| Friday 25 February 2022 Good morning Voornaam,
Yesterday was a tough day emotionally. In times like these, I find it helpful to remember what I can and cannot control in the world. Focusing on the former while being aware of the latter is usually the right strategy.
Anglo American has released preliminary results for the year ended December 2021. Net debt to EBITDA is just 0.2x, reflecting the health of the industry currently. Basic HEPS increased from $2.47 to $7.00 and the final dividend is $1.68 per share (including a $0.50 per share special dividend). Return on capital employed was 43%, way above the 15% through-the-cycle target (as is to be expected when times are good).
Anheuser-Busch has released its 2021 results, led by a 15.6% increase in revenue and 9.6% increase in total volumes. The Global Brands (Budweiser, Stella Artois and marketing winner of the pandemic, Corona) grew revenue 22.9%. Normalised EBITDA only increased by 11.8% as the company experienced margin contraction. The group is still highly leveraged (net debt to EBITDA of 3.96x) but declared a EUR0.50 dividend per share regardless.
Distell has released results for the six months to December 2021. The share price barely moved, as the Heineken offer is in the process of obtaining the required regulatory approvals after receiving resounding approval (94%) from shareholders. The group grew revenue by 15.8%, with 22.8% growth in South Africa driven by premium ready-to-drink products and spirits. The single malt business posted double-digit growth. With adjustments for forex and other normalisations, HEPS increased 6.2%. There is no dividend due to the terms of the Heineken deal.
Quantum Foods is the largest producer of eggs in South Africa. It faced many challenges in recent months, ranging from increases in raw material costs to higher egg supply and avian influenza in the Western Cape. The com pany also suffered an unprotected strike at the Kaalfontein Farm which supplies approximately 15% of the company's local eggs, culminating in "the majority of staff" being dismissed. The financial impact of this mess was a R10 million knock. The company expects raw material costs to be high for the remainder of the financial year, with the attack on Ukraine doing no favours. The share price is highly illiquid, so there wasn't much of a reaction to the update.
In a pre-close presentation, Equites Property Fund notes that there has been a significant uptick in demand for A-grade warehousing space in South Africa. The company is also active in the UK market, where a development has been pre-let to Amazon Logistics. The company believes it is on-track to deliver a double-digit total return for FY22.
Investors hoping for an improvement in Advanced Health's earnings were left disappointed. A sell-off of nearly 13% was nasty e ven on a red day for the market. The headline loss per share for the six months to December 2021 has worsened from 2.16 cents to 2.81 cents.
Discovery increased normalised HEPS by 26% in the six months to December 2021. Discovery Insure took a huge knock to profit, while VitalityHealth and the Ping An Health Insurance businesses both performed very well. Discovery Bank is bringing on board 750 new clients per day and has increased deposits by 69%. Advances only grew by 10%, with a cautious approach reflected in a low credit loss ratio. There is still no dividend as the group is investing heavily in the business.
HCI jumped over 15% on the news of a light oil discovery off the coast of Namibia. HCI is a 49% shareholder in Impact Oil and Gas, a 20% participant in the block that has announced the discovery. I don't think HCI could've picked a better day to make this announcement, with the oil price surging.
Royal Bafokeng Platinum achieved a double-digit increase in production of 4E and platinum ounces, which drove an increase in basic HEPS of between 58.4% and 78.2% for the year ended December 2021. As a reminder, the company is currently under offer from Impala Platinum.
Orion Minerals loves releasing SENS announcements that sound like the intro to a geology exam. The company has discovered copper in the first drill hole at Okiep in the Northern Cape. Shareholders will be thrilled to learn that the chalcopyrite-pyrrhotite mineralisation intersected in the hole is exactly what the company had targeted. No, I have no idea what that means either. Follow-up drilling is underway (I understand that part at least).
Heriot REIT released results for the six months to December 2021. The net asset value per share increased 6.4% and the dividend is 15% higher. There is absolutely no liquidity in this stock.
Today's feature article is on Spur, a company we all understand and can relate to. The company released results for the six months to December 2021. I've also decided to republish Episode 63 of Magic Markets, as it was released into an incredibly busy week of earnings and you may have missed it. The show is a wonderful opportunity to learn about concepts like liquidity and balance sheet structuring, brought to you by Westbrooke Alternative Asset Management.
As is the norm on a Friday, the DealMakers team gives us their summaries of the corporate activity on the JSE.
Good luck out there today - we probably need it.
The Finance Ghost
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Local and Offshore Market News |
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