| | | | | | | | | | | | | | | Monday 19 July 2021 | | | | Good morning Voornaam,
JSE-listed companies with large balance sheets have sent a clear message over the past few days: they will rebuild their businesses.
I'm not surprised, to be honest. The management teams are the custodians of shareholder money and they have no reason to exist without a store footprint or operational retail malls. Of course they will rebuild.
My concern is for the small businesses that were destroyed last week. Will they rebuild? Can they rebuild, even if they wanted to?
The property funds gave us a reasonable idea of the damage to large malls owned by listed companies last week. There are many properties in South Africa that are privately owned, so the losses to REITs by no means reflect the overall picture. For this reason, we needed to wait until the retailers announced their store damages before we could truly appreciate the scale of the destruction.
The likes of Massmart, The Foschini Group, Pepkor and Spar released updates on Friday. Predictably, the damage is extensive. I was pleased to see that Walmart has pledged its commitment to Massmart, as foreign shareholders sometimes leave countries after events like these. I was saddened by how widespread the damage really is, because many more small businesses have been destroyed alongside stores belonging to large corporates.
Mustek shareholders who saw images of its KZN office on fire will be relieved to know that losses to inventory and equipment are not expected to exceed R20m. That's immaterial vs. an inventory balance at December 2020 of R1.8bn.
Another interesting tidbit on Friday was a change in JSE Sponsor by Huge Group. It may or may not be a coincidence in light of the Takeover Regulation Panel making Huge Group remove yet another video aimed at Adapt IT shareholders. Either way, Questco will be happy to pick up another JSE-listed client.
Steinhoff released an important and complicated announcement regarding its ongoing litigation process. There's a lot of technical legal stuff in there that goes way over my head. The core message is that the company is increasing the settlement offer, a clear victory for the creditors that have been fighting in court for a fairer outcome.
As usual on a Monday, we have Chris Gilmour's summary of the biggest news around the world. Cuma Dube weighs in on the importance of the "S" in ESG, which has become even clearer in the past week. We also having the winning letter of the week, in which Muhammad Khan discusses some of the winners and losers in his portfolio. Remember, if you want to win a R250 Easy Equities voucher, use the banner at the bottom of this mailer to send in your letter.
With everyone reflecting on the riots and what they mean for our country, we did the same in the latest episode of Magic Markets. In Episode 34 Riots and Rands, Mohammed Nalla and I had a heartfelt discussion about the state of play in South Africa and the impact it has on investors.
This week can only be better than last week. Let's make the most of it!
The Finance Ghost
| | | | | | | | | | | | | | | | | | | | | | | | | Local and Offshore Market News | | | | | | | Retailers suffered extensive damage
Massmart, The Foschini Group, Pepkor Holdings and Spar have all updated the market on the damage to their stores from the looting. Read More |
| | | | | | | Steinhoff offers creditors a higher settlement
Steinhoff is attributing a higher settlement offer to improved trading. Personally, I think it has more to do with recent legal setbacks. Read More |
| | | | | | | The S in ESG: More important now than ever before
The impact of companies on the broader social issues within a society is often perceived to be very difficult to articulate, let alone quantify. Read More |
| | | | | | | The Week Ahead with Chris Gilmour
South Africa experienced an orgy of unprecedented violence last week, as rioters looted and pillaged with impunity, mainly in KwaZulu-Natal and parts of Gauteng. Read More |
| | | | | | | Letter to the Editor: Winners and Losers
Muhammad Khan wrote our winning letter of the week, with his passion for his portfolio shining through. Read More |
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