Sappi share price rallies
The paper producer Sappi jumped more than 10% in opening trading on Monday morning.
According to JC Louw, CEO of Sharenet, this was due to the investment house JP Morgan upgrading its recommendation on the share to “overweight”, which indicates that it believes Sappi will outperform some other shares. JP Morgan thinks Sappi shares should reach R34.
On Monday morning, it was trading around R25.
Sappi’s share price in 2020. Source: Google
Afrox to leave JSE
The industrial gas company Afrox looks set to leave the JSE after 57 years. Its key shareholder, the German international company Linde, wants to buy out all minority shareholders.
Omnia to sell unit for more than R2 billion
This morning, SA chemicals and fertiliser company Omnia announced that European company Rovensay will buy its international Oro Agri, the international crop protection company AgriBio for $146.9 million (R2.4 billion).
American eyeing producing nuclear power in SA
Bloomberg reports that the US government’s development finance institution is backing American nuclear company NuScale Power to develop a nuclear plant that could deliver 2,500 megawatts of power in South Africa.
Rand weaker despite rescue plan
The rand weakened from below R16.50/$ to R16.70 after president Cyril Ramaphosa announced government’s Economic Reconstruction and Recovery Plan, which Treasury reckons should help to raise growth to around 3% on average over the next 10 years. But there were doubts about the specifics, with no indication about how plans to create jobs and fix SOEs will be funded. The rand was last trading at R16.64.
Gold losing ground
Gold is heading for its first weekly decline in three weeks, and is now down 2% over the past month. The market is weighing the possibility of a second US fiscal stimulus package after the presidential election It was last trading at $1,903/oz.
Cartrack on a tear
The vehicle tracking company Cartrack’s share price has now gained 20% since it it reported a 21% increase in its interim headline profit earlier this week. Its half-year dividend per share jumped 335% to 87c.
Pepkor profit to fall by 20%
In a trading update, Pepkor, owner of Pep and Ackermans, said its headline profit will fall by at least 20% for the year to end-September. The company said the process to refinance R5 billion in debt due for repayment in May 2021 was successfully concluded, and the debt is now repayable in September 2023.
Adcorp sees weaker demand for personnel placement
Adcorp, which focuses on personnel placement and training, says its revenue fell by 10% to 12% for the six months to end-August largely due to the interruption of classroom-based training in South Africa, as well as a fall in demand for new personnel. Still, its operating profit rose by 11% to 22% in SA and in Australia by 79% to 98%.
Famous Brands’ UK outlet bought – report
The BBC reports that Ranjit Singh Boparan, a British fast-food tycoon known as the “Chicken King”, bought Gourmet Burger Kitchen from SA’s Famous Brands, the owner of Steers and Wimpy.
Yesterday, Famous Brands said its struggling UK operation Gourmet Burger Kitchen (GBK) has entered into administration. Administrators have been appointed, who will consider the “insolvent sale” of the business.
According to the BBC, 35 sites and 669 jobs will be saved by the deal with Boparan. However, 26 restaurants and 362 jobs will be lost.
Famous Brands bought GBK in 2016 to reduce its dependence on South Africa, but announced recently that it will cut funding to the struggling food operation due to a deterioration in sales caused by the coronavirus pandemic.
PSG sees decline in value of investments
On Thursday, the PSG Group reported its results for the six months to end-August, its first financial report since the unbundling of an effective 26% of its 30.7% interest held in Capitec and disposing of 1.9 million Capitec shares for R1.7 billion cash.The group still owns stakes in PSG Konsult, Zeder, Curro and other companies. Taking into account the fair value of all its investments (i.e. the Sum-Of-The-Parts value), its SOTP amounted to R75.86 as at 31 August 2020, which is down 20% from February. “The decrease is indicative of depressed equity markets and the challenging trading conditions brought about by the Covid-19 pandemic and associated national lockdown,” PSG said.
$JSEPSG PSG Group H1 results webinarCEO Piet Mouton comments that they will “consider buying back shares” this was not (really) considered before in prior webcastsGiven current discount of -42% seems best use of cash on hand unless there is a compelling new investment pic.twitter.com/OYf07MOm6j
— Smalltalkdaily Research (@smalltalkdaily) October 15, 2020
Mondi warns of 20% profit fall
In a trading update, Mondi warned that its underlying EBITDA for the third quarter of 2020 was down 20% compared to the same time last year.
“Good volume growth in uncoated fine paper and fibre-based packaging products and ongoing strong cost control were more than offset by the impact of planned maintenance shuts, negative currency effects and lower average selling prices,” the company said.
Mediclinic revenue falls 19% in SA during lockdown
Mediclinic reported a 7% fall in revenue for the past six months, in a trading update on Thursday. In South Africa, revenue fell by 19%, while in the Middle East revenue rose by 8.5%.”We have seen a good rebound in trading since May 2020, particularly in Switzerland and the United Arab Emirates, as the initial peak of the pandemic passed,” Mediclinic said.
Its Hirslanden private hospital group in Switzerland contributed 47% of its revenue, followed by 29% from Mediclinic Southern Africa and 24% from Mediclinic Middle East, at the end of March.
Cartrack dividend up 335%
The vehicle tracking company Cartrack, which has operations in SA, Europe and South East Asia, reported a 21% increase in its headline profit for the six months to end-August.
Its half-year dividend per share jumped 335% to 87c. Its subscribers increased by 13% to almost 1.2 million.
Its share price jumped more than 7% on Wednesday.
Coronation profit increased by more than 10%
In a trading statement, fund manager Coronation said its headline profit for the year to end-September will be between 10% to 20% higher. Coronation’s total assets under management at end-September was R569 billion.
The company also appointed three new directors: Neil Brown (co-founder of Electus Fund Managers), former Eskom CEO Phakamani Hadebe and Saks Ntombela, group CEO of Hollard Insurance.
Mboweni wants to delay medium-term budget
Finance Minister Tito Mboweni has requested that the Medium Term Budget Policy Statement be postponed by a week to 28 October 2020.
It was originally tentatively scheduled for 21 October, but given the “complex and unusual circumstances” created by the pandemic he is asking parliament for a postponement.
Truworths gets green light for takeover
The Competition Tribunal has given Truworths the green light to acquire Barrie Cline, a clothing manufacture in Cape Town. More local fashion retailers are trying to increase their local production capacity.
IMF lowers expected outlook for SA
The IMF expects the South African economy to shrink by 8% this year, and it lowered its outlook for South Africa for next year to growth of only 3% – from 3.5% previously, reports Reuters.
Takeover bid for Omnia unit in final stretch
Omnia says it has reached the point of “final negotiations” with a bidder for its international agri-chemical company Oro Agri. “If a transaction is concluded, this may affect the price at which Omnia’s securities trade.”
Ramaphosa’s economic recovery plan for SA
It appears that President Cyril Ramaphosa’s economic recovery plan, which will be submitted to parliament on Thursday, has been leaked. News24 reported that the 48-page draft document, titled the South African Economic Reconstruction and Recovery Plan, outlines eight priority areas to “rebuild and grow the economy” after the economic shock of Covid-19. The document also includes plans for a controversial nuclear build programme, through a public-private partnership.
Moir replacement named
The controversial former CEO of Woolworths, Ian Moir, will leave the company after two decades. Most recently he was CEO of David Jones in Australia, and will now be replaced by Scott Fyfe, the CEO of Country Road. Moir oversaw Woolworths’ disastrous expansion to Australia, which destroyed billions in value – still, he continued to received massive pay packages. For example, he will get more than R22 million for the next year as “notice pay”, Business Day reported.
Steinhoff jumps 36%
Steinhoff’s share price jumped 36% to above R1 yesterday. On Friday, the company said it is making “real progress” in a $1 billion settlement with various litigants.
Steinhoff’s share price. Source: Sharenet
More competition for Shoprite, Checkers in malls
Following an agreement with the Competition Tribunal, Shoprite and Checkers will drop exclusive clauses with shopping centres, which means that they must allow small and independent retailers to compete with them in the same malls.
Murray & Roberts rallies thanks to big contract
Construction company Murray & Roberts’ share price jumped 9% to 678c after the group announced that its Australian company was awarded a large contract, as part of a joint venture.
Murray & Roberts share price
Murray & Roberts’ Clough – via a joint venture – won the AU$1.5 billion (R18 billion) contract to work on power grids in South Australia and New South Wales. The joint venture will construct four substations and approximately 700km of 330kV transmission line.
As at June 2020, Murray & Roberts had an order book of R54.2 billion, which includes several multi-year contracts.
Harmony workers killed
Two employees at Harmony’s Tshepong mine, near Welkom, were killed in an incident related to “a fall of ground” the company said in a release.
Rand on the front foot
The rand is starting the week at R16.48/$, still benefiting from a bout of dollar weakness – which also bolstered the gold price.
On Friday, the White House announced that it is preparing a $1.8 trillion coronavirus relief offer – its largest yet. This could put US government finances under pressure, and the prospect weighed on bonds and the dollar.
The gold price, which has gained more than 12% in the past six months, was trading at $1,927/oz on Monday morning. On Friday, Harmony, DRDGold and Gold Fields all saw their share prices rally by more than 6%.
Ramaphosa to announce economic rescue plan
President Cyril Ramaphosa will outline his economic recovery plan in parliament on Thursday, 15 October, following approval from cabinet and Nedlac. The joint sitting is a week before Finance Minister Tito Mboweni is expected to deliver his medium-term budget, which he on Friday warned would not be popular.
Post Office workers to strike
Post Office workers plan to strike over concerns that their medical aid and retirement benefits – which were deducted from their payslips but not paid to administrators – might have been misappropriated by the parastatal. The Post Office says this is due to its financial crisis due to a “dramatic decline” in revenue.
Lake Charles hit by second hurricane
Sasol’s embattled Lake Charles Chemicals Project in Louisiana has been hit by a second hurricane in six weeks. But while it remains shut, there was no apparent damage to equipment following the landfall of Hurricane Delta.
In August, Hurricane Laura caused “moderate wind damage” to cooling towers, as well as some insulation and building damage.
Absa looking for new chairperson
Absa has launched a succession search to replace its chairman Wendy Lucas-Bull, whose term ends in March 2022. She will have served 9 years on the board by that time, the limit in terms of reserve bank directives.
It was recently announced that Lucas-Bull would replace Christo Wiese as a chairman of Shoprite next month.
Vodacom Lesotho’s licence drama
Lesotho’s telecommunication regulator revoked the operating licence of Vodacom, Business Day reports.
According to Techcentral, the regulator contends that Vodacom Lesotho failed to pay a part of a R134m fine for “conflict of interest” allegations, related to the hiring of an auditing firm allegedly owned by the sister-in-law of the firm’s chairman.
PPC suffers loss amid lockdown, imports
Despite lockdown, a depressed construction sector and an increase in cement imports, PPC posted a R1.87bn loss attributable to shareholders for the year to end-March.
While cement sales in South Africa declined by 15%, average selling prices for cement in South Africa increased by 8% to 10%. The company reported that cement imports increased by 36% to 1.3 million tonnes over the past year. PPC says there has been a strong recovery since lockdown: in South Africa and Botswana, cement sales grew by double-digits since June, compared to the previous year.
Sorbet’s owner warns of profit wipe-out
Long4Life, the owner of Sorbet salons and Sportsman’s Warehouse, warned that its profit for the six months to end-August will be down by between 90% and 100%.
Sorbet was forced to shut its doors for months during lockdown.
Civil servant pension manager now owns 10% of Makro, Game
The Public Investment Corporation, which manages civil servant pensions, now owns more than 10% of Massmart, owner of Game, Makro and Builders Warehouse.
The company suffered a R1.2 billion loss in the first half of 2020. Recently, its American CEO Mitch Slape, used his own money to buy almost R8.2 million in shares in Massmart.
Spur restaurants busier than expected
In an update, Spur says its restaurants have recovered faster than it expected.
In September, Spur restaurants saw sales that were 18% below the same month last year. In May, sales were 91% down.
Sales at the group’s upmarket Hussar Grill chain was only 6% below the same month last year, while RocoMamas was at 13% lower.
The recovery in restaurant turnover post lockdown has exceeded management’s expectations,” CEO Pierre van Tonder said. “The improving monthly growth trend is particularly encouraging in the tight consumer environment where spending is under intense pressure.”
Markets rally after Trump U-turn
Overnight, markets rallied after US president Donald Trump appeared to backtrack after abruptly calling off negotiations on a stimulus bill in the US. Trump tweeted that he would support a separate bill that would support sending $1,200 cheques to support Americans.
The rand was last trading at R16.59/$ this morning.
VBS CFO heads to jail
Former VBS head of finance Phillip Truter will serve seven years in prison after entering into a plea agreement with the State. Truter made several admissions, including how he manipulated the bank’s financial statements, and submitting false returns to SARS. Truter will be the State’s “ace witness” in the VBS matter, News24 reported.
Pick n Pay profit halved
Its sales of liquor and tobacco sales, which were banned for a large part of the lockdown, fell by almost 48%. Clothing sales – partially banned for some time – dropped by 4%. Group turnover increased by 2.6% year-on-year. Prices rose by 3.4% over the six months at its stores.
Sales of food and groceries rose by almost 10% in South Africa.
Pick n Pay’s share price rose by 2% to R46.86 – which is still down 27% from the start of the year.
Foschini invests in SA factory
The Foschini Group announced that it is investing in local factories to cut down on its reliance on China. It only takes 42 days for clothing to reach the shelves when locally produced as opposed to over 100 days when imported.
Implats approached about stake in Zim mine
The owners of a Russian-backed project to build Zimbabwe’s biggest platinum mine want to sell a stake of at least 20% in the mine – and it has approached Impala Platinum, Bloomberg reports.
Rand takes a hit after Trump shocker
The rand has weakened to R16.63/$ as investors dumped risky assets following a shock over the US economic stimulus plans. Markets faltered overnight after US president Donald Trump unexpectedly stopped negotiations over the plan.
The Dow plummeted as much as 1.5% immediately after the announcement.
The abrupt pause leaves the US economy to recover without fiscal support many have deemed essential for fueling a timely bounce-back.
“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” the president said in a tweet.
This means Americans will not receive any additional economic relief — neither stimulus checks nor expanded unemployment benefits — until at least after the November election.
Insisting that Democrats only want to “bailout poorly run, high crime, Democrat states,” Trump said on Twitter that he would no longer negotiate with them over another stimulus package. Indeed, he insisted that the economy is “doing very well,” despite there being 10.7 million fewer jobs today than there were six months ago, and said he would pivot instead to confirming his nominee Amy Coney Barrett to the Supreme Court.
On 1 October, the Democrat-led House of Representatives passed a $2.2 trillion coronavirus relief package that included a second round of $1,200 stimulus checks for every American, with parents eligible to receive another $1,200 for each dependent child. The bill also proposed an additional $600 in federal unemployment benefits and $436 billion in aid for state and local governments to help cover the cost of providing assistance to out-of-work Americans.
But Senate Republicans negotiators balked at the price tag, and the two sides were unable to reach a deal.
Cosatu strike gets underway
Cosatu’s national stayaway strike got underway this morning in protest against corruption, retrenchments and unemployment, gender-based violence and attacks on collective bargaining. Motorcades are planned for Tshwane, Polokwane, Mbombela, Rustenburg, Mthatha, Bloemfontein and more.
Luxury cars seized
More than 25 luxury vehicles owned by businessman Edwin Sodi – who finds himself at the centre of a R255m asbestos audit tender scandal – and his firm Blackhead Consulting, were seized yesterday. The NPA reported that assets and cash totalling R300 million had been frozen. Sodi, along with ousted Mangaung mayor Sarah Mlamleli, the head of the Free State human settlements department Nthimotse Mokhesi and others face more than 60 charges tied to a tainted multimillion-rand asbestos audit contract, which envisioned an audit of 36 000 low cost homes in the province.
Meanwhile, the Hawks have dismissed rumours of an imminent arrest of ANC secretary-general Ace Magashule. Magashule has been on the radar of law enforcement over his links to corrupt deals in the Free State.
Oil surges after Trump leaves hospital
Stock markets rallied overnight after US President Donald Trump was released from hospital, and amid signs that US politicians are moving closer to a new stimulus package. Oil prices surged 6% – also due to a strike at oil and gas fields in Norway. The rand was last at R16.55/$.
Cosatu plans national strike tomorrow
Cosatu is urging workers to take part in a national “stayaway strike” tomorrow in protest against corruption, retrenchments and unemployment, gender-based violence and attacks on collective bargaining. Due to the Covid-19 pandemic, workers have been asked to stay at home, rather than congregate in the streets.
PPE suppliers at tribunal
A special tribunal will today hear arguments about whether the bank accounts of 40 Gauteng-based contractors who benefited from PPE contracts should remain frozen. Earlier, it granted an urgent application by the SIU to freeze R38.7 million held in the contractors’ bank accounts. The companies are linked to a Gauteng health department PPE tender that was allegedly irregularly obtained.
Multichoice rockets 9% after Canal+ takes stake
The French media company Groupe Canal+ now holds 6.5% of Multichoice, the company announced on Monday. The share price of Multichoice, which owns DStv, rocketed by 9% in response.
Multichoice’s share price. Source: Sharenet
Canal+ is owned by Vivendi, which is also the owner of one of the biggest record labels in the world, Universal Music Group, as well as the advertising giant Havas.
“As a publicly held company, MultiChoice regularly engages with its strategic partners and maintains an open dialogue with the investment community. The Groups policy is not to comment on its individual shareholders nor on its interactions with them. The Company remains committed to acting in the best interests of all shareholders and to create sustainable long-term shareholder value,” Multichoice said in a statement.
Fuel price cuts from Wednesday
From Wednesday morning, 93 petrol will be 23 c/l lower, while 95 petrol will decrease by 32c/l. Diesel will be lowered with some 90c. This is thanks to a stronger rand last month, and a falling oil price. The Brent crude oil price fell from an average of $44.78 per barrel in August to $40.82 in September, while the average rand level was R17.28 in August, and R16.72 in September.
On Monday, oil prices rebounded as US president Donald Trump’s doctors suggested that he could be discharged from hospital today. Trump’s illness triggered uncertainty in the market. Brent crude oil was back above $40 a barrel. The rand was trading firmer at R16.44/$.
NUM to strike at De Beers, Exxaro
Members of the National Union of Mineworkers (NUM) are set to down tools at De Beers, Exxaro and Petra Diamonds after they failed to reach a wage settlement at the Commission for Conciliation, Mediation and Arbitration (CCMA).
The planned strike at the three companies had been given the go-ahead by the CCMA, with the union saying it was now finalising logistics.
The NUM wants an 8% increase at De Beers, while the company is offering 1.5%. Exxaro Coal is offering 5, against the union’s 7.5% demand.
SAA, Mango strike agreement with technical services
After threatening to stop supplying services to SAA and Mango, South African Airways Technical reached an agreement with the airlines, who have agreed to pay in advance for maintenance work on their aircrafts. Both SAAT and Mango are subsidiaries of SAA, which is in business rescue and still awaiting a R10.5 billion bailout from government.
SAAT employees were paid only 25% of their salaries in September.
Gautrain workers start strike
Fin24 reports that Gautrain services will continue on Monday, even as workers go on an indefinite strike over a pay hike. The National Union of Metal Workers of South Africa (Numsa), is demanding an 8% increase for its members at Gautrain and has rejected the 4% offer on the table. Gautrain says it is implementing a “contingency plan”, which includes additional security.
Gold rallies, oil slumps after Trump diagnosis
Global equity markets and oil plunged on Friday, while gold spiked after US president Donald Trump said he and his wife had tested positive for coronavirus.
The Brent oil price was down 3% to below $40 a barrel, while gold jumped 3% to $1,909/oz.
Sasol in deal to sell half of Lake Charles
Sasol plans to sell a 50% stake in US base chemicals business, including its beleaguered Lake Charles project, to Dutch chemicals multinational LyondellBasell in a deal worth $2 billion. The proceeds will be used to lower Sasol’s debt burden of $10 billion.
Lake Charles has been hit by huge cost overruns – it cost double the budgeted amount – and other technical problems.
The unit will become a joint venture between the South African company and LyondellBasell, Sasol said in a statement Friday. The deal is expected to be completed this year.
Sasol announces sale of 50% of lake Charles in USA for $2bn. Total cost was around $12bn. So around $8bn lost on lake Charles. Still say might be right offer next year but no immediate urgency. Could happen if share price goes up
— Wayne McCurrie (@WayneMcCurrie) October 2, 2020
The article has been updated to reflect that Sasol is selling a stake in its base chemicals business in the US.
Two women take CEO, CFO positions at Spur
Val Nichas has been appointed as the new CEO of the Spur Corporation, which also owns Panarottis, John Dory’s, RocoMamas and Hussar Grill. Nichas was formerly the managing executive for quick service restaurants at Famous Brands, which owns Steers, Debonairs Pizza, Wimpy, Mugg & Bean, Fishaways and Milky Lane.
Spur also announced that its CFO, Phillip Matthee, has requested to stand down from his current position for personal reasons. He will take a senior operational role within the group’s finance department.
Cristina Teixeira, previously CFO of Group 5 and the Consolidated Infrastructure Group, will take his place.
Christo Wiese resigns as Shoprite chair after 41 years
Christo Wiese will retire as a chairman of Shoprite next month. Wiese has been Shoprite’s chairperson since 1979, and will be followed up by the chairperson of Absa, Wendy Lucas-Bull. Last year, shareholders holding 61% of the shares in the company voted against his re-appointment as chairman.
Wiese was once South Africa’s richest man, Bloomberg reported. But much of his wealth was lost after he exchanged Pepkor for shares in Steinhoff. He was its biggest shareholder at the time 90% of its share value was wiped out, and is currently suing Steinhoff for R59 billion.
Rand at the best level in a week
The rand reached R16.67/$ this morning – its best level in a week. The currency has recovered from a low point of R17.23 a couple of days ago. Risk appetite improved overnight amid renewed hopes for a stimulus deal in the US, and positive US jobs data.
Also, South Africa’s trade surplus increased in August, with the country exporting R38.9 billion more than it imported. Exports were up almost 9% than a year ago.
Dollar/rand exchange rate. Source: XE
Big day for spectrum
Icasa is expected to publish an invitation for telecommunication companies to apply for spectrum today. Mobile operators have long blamed the lack of spectrum for SA’s high data prices.
In July 2016, Icasa invited applicants for spectrum licences, but the courts halted the process. Government argued that its policy regarding spectrum had not yet been finalised and that the sale risked only benefitting big companies with access to capital.
Capitec rallies after results
Capitec’s share price gained another half a percent early on Thursday, after a rally of more than 5% yesterday. Its share price climbed above R1,000 after it released its results.
Capitec’s headline profit fell by 78% to R650 million in the six months to end-August.
The group impaired R5.8 billion for bad debts, and rescheduled payments for R7.5 million in loans.
“Banking clients’ income was negatively impacted by the lockdown and decreased by 25% in April 2020 compared to March 2020. By August income had returned to March 2020 levels,” Capitec said.
Its share price is still down 30% from its highest level over the past year, but has doubled from recent lows.
Capitec’s share price. Source: Google
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