| Tuesday 21 September 2021 Good morning Voornaam,
I must start with a correction of yesterday's InceConnect. Evergrande's debt isn't $300m (we wish it was), but rather $300bn - thank you to those who alerted me to the typo. The rest of my commentary was spot-on in terms of the painful day in the markets. The ALSI dropped 2.24% and the ZAR weakened to R14.82 to the USD. I personally don't think we are anywhere near finished with this issue and I've now got around 8% of my portfolio sitting in USD cash, waiting for what I believe could be a significant sell-off in the US market.
I must highlight Combined Motor Holdings (CMH), which expects HEPS for the six months to August 2021 to be between 190 and 210 cents per share. Not only is that a huge turnaround from the comparable period with tough lockdowns, but it's over 65% higher than the comparable period in 2019.
Th ere's also good news for PPC, which has finalised the disposals of PPC Lime and PPC Aggregate Quarries Botswana. The proceeds from both transactions will be used to reduce PPC's debt.
In small cap industrials news, Argent Industrial expects HEPS to be between 137.9 and 152.7 cents for the six months to September 2021. Insimbi Industrial Holdings expects HEPS for the six months to August 2021 to be between 11.09 and 11.29 cents per share. In both cases, the companies are on annualised P/E ratios of approximately 4x. Argent is up more than 65% this year and Insimbi is up nearly 38%.
Ascendis has acknowledged that there are discussions underway with interested parties in taking the remainder of the group private, once the European distressed debt investors have finished feasting on the carcass. The group will comprehensively restructure its head office (which means lots of retrenchments) to bring the cost dow n to 2.5% of revenue of the underlying continuing operations, which are performing rather well. Naturally, shareholders will fight for the best possible offer in a take-private scenario.
Northam Platinum will buy back another 3.9% of its shares at a 16.1% discount to the 30-day volume weighted average price (VWAP). When compared to the share capital structure before the Zambezi BEE Transaction back in 2015, Northam will have achieved an 8.9% reduction in issued share capital.
Steinhoff has confirmed that Mattress Firm, which has more than 2,300 retail stores in the US, is "exploring" a listing in that country. The company has confidentially filed a draft registration statement with the Securities and Exchange Commission (SEC), so the company is clearly serious about the possibility.
Today's feature articles are on RMI's announcement to unbundle Discovery and Momentum Metropolita n, as well as Caxton and CTP's impressive results announcement.
We are halfway through #HerenyaSeptember with Petri Redelinghuys of Herenya Capital Advisors on Magic Markets. In the second show in the series, he answered questions from listeners on what it takes to be a trader and what some of the important techniques are for beginners. Make sure you take advantage of this learning opportunity by listening to the show.
I'm fully expecting another mess on the markets today. Remember, there are going to be good days and bad days. It's a long-term game and you need to be careful of rushing to buy the dip - a good portfolio strat egy includes being disciplined on the size of each position!
The Finance Ghost
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