| Wednesday 29 September 2021 Good morning Voornaam,
PPC has nearly put the risk of a capital raise to bed. Provided the disposal of PPC Lime can be completed by 31 October 2021, the South African lenders will refinance the debt without requiring a capital raise. The only outstanding matter in the PPC Lime sale is the actual receipt of the cash, as all other conditions have been fulfilled. The money should be received on 14 October, so the 31 October deadline shouldn't be a problem.
Importantly, the refinanced facility will be cheaper than the debt it replaces, reflecting PPC's improved credit risk profile as cement sales volumes for the six months to September 2021 are 6% - 9% higher than they were in the comparable period in 2019.
The company does raise the ongoing risk of cement dumping in the South African market by foreign manufacturers, with cement imports accounting for 10% of local industry volumes. The local poultry industry suffered terribly during periods of chicken dumping in South Africa, a situation that is usually resolved by government with the introduction of tariffs or other measures. PPC is awaiting a decision from government on this matter.
Grand Parade shareholders will be hoping that ECP Africa accepts the conditions from the Competition Commission for the acquisition of Burger King South Africa, as a trading statement confirms that the business is still loss-making (albeit to a lesser extent than in the comparative period). Although the gaming businesses are up this year, the group headline loss per share will be between 4.8 and 7.7 cents for the year to June 2021.
Wesizwe Platinum, with a market cap of under R850m, jumped over 15% on the news that HEPS will be up between 114% and 134% for the six months to June 2021. Platinum profits are old news, so I was surpris ed at the jump in the price. Perhaps it's a company that people simply forgot about.
Labat Africa has decided not to pursue the pharmaceutical side of the cannabis industry, citing the "complex and developing nature of this industry from a regulatory point of view." The company will focus on the off-take agreement, as well as the local retail and research aspects of the industry, which it notes are models that require substantially less funding.
Sygnia has announced a return of capital to shareholders of 48 cents per share, as the company has been paid back the original amount advanced to the broad-based employee share scheme which has now been unwound. This is a capital distribution rather than a dividend.
Rex Trueform, a miniscule company with a market cap of R23.5m, has at least returned to a profitable position with HEPS of 146.6 cents for the year to June 2021. Telemasters is another tiny business on the JSE, with a market cap of R63m. The company has reported a headline loss of 7.82 cents per share.
The biggest story today is a voluntary update from Barloworld, a group that managed its balance sheet incredibly well during the pandemic. I've also written on the results of Adapt IT and York Timber.
As we are now in the final week of #HerenyaSeptember on Magic Markets, make sure you don't fall behind on episodes. In Episode 44, Petri Redelinghuys of Herenya Capital Advisors responded to the second batch of questions from listeners. It was another insightful and candid discussion.
Have an enjoyable Wednesday!
The Finance Ghost
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