Merafe's positive profit swing of R1.5bn

Wednesday 11 August 2021

Good morning Voornaam,

Good morning Rox,
Yesterday in Ghost Mail, I wrote about the pain I've taken in gold shares this year. If you haven't subscribed yet to my free weekly mailer, you'll find the link here. I focus on discussing investment concepts and themes in the market, so it's a great complementary read to InceConnect.
It made me feel slightly better to see an AngloGold director buying shares in the company. It's come off so hard that I'm now miles in the red, but I know some analysts in the market have put a target price on the company that is slightly above my in-price of R350 per share. There's hope that I might get out with my shirt still on my back.
An interesting piece of news yesterday was the resignation of Sbu Shabalala, the founder and now ex-CEO of Adapt IT. His personal matters related to an alleged case of assault are clearly going to consume his focus going forward. With the attempted takeover by Huge well and truly dead, Adapt IT's management team will focus on finalising the Volaris deal. Tiffany Dunsdon will continue in her role as interim CEO.
Shareholders of Ellies and Fairvest should check their emails, as both those companies have issued shareholder circulars. Ellies is in the process of implementing a B-BBEE deal and Fairvest is in the middle of a proposed share-for-share deal with Arrowhead Properties.
The lead article this morning is a phenomenal profit swing at Merafe. The company has achieved a net profit for the six months to June of R576m vs. a loss of R961m in the comparable period. Despite this, the company is trading on an annualised P/E of just 2x!
My other piece this morning is also based on the mining industry. Exxaro has doubled its headline earnings per share, with the company noting in its trading statement that Sishen Iron Ore has been a major contributor.
In celebration of Women's Month, DealMakers has contributed an article on inspirational women in the South African M&A and financial markets industries. There's also a piece from Allan Greenblo to give you some tasty variety this morning.
In case you missed it, the latest episode of Magic Markets is an insightful discussion with the Satrix portfolio manager responsible for the Inclusion and Diversity ETF. We asked tough questions and there's a lot to learn along the way in this episode. You'll find it here.
Have a good day!
The Finance Ghost

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