. It recently applied to terminate its listing on the Australian Stock Exchange (ASE) and to move its listing from the JSE's main board to the Alt-X. In its results for the year to 30th June 2024, the company reported an income of $277,000 and a loss of $632,800. The company has accumulated losses of $52.8m and cash in the bank of $252,000. Europa is a penny stock that was oscillating between 47c and 80c on thin volumes. It is highly risky because it does not yet have a productive mine. In an update on 21st February 2025, the company said, "The Company is very aware that, since the resumption of trading on AIM, the share price has declined considerably, however the Company is not aware of any reason for this decline." This share is volatile, unpredictable, and difficult to evaluate.
JSE:EUZ
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. Dis-Chem's objective on listing was to expand its store base from 108 stores, which it has now far surpassed. Theoretically, Dis-Chem can have a store in every shopping mall where Clicks has a store. Clicks had about six hundred stores when Dis-Chem was listed and has spoken of plans to expand its store base to as many as 1,200. This means that Dis-Chem 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, showing that it is growing rapidly. It 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, which 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, Dis-Chem 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 also expanding into healthcare insurance with the acquisition of 25% of Kaelo Holdings. In its results for the six months to 31st August 2024, the company reported revenue up 9.6% and headline earnings per share (HEPS) up 16.3%. The company said, "The biggest contributor to earnings growth was the containment of Group payroll cost, predominantly driven by the successful deployment of staffing framework 1.0, which delivered positive operating leverage, with operating profit growing at 17.5%." In an update on the five months to 31st January 2025, the company reported revenue up 7.2%. The company said, "The retail revenue recovery seen in January, largely driven by the availability of medical aid benefits, continues into February, countering weaker November trade." In our view, this is a solid blue-chip company with a good future. Technically, the share moved sideways and downward since making a long-term "triple top" with peaks in January 2018, April 2022, and November 2024. We consider Dis-Chem to be a solid defensive share with good long-term potential, but it has shown itself to be technically volatile.
JSE:DCP
by PDSnetSA
Our opinion on the current state of ANGGOLD(ANG)AngloGold Ashanti (ANG) is an international gold producer that used to have operations in South Africa (the last of which, Mponeng, has now been sold) and still has assets in the DRC, Tanzania, Ghana, Mali, and the US. It had some significant problems in bringing the Obuasi mine into production and with the Tanzanian government over royalties. The company has 14 operational mines. AngloGold has retained its listing on the JSE despite having no South African assets. On 14th July 2021, the company announced that it had acquired Corvus Gold for R5,4bn in cash to extend its exploration in Nevada, USA. This is a relatively marginal, short-life (11 years) gold mine with rising costs, falling grades, and a volatile gold price. In its results for the year to 31st December 2024, the company reported a, "...nine-fold increase in 2024 free cash flow to $942m versus prior year; Adjusted EBITDA* +93% year-on-year and H2 dividend growth of 263% to 69 US cents per share; total cash costs* +4% for FY 2024, below group inflation." Headline earnings per share (HEPS) was 221c (US) compared with a loss of 11c in the previous period. Technically, the share has been rising since March 2024 in what looks like a volatile upward trend. On 10th September 2024, the company announced that it had made an offer for 83,6% of Centamin in Egypt for 0.06983 AngloGold shares and $0,125 in cash. The announcement caused ANG's share price to fall. This share remains a speculation on the gold price.
JSE:ANG
by PDSnetSA
Our opinion on the current state of DISCOVERY(DSY)Discovery (DSY), developed and built by Adrian Gore over the past 25 years, offers the A/B income group of people a matrix of financial services that are inter-linked and cross-selling. Thus, a customer can begin with his/her medical aid and then add to that a variety of insurance products and now, most recently, personal banking products. Discovery's "Vitality" concept, which rewards clients for looking after their health in various ways, is extended to their driving record and a rewards system that ensures that there are attractive benefits for taking the full range of Discovery debit-order products. The Vitality platform tracks over 1000 customer activities and 50 biometrics a minute by using the Apple Watch in South Africa, the UK, China, Europe, and the US to ensure a process of healthy aging and retirement planning. Discovery's Chinese company, Ping An Health, in which Discovery has a 25% stake, saw membership grow by 60% over the year, and written premiums increased by 87% to $753m. Ping An is rapidly developing into Discovery's "Tencent." Discovery's move into banking offers existing clients a range of banking and credit card facilities. The banking license was approved in November 2017 and should significantly increase the profits being generated by the group in time. This is a disruptive development that will seriously shift the banking of A/B income group consumers away from existing banks. Discovery Bank's aim was to bring in 1000 new accounts per day from the end of August 2019. The company has seen a drop in car accident claims and medical insurance claims since the lockdown. This is a highly rated share despite the decline in its share price over the past two years. Discovery Bank has now reached 700 000 active clients and those clients are mostly of very high quality—but the progress has been relatively slow, partly because of the pandemic. Discovery shares remain expensive, but we regard this as one of the best shares for a private investor to hold for long-term growth. CEO, Adrian Gore, says, "I am a great believer that opportunities are not in good times,"—indicating his belief that growth comes from investing during difficult times such as South Africa is currently experiencing. Gore has also stated that the NHI, as it is proposed, is unaffordable for South Africa and that there are insufficient medical resources to implement it. Discovery became the first large, listed company to require all its staff to be vaccinated. On 20th June 2022, the bank reported that it had more than 1 million accounts and was taking on about 750 new accounts per day. In its results for the year to 30th June 2024, the company reported headline earnings per share (HEPS) up 14% and net asset value (NAV) up 16%. The company said, "Discovery Group achieved strong growth in the year ended 30 June 2024, with normalised operating profit up 17% to R11 604 million, headline earnings up 7% to R7 202 million, normalised headline earnings up 15% to R7 329 million, and core new business annualised premium income (API) up 18% to R26 667 million." In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would increase by between 30% and 35%. Technically, the share has been in an upward trend since June 2024. We added it to the Winning Shares List (WSL) on 1st August 2024 at 14280c. It has subsequently moved up to 20936c. Due to the quality of its management and business model, we see this as a "must-have" share for any private investor's portfolio.
JSE:DSY
by PDSnetSA
Our opinion on the current state of GLENCORE(GLN)Glencore (GLN) describes itself as, "...one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities." The group's operations comprise around 150 mining and metallurgical sites, oil production assets, and agricultural facilities. With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries. This is a massive, diversified mining house that markets its products worldwide and is involved in almost every mineable commodity that exists. This means that it is far less volatile and risky than other less diverse mining houses. Since the commodity cycle turned at the start of 2016, one of the greatest beneficiaries has been Glencore, particularly because it owned the world's richest source of cobalt in the Democratic Republic of Congo (DRC). Cobalt is the metal used in the batteries required for the world's shift to electric motor vehicles. The problem is that the government in the DRC is in the process of declaring cobalt a "strategic mineral," which means much higher tax. The company is in the process of aggressively buying back GETTEX:2BN worth of its own shares. Glencore announced on 28th June 2021 that it had bought Anglo's 33% stake in Correjon Colliery in Columbia for $294m. Glencore clearly benefited from the war in Ukraine and the increase in coal prices, particularly. In a production update on the year to 31st December 2024, the company reported copper production down 6%, cobalt down 8%, zinc down 1%, nickel down 16%, and energy coal down 6%, while lead was up 2% and steel-making coal was up 165%. The company said, "2024 production volumes were delivered within our guidance ranges (unchanged from the beginning of the year), reflecting stronger second half (H2) performances across our key commodities. Copper production was 26kt higher in H2 (+6% vs H1), supported by Antapaccay's recovery from H1 geotechnical issues." Business Day (20-2-25) reported that Glencore had made a R30bn loss in the year to 31st December 2024, mainly because of lower prices for thermal coal. The price of nickel was down 22%, and cobalt fell 27%. The company has impaired its zinc and copper operations by almost R1,5bn. Earnings per share (EPS) fell to a loss of 13c (US) from a profit of 34c. The share made a convincing "descending double top," with the second top being slightly lower than the first in April 2024. Technically, this is a bad sign. The fact that the share could not rise above its January 2023 top at R120 was a major disappointment to the bulls. Commodities are in a downward trend, which has a direct impact on Glencore.
JSE:GLN
by PDSnetSA
Our opinion on the current state of METROFILE(MFL)Metrofile (MFL) is a company that specializes in records storage and management, image processing, and backup. The company has been listed since 1995 and has a 57.4% Black ownership. The Mineworkers Investment Company owns 38.64% of the business, and Sanlam owns 5%. The company's record management division has 52 facilities at 27 locations with over 100,000 square meters of offices and warehousing. Housatonic Partners, a US company, made an offer to buy 100% of Metrofile for 330c per share but delayed the deal because of COVID-19. They stated that they would want to see the end-June 2020 results and "three months of normal trade" before reconsidering. Despite this, they have assured the company of their wish to continue with the possible acquisition of Metrofile. In its results for the year to 30th June 2024, the company reported revenue up 1% and headline earnings per share (HEPS) down 49%. The company said, "General market conditions were weak. Demand for cloud services remained strong and now contributes 32% (2023: 26%) of our digital services revenue." In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would fall by between 23% and 46%. We see this as a good-quality small business that seems to be battling in a very tough economic climate. Technically, the share now looks to be in a new downward trend. On 5th September 2024, the company announced that its CEO, Pfungwa Serima, would resign with effect from 30th September 2024. He will be replaced by Thabo Seopa.
JSE:MFL
by PDSnetSA
Our opinion on the current state of MPACT(MPT)Mpact (MPT) is a large producer of paper and plastics packaging in Southern Africa. It recycles paper and cardboard and makes corrugated cardboard containers for a variety of industries, as well as polystyrene trays for the food industry. It has 20 manufacturing operations, with South African sales accounting for 86% of its business. It employs over 5,000 people. The business is impacted by the general level of consumer spending (which has been depressed because of COVID-19 and was improving at least until the advent of the Ukraine crisis) as well as weather considerations, which affect the demand for corrugated containers for fruit and other agricultural products, especially in the Cape. Like many businesses in the current environment, Mpact has been working to preserve cash, but it has benefited from a switch to local suppliers during the pandemic. In its results for the six months to 30th June 2024, the company reported revenue slightly down at R6,17bn and headline earnings per share (HEPS) of 144,6c compared with 211,6c in the previous period. The company's net asset value (NAV) increased 9% to 3411c per share. The company said, "The uncertain socio-political environment leading up to the national elections, high levels of loadshedding that continued until the end of March, high inflation and interest rates all contributed to weak consumer and business sentiment." In a trading statement for the year to 31st December 2024, the company estimated that HEPS for continuing operations would be between 23,3% and 30% lower than in the previous period. The company said, "The Group experienced a challenging trading environment for most of the 2024 financial year, despite positive sentiment emerging from the May 2024 election outcome and reduced loadshedding since April 2024." The share fell from a high of R51 in April 2016 to levels around R8 in March 2020 but has since recovered to 2812c. At the current level, it is on an earnings multiple of 6,31 - which looks cheap. Technically, the share looks like it may be entering a new upward trend, but it has been moving sideways since August 2022. On 1st August 2024, the company announced that it had sold its Versapak business for R267,7m. On 3rd February 2024, the company announced that its shares would be traded on the A2X with effect from 11th February 2024.
JSE:MPT
by PDSnetSA
Our opinion on the current state of SIBANYE-S(SSW)Sibanye (SSW) is a mining house that has been on a rapid acquisition trail, accumulating platinum and gold mines in South Africa and America and now broadening its scope to include base metals and minerals, especially so-called "green" metals. The company is run by Neal Froneman, who is well-known in the mining industry for his toughness, expertise, and experience. Froneman has said that he intends to retire in about 2024/5 but plans to double the size of the company before he does. Sibanye is also considering moving into the base minerals used in motor vehicle batteries, like vanadium, copper, nickel, and lithium. On 1st June 2021, the company announced a share buy-back program to repurchase up to 5% of its issued shares. On 3rd July 2024, Business Day reported that Sibanye had retrenched 11,000 workers over 18 months. In its results for the six months to 30th June 2024, the company reported headline earnings of R137m compared with R5,891m in the previous period. Lower commodity prices caused revenue to decline by 9%. The company said, "The Group maintained a sound financial position with undemanding balance sheet leverage of 1.43x net debt: adjusted EBITDA at 30 June 2024, well below our covenant levels." In an update for the 3 months to 30th September 2024, the company reported EBITDA up 9% and EBITDA from South African gold operations up 292%. The gold price in rands was up 24%. In a trading statement for the year to 31st December 2024, the company estimated that HEPS would be between 63c and 67c compared with 63c in the previous year. The company took an R8,8bn impairment loss on its PGM operations in the US, which is not reflected in HEPS. Technically, the share has been in a downward trend since March 2022, mainly because of falling commodity prices. On 13th February 2024, the company announced that CEO Neal Froneman would be retiring on 30th September 2025 and will be replaced by Richard Stewart.
JSE:SSW
by PDSnetSA
Our opinion on the current state of VODACOM(VOD)Vodacom (VOD) is South Africa's largest airtime and data provider for cell phones. It is a subsidiary of the international company Vodaphone. Its competitors are MTN, Cell-C, and Telkom. The cell phone industry has been hammered by a steady decline in voice revenue, which has to some extent been compensated by a sharp rise in data usage. The disadvantage which Vodacom has as an investment is that a foreign parent owns it. This was graphically demonstrated when its share price fell 7% in two days because it was feared that its parent company would be pressured to sell off its non-European subsidiaries. Vodacom has businesses in Mozambique, Tanzania, the DRC, and Lesotho. Now the group is looking to develop a business in Africa's fastest-growing economy, Ethiopia, with a population of 105m. On 2nd December 2019, the Competition Commission ruled that Vodacom and MTN had to cut their interconnect fees by between 30% and 50%. Much of Vodacom's revenue comes from interconnect fees, and it saw its share price drop by 5%. The company is launching a "super-app" in conjunction with Jack Ma's Alipay to boost its non-voice revenue. It has also spent R4bn to mitigate the impact of loadshedding. We believe that this share will perform well, but may take some time to reach former heights. In its results for the six months to 30th September 2024, the company reported revenue up 1% and headline earnings per share (HEPS) down 19,4%. Financial services revenue increased by 7,8% and contributed 11,4% to group service revenue. The company had 206m customers and rendered financial services to 83m. The company said, "While our bottom line was impacted by various one-offs, I am confident that we are poised for a stronger second-half performance." In a trading update for the 3 months to 31st December 2024, the company reported revenue up only 1,6% due to the stronger rand, with service revenue up 11,6%. The company said, "...the quarter was positively impacted by accelerated growth in South Africa's prepaid market in addition to another stellar performance in Egypt and Tanzania, while network operators in Mozambique, including Vodacom, have been hampered by post-election tensions since October 2024." In a presentation to investors on 19th February 2024, the company said that it expected to grow earnings by 10% per annum in the years between 2025 and 2030. The expectation is that its Egyptian subsidiary will grow profits by at least 20% per annum. Technically, the share fell from its high of 16214c on 1st April 2022, and we suggested waiting for a clear break up through its downward trendline, which happened on 25th July 2024 at 9836c. Since then, it has risen to 11900c. It still looks relatively cheap at current levels, with a dividend yield (DY) of around 3,83%—but it is in an environment where technology and regulation shift continuously, making it risky.
JSE:VOD
by PDSnetSA
Our opinion on the current state of TRENCOR(TRE)Trencor's (TRE) primary asset is 47,78% of Textainer, a US-listed renter of shipping containers (Twenty-foot units or TEUs). It should be noted that Trencor spent R100m buying back its own shares between 4-10-18 and 6-12-18. Investors have been unhappy with the fact that Textainer has been underperforming its competitors. For example, Triton had a return on equity of 16% compared to Textainer's 1,7%. Trencor has unbundled its holding of Textainer into the hands of its shareholders, which resulted in a tax of R17m. In its results for the six months to 30th June 2024, the company reported headline earnings per share of 9,8c compared to 64,8c in the previous period. The company said, "Whether or not the company will be in a position to commence the winding up process following 31 December 2024, as currently intended, will depend on the satisfactory conclusion of all outstanding regulatory and other matters required in order to wind the company up." In a trading statement for the year to 31st December 2024, the company estimated that HEPS would fall by between 55,2% and 65%. The company said, "The after-tax unrealised loss from the translation of the US dollar deposits into SA rand for the current period was R15,1 million (2023: profit of R83,9 million)." Trencor paid out a special dividend of 730c to shareholders, which went ex-div on 19th February 2025, resulting in a sharp drop in the share's price.
JSE:TRE
by PDSnetSA
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