| Thursday 14 April 2022 Good morning Voornaam,
Capitec has been "priced for perfection" and even the latest excellent result wasn't strong enough for the market. The share price fell 4.5% yesterday as the valuation proved to be too demanding.
Sappi was the first company to announce the impact on its operations of the terrible floods in KZN. Production at the Saiccor, Tugela and Stanger Mills has been stopped and export facilities at the Durban Port have been impacted. At this stage, there has been no material damage to any of the plants and insurance is in place for all assets and stock. The company will update shareholders once the financial impact has been quantified.
The next update came from property group Fairvest, which has 16 assets representing 11.1% of the portfolio by gross lettable area in KZN. There has been no structural damage to these pro perties, so the fund has gotten off lightly compared to most.
Pepkor Holdings issued an update shortly thereafter and the group hasn't been as lucky as Fairvest. PEP's Isipingo distribution centre in Durban has sustained "significant damage" and supply chains have been affected. If there's one thing the retailers learnt from the riots, it was the value of supply chain redundancies. With three major distribution centres in South Africa, PEP is putting contingency plans in place to service stores. Although the group has noted that adequate insurance cover is in place, Pepkor cannot yet quantify the extent of losses.
EOH released interim results for the six months to 31 January 2022. HEPS is finally positive again at 41 cents per share, a substantial turnaround. Margins all moved in the right direction to make this happen. As I've written several times before in InceConnect, the group is entirely focused on getting enough cash to deal with the bridge facility repayment. You have to read carefully to notice, but the repayment date has been shifted from October 2022 to April 2023 based on renegotiated terms.
Zeder released results for the year ended 28 February 2022. The net asset value per share at that date was 466.1 cents, an increase of 7.6% over the prior year. A special dividend of 20 cents per share countered the increased valuations of The Logistics Group and Kaap Agri. Based on major recent events like the unbundling of Kaap Agri, the sum-of-the-parts valuation on 4th April 2022 was R3.62 per share. A special dividend of 92.5 cents per share has been declared from the proceeds of disposal of The Logistics Group. Zeder closed 7.8% higher at R3.03 per share. The key assets are now Zaad and Capespan, with Agrivision Africa as a smaller investment in the group.
PSG Konsult's results for the year ended February 2022 reflect a 32% jump in recurring HEPS and a 31% increase in the dividend. Total assets under management increased by 17%. Return on equity was 23.8%, which is a solid outcome. The earnings are 40% above pre-COVID levels. The biggest move over this period was in PSG Asset Management which grew recurring HEPS by 133%. The share price is down slightly this year and up 44.5% in the past 12 months.
The Maitlantic Group has increased its stake in Emira Property Fund to over 50%. In early 2021, the group made a mandatory offer for all the shares in Emira. Based on this announcement, the group didn't stop there with building its stake in Emira.
Anglo American has announced the value of rough diamond sales for De Beers' third cycle of 2022. Sales in this cycle were USD565 million, higher than the comparable cycle last year (USD450 million) but well down on the second cycle of 2022 (USD652 million). The CEO of De Beers notes that diamond businesses are taking a more cautious approach based on events in Ukraine and China.
PSG Group has issued a further cautionary announcement, noting that the directors expect to make a detailed announcement about the proposed PSG Group restructuring and value unlock on 25th April.
Standard Bank has released background information related to the non-binding advisory resolution that climate activist shareholders are putting forward. Resolutions have been proposed for the 2022 AGM that would require Standard Bank to report on financed greenhouse gas emissions and various related targets, which the bank would support shareholders voting in favour of.
Schroder European Real Estate Investment Trust achieved a 1.9% increase in its property portfolio valuation over the last quarter. 96% of the rent in the quarter has been collected and the valuation uplift is due to improved yield re-ratings (or "yield compr ession") as a lower yield means a higher portfolio value.
MC Mining has completed its bankable feasibility study for the Makhado Project, a key milestone to raise funding for the project. If it goes ahead, developing the project would create 650 permanent jobs and achieve a 3.8 year payback period on investment with a peak funding requirement of R727 million.
On a lighter note, Afine Investments saw its share price increase from the mid-R6 range to R650 (!) based on trade of just 7 shares. This looked at lot like finger trouble (should've been a bid of R6.50) but the volume of 7 shares would make even less sense in that context. Either way, the company confirmed with the JSE that the trades are valid. On volume of just 150 shares yesterday, the share price returned to around R6, so the share price chart is going to look ridiculous forever.
In addition to the excellent DealMakers content t o finish off the short week, I've written on Mr Price's significant acquisition of Studio 88 Group. The retailer is certainly delivering on its promise of rapid inorganic growth. It's a risky and brave strategy, so Mr Price is one to keep an eye on.
Have a fantastic Easter weekend!
The Finance Ghost
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