A rally for Merafe

Good Morning Voornaam,

With just one day to go until the TreasuryONE fireside chat, you can send through some questions in advance to help the team prepare. Topics can include the rand, the global economy, macroeconomic data points and whatever else interests you in this space. Make sure you've registered here to attend tomorrow morning's chat at 9:30am and send through those questions!

If you want to get up to speed on banking (Absa and Nedbank), mining (Exxaro, Northam Platinum, Sasol and Glencore), telecoms (Vodacom and MTN), building materials (Cashbuild and Italtile) and Nampak's latest news, then Ghost Wrap will do it for you in under 7 minutes. Brought to you by Mazars, you'll find the podcast here>>>

Here's some other stuff to sink your teeth into:

It doesn't get cheaper than Merafe

As your investment journey continues, you'll be exposed to companies trading on very different Price/Earnings (P/E) multiples. This valuation tool is far from perfect, but it does let us easily compare companies to quickly see just how different the valuations are. The calculation is simple: just divide the share price by full-year HEPS.

For example, KAP is trading at 6x. Impala Platinum is at roughly 4.5x. There are very strong companies on the JSE trading at over 20x. Then we have Merafe, which stubbornly trades at ridiculously low multiples, a function of the single-commodity exposure to ferrochrome.

How low is low? Well, with interim HEPS of 42 cents and a share price of R1.31, even a breakeven result in the second half of the year would put it on a P/E of 3.1x by the end of the year! To give you an idea of how lucrative this can be in dividends, the interim dividend is a yield of 15% on the current share price. One would certainly expect to see a second-half dividend to create an even higher full-year yield.

Along with the latest from Merafe, KAP and Impala Platinum, Ghost Bites includes a disposal of land by Equites, results from Grindrod and Homechoice, a business rescue update at Rebosis, numbers from Resilient and a Santam trading statement that inspired my chart of the day. There's also new s from Trustco, which includes a quote that nearly made me fall off my chair.

Curious? Of course you are. Read Ghost Bites here>>>

US Retail Sales surprise to the upside

The most significant release yesterday was US Retail Sales, which rose 0.7% in July. This was better than the market expectation of 0.4%. With the rand trading above R19.10, our currency is very sensitive to any data releases and an initial weakening after the data release thankfully improved later in the day.

It was another bright red day for commodities, which didn't do local mining counters any good at all. Brent Crude fell below $85 a barrel.

Remember to register for the fireside chat and send through your questions!

Have a great Wednesday.

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