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Our opinion on the current state of MARSHALL(MMP)Marshall Monteagle PLC (MMP) is a diversified investment holding company based in the UK, with strategically located offices globally. The company is involved in procurement, logistics, and trading of various hard and soft commodities, industrial raw materials, and consumer food and non-food products. Additionally, the company holds non-operational investments in commercial and industrial properties as well as listed equities. In its results for the six months to 30th September 2023, Marshall reported a 19% decline in revenue from continuing operations and headline earnings per share (HEPS) of 2,2c (US), compared with a loss of 6,9c in the previous period. The company stated, "Profit after tax on continuing operations for the period was US$674,000, compared to a loss after tax of US$2,720,000 for the six months period to 30 September 2022. In constant currency terms, the profit was US$554,000." In a trading statement for the year to 31st March 2024, the company estimated that HEPS would be 5,8c (US) compared with a loss of 4,4c in the previous period. Despite the improvement in financial performance, the share remains very thinly traded with only R37,000 worth of shares changing hands each day on average, making it risky for private investors.
JSE:MMP
by PDSnetSA
Our opinion on the current state of VUNANI(VUN)Vunani (VUN) is a black-owned financial services group with interests in asset management, investment, banking, property, and stockbroking. It also has an interest in coal mining, which has been performing well with the rise in coal prices. In its results for the year to 29th February 2024, the company reported revenue up 2% and headline earnings per share (HEPS) of 7,4c compared with 30,1c in the previous year. From a private investor's perspective, the biggest problem with this share in the past was that it was too thinly traded to be a practical investment. In recent weeks, however, the value traded on average each day has risen to R128 000, making it more viable. There remain many days when there are no trades at all, so it remains quite risky.
JSE:VUN
by PDSnetSA
Our opinion on the current state of GEMFIELDS(GML)The Gemfields Group (GML) (previously Palinghurst Group) is a mining group that has two major projects: (1) Kagem, the world's largest producer of emeralds (in Zambia) and rubies (at Montepuez in Mozambique); (2) Jupiter Mines, a South African producer of manganese. The group is led by Brian Gilbertson, previously the CEO of BHP Billiton. Gilbertson identified that the semi-precious stones market was under-developed and offered an opportunity for consolidation and professional management - hence the Gemfield's operation. Jupiter was listed on the Australian Stock Exchange (ASX) in April of 2018, and in the process, Gemfields disposed of 60% of that company in line with its decision to cease being a diversified mining company and to focus purely on gemstones. The share is fairly well-traded with approximately R0.5m worth of shares changing hands on average every day. Like all commodity shares, it is risky and its fortunes depend on the prices of emeralds and rubies on the international market, as well as the risks associated with mining in third-world countries. It appears to have found a niche for itself where there is very limited competition, and it should do well as the world economy recovers. On 24th October 2022, the company announced that operations had resumed at MRM and key personnel had returned following an insurgent attack on a mine about 12km away on 20th October 2022. On 7th August 2023, the company announced that it would construct a new processing plant that would triple its output from the Montepuez ruby mine. In its results for the year to 31st December 2023, the company reported revenue down 23% and a headline loss of 0,9c (US) compared with a profit of 4,8c. The company said, "The Group’s financial performance was impacted in the year by the withdrawal of November 2023’s higher-quality emerald auction and an unrealised write-down of Gemfields’ non-core 6.54% equity holding in Sedibelo Resources, the platinum group metals mining company." Technically, the share rose off an island formation and entered a strong new upward trend which lasted until July 2023 when the trendline was broken. We recommend waiting until the downward trendline is broken - which has not yet happened. On 11th June 2024, the company announced the appointment of Bruce Cleaver as Chairman. In a report on 19th June 2024, the company said that in June 2024 auctions, it had sold $68,7m worth of rubies at an average price of $316,95 per carat.
JSE:GML
by PDSnetSA
Our opinion on the current state of LIBSTAR(LBR)Libstar (LBR) is a recently listed decentralised food and beverage company producing "consumer packaged goods." It raised R3 billion in an initial public offer (IPO) in May 2018. It owns the Denny brand, a leading mushroom supplier, and Lancewood, known for its dairy products, among other food brands. Altogether, it makes over 9000 products and has launched 88 new products in the past six months. The company produces private label brands for retailers like Spar, Woolworths, Pick 'n Pay, and Shoprite. A centralised head office supports and invests further in autonomous production units by supplying capital and expertise and making acquisitions. The company has spent R60 million on coping with COVID-19. Consumer spending is under pressure because of load-shedding, civil unrest, retrenchments, high unemployment, the residue of COVID-19, and now developments in central Europe. This company is entirely dependent on consumer spending. In its results for the year to 31st December 2023, the company reported revenue up 5,2% and normalised headline earnings per share (HEPS) down 11,2%. The company said, "Selling price inflation and mix changes contributed 10.0% to sales growth. Sales volume declined by 4.8% as the Group experienced a decline in its retail, industrial and export channels. Group net finance costs on interest-bearing debt (excluding IFRS 16 lease liabilities), increased by 53.3% from R109.8 million to R168.3 million, mainly due to the full period impact of the increase in the Johannesburg interbank average lending rate (JIBAR) compared to the prior period." In a voluntary trading update on 19th June 2024, the company reported revenue up 4,6%. The company said, "Revenue growth was driven by price and mix changes of 6.3%, against a volume decline of 1.7%. Perishable Products category revenue increased by 4.4%, with selling price inflation and mix changes contributing 7.7% to sales growth. Sales volume declined by 3.3% driven mainly by lower beef volumes in the food service channel." Libstar trades on a multiple of 8,2 and a dividend yield (DY) of 3,07%. Technically, the share has been in a downward trend for some time. We suggest waiting for a clear break above the long-term downward trendline.
JSE:LBR
by PDSnetSA
Our opinion on the current state of STADIO(SDO)Stadio (SDO) is a tertiary education institution that offers a wide range of post-school training. The company provides higher education through five universities, offering higher certificates, degrees, master's, and PhD qualifications. It currently has over 46,000 students enrolled in six faculties offering more than 50 accredited training programs. Notably, 86% of these students study online. The company envisions having 100,000 students, with most expected to be distance learning students. In its results for the year to 31st December 2023, the company reported revenue up 16% and headline earnings per share (HEPS) up 19%. The company's net asset value (NAV) increased by 1% to 212c per share. The company stated, "...despite a challenging economic environment, with good growth in student numbers for the year, specifically in new student numbers. The growth in EPS, HEPS and CHEPS is due to an increase in student numbers, coupled with good cost controls and efficiencies." In a business update at their AGM, the company reported that student numbers increased by 8% in the year to June 2024. This was made up of 86% of students in distance learning and 14% in contact learning. We believe that Stadio has a great future based on the general ineffectiveness of government tertiary education in South Africa. At current prices, and following their results, Stadio has broken up through its long-term downward trendline and is now on an upward trend. We are bullish on its prospects.
JSE:SDO
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 and demutualised in 1998, subsequently listing on the JSE and the Namibian Stock Exchange. The company operates in South Africa, the UK, America, Europe, India, Australia, and 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, Sanlam has operations in 11 other African countries and Malaysia. Saham operates in 33 French-speaking countries with 3,000 staff members across 700 branches, offering a product mix similar to Sanlam's. Sanlam also owns 26% of Shriram, a leading provider of insurance products and financial services in India. Additionally, it acquired 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 primarily based in South Africa. Consequently, it is impacted by low levels of consumer spending and the economic recession in the country. Sanlam is 18% black-owned and has initiated a partnership with African Rainbow Capital (ARC) to focus on lower- and middle-income consumers and small companies. Sanlam will provide R2bn of seed capital for this initiative. On 14th June 2021, the company announced that it had acquired the Alexander Forbes group risk and retail life business for R100m. Furthermore, Sanlam 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 2023, the company reported the net result from financial services up 26% and headline earnings per share (HEPS) up 118%. The company said, "Cash net results from financial services increased by 30%, while net results from financial services increased by 26%. The improved performance was broad-based. Net result from financial services from our general insurance line of business increased by 38%, life insurance by 28% and credit and structuring by 36%." In an operational update for the nine months to 30th September 2023, the company reported new business volumes up 13% and operational earnings up 35%. The company said, "The solvency position of the group remained strong and within target ranges on 30 September 2023, with a group solvency cover ratio of 170%." In a trading statement for the year to 31st December 2023, the company estimated that HEPS would increase by between 43% and 53%. The company said, "The higher expected percentage increase in net operational earnings is due to higher investment returns on the shareholder capital portfolio." In an update on the three months to 31st March 2024, the company reported cash flow up 14% and investment returns up 15%. Sanlam is one of the JSE's foremost blue-chip shares with a history of steady growth over a long period. After recovering somewhat from the fall in markets due to the corona pandemic, it is currently trading on a P:E of 11.86. 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