| Friday 06 May 2022 Good morning Voornaam,
Altron has released a trading statement for the year ended February 2022. HEPS for continuing operations is expected to increase by between 58% and 78%. It's important to look at continuing operations rather than the total group, as Bytes Technology Group is included in the base period (it was subsequently unbundled and separately listed). With other normalisation adjustments, guidance is for HEPS growth of between 42% and 49% for continuing operations. This equates to HEPS of between 49 and 55 cents. On a share price of around R8.75, this is a trailing Price/Earnings multiple of around 16.8x.
Shipping container business Textainer has released results for the first quarter of 2022. HEPS of USD1.47 is marginally higher than in the previous quarter (USD1.45) and up by 32% year-on-year. Average fleet utilisation was 99.7% as the company bene fitted from the extraordinary conditions in global supply chains and shipping. Textainer's share price is up over 52% in the past year. In 2022, the share has been volatile with a flat performance overall.
Anheuser-Busch InBev (or AB InBev as everyone calls it) has released results for the first quarter of 2022. Revenue increased by 11.1% and the group has shown an ability to grow beer brands globally, with a 6% increase in combined revenues of Budweiser, Stella Artois and Corona outside of their home markets. Normalised EBITDA margin contracted by 115bps to 33.9%, a theme I'm seeing everywhere in the markets. Despite the margin pressure, normalised EPS was up 31% year-on-year. The group has guided EBITDA growth for 2022 of between 4% and 8%.
In mining news, Gold Fields has given an operational update for the three months to March 2022. This company is a solid performer and has been by far the best gold play in my portf olio. Production in this quarter was up 7% year-on-year but down 8% quarter-on-quarter, on track to deliver the guidance that the mining house provided in February. Costs are rising by mid-single digits and the Salares Norte project cost capex could be 5% to 7% higher than expected based on inflation. Net debt to adjusted EBITDA is 0.39x and overall guidance for FY22 is unchanged.
The same cannot be said for Sibanye unfortunately, another holding in my portfolio. The share price fell around 8% based on a disappointing update, although everyone knew results wouldn't be great with a labour strike underway in the gold operations that is now entering its third month. Sibanye has taken a hard stance on this labour action ("no work no pay" principle) and CEO Neal Froneman's R300 million remuneration (most of which was in share-based compensation) hasn't won many friends against this backdrop. PGM production was a mixed bag across the operations and down yea r-on-year, with gold production taking the biggest knock with a 45% drop at a time when the average price per kilogram is considerably higher than a year ago. Group adjusted EBITDA fell 31% year-on-year (admittedly vs. a record result). PGM production guidance for the year is unchanged and no guidance has been given for annual gold production based on uncertainty around the strike.
Nu-World Holdings is a small cap that you probably aren't familiar with. The company has a market cap of around R770 million and is an importer and distributor of various consumer products ranging from appliances and electronics through to liquor. The company has released results for the six months to February 2022, reflecting a drop in revenue of 15.1%. HEPS has fallen 19.1%. The company has come under significant pressure from supply chain issues on one side and a slowdown in consumer spending on the other. One of the few highlights is that air-fryers are flying off the s helves, a trend I've picked up in discussions with other companies as well. Overall, I would see this as a worrying read-through for Massmart (and especially Game), with that stock struggling to keep its head above R40 per share.
Metair has given an update on the impact of the flooding on its operations. An unnamed major automotive customer of the group has suffered "significant damage" (which makes me think that it is probably Toyota) and this will have a material impact on demand for Metair products. In a manufacturing environment, that's not good news at all for profits. Metair has insurance in place which it hopes would "limit the impact" and then goes on to say that it is in discussions with funders to maintain liquidity to see out this issue. I was rather surprised that the share price only fell 2.7% in response to this announcement.
Dipula Income Fund has released results for the six months to February. Although important financial metrics like revenue and HEPS were almost flat, distributable earnings per share increased by 5% and 6.4% for the A- and B-shares respectively. Distributions of 61.97130 cents per A-share and 42.21706 per B-share have been declared. I was surprised to note negative reversions in the industrial portfolio (leases renewed at a lower rate than the expired lease) and positive renewals in the office portfolio. This is the exact opposite to what I've seen in other funds.
Recently listed property counter aReit Prop has reported net asset value per share of R9.31 and has declared a maiden dividend of 10.70525 cents related to the three months ended March 2022 (based on a net profit of R17 million). The share price is R7.79, reflecting a discount to net asset value of around 16%.
Labat hopes to raise EUR18 million from European investors, facilitated by the company's listing on the Frankfurt Stock Exchange tha t was finalised in December. The company will go on a roadshow to attract investors and will also be issuing a circular to existing shareholders to approve the issue of shares and warrants to grow the business.
Directors of Texton Property Fund have loaded up on around R9.6 million in shares. I try to always mention directors buying meaningful amounts of shares, especially in smaller listed companies.
As you've noticed, it was a busy day of news on the JSE. I decided to dedicate the feature article to Mondi and the company's trading update that includes important news on its Russian business.
Don't fall behind on Magic Markets! In Episode 73, the Westbrooke team joined us to discuss the colourful wo rld of venture capital and the economics of such investments. Listen to the show here.
Next week is the big week: the merger of Ghost Mail and InceConnect! Monday's edition of InceConnect will be the last time you see that name in your inbox, with Ghost Mail due to launch on Tuesday.
Have a terrific weekend!
The Finance Ghost
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