Weekly roundup of what's happening on the JSE in South Africa hosted by Simon Brown. Focusing on stocks outside the Top40 index it includes; company results, updates, market moves, week ahead, trading tips/products and book reviews. Published Thursday every week.
Simon Shares Remgro (JSE code: REM) plans to unbundle its stake in Grindrod (JSE code: GND). There were ideas that maybe Remgro would take out Grindrod, but the unbundling is going in a different direction and Remgro unbundles shares they don't want. Remember also that after the unbundling expect weakness in the Grindrod share price for a few weeks. They've held them since 2011 and hold a 24.81% stake For every 100 Remgro you'll receive 30.70841 Grindrod shares. Last day to trade (LDT) is 11 October 2022. You'll receive them with a base cost that Remgro paid, that value is still to be determined. Barloworld (JSE code: BAW) trading update is not bad. The big news is that they plan to list Avis by year-end. Tiger Brands (JSE code: TBS) trading update was solid off a low base. The chart looks bullish as it rose +10% on Monday after the update. Chart looking decent and a potential delisting target? The UK is an absolute mess. Here the UK 5, 10 & 30 year bonds for September .(with correct carts) . Just September pic.twitter.com/hMj5yP65bC — Simon Brown (@SimonPB) September 28, 2022 Rampant Dollar The US$ Index (code: DXY) is at twenty-year highs and within a few percent taking out the highs from the early 2000s and heading back to levels last seen in the mid-1980s. The reasons are simple and two-fold; The world is scared and fear sees investors rushing to the safety of the US$. Rising rates in the US now see the US ten-year treasury bills trading around 4%, the highest level in over a decade. So investors can flee to the US$ and buy 10-year bills for a ±4% return. Importantly this is hitting every currency in the world. Has earnings implications for US companies selling products offshore as those profits are now lower due to US strength. When does the strength stop? In the short-term a pullback is likely. But as long as fears remain the strength will continue and could continue well into next year. What to do? Don't panic. Consider some JSE listed currency ETFs. Continue with your offshoring strategy. The tables have turned. Emerging markets are much more resilient against the US Dollar than the rest of the G10. Year-to-date, the Dollar has risen a stunning 15% against the G10 (black), but only 5% against emerging markets (blue). EM is the new standard bearer for stability... pic.twitter.com/ToaQvQB9DS — Robin Brooks (@RobinBrooksIIF) September 27, 2022
hh Simon Shares FedEx (NYSE code: FDX) spooks the market by withdrawing guidance and saying demand is collapsing. Thungela Resources (JSE code TGA) went ex-dividend to 6000c. Wilson Bayly (JSE code: WBO) is letting their Australian operations go bust, not giving any more financial assistance. Has inflation peaked? Local inflation down at 7.6% for August from 7.8%. US August inflation at 8.3% from 8.5%. UK August 9.9% from 10.1%. EU 10.1% up from 9.8%. Europe and UK still have a winter of energy crisis to contend with. US and local looks to have topped, but energy/petrol still needs watching. Food inflation remains high and remains a risk. A recession will dampen demand and help inflation lower. Transport costs are down. BUT, what of interest rates? The problem is getting back to target. Locally 3%-6% US 2% Rate increases still coming, likely into the new year before pausing. Then the long wait for inflation to get to target (or near) before rates start coming down. In the US this is at best 2024 but probably 2025. Locally rates may start moving lower in early 2024.
Simon Shares Trading Trading in the Zone – Mark Douglas (detailed review) Trend Following – Michael Covel (detailed review) Reminiscences of a Stock Operator – Edwin Lefevre Market Wizards - Jack Schwager The Complete Turtle Trader: How 23 Novice Investors Became Overnight Millionaires - Michael Covel Investing The Little Book of Common Sense Investing - John C. Bogle One up on Wall Street – Peter Lynch (detailed review) Common Stocks and Uncommon Profits – Phil Fisher (detailed review) Effective Investor – Franco Busetti The Little Book that Beats the Market - Joel Greenblatt General Thinking, Fast and Slow - Daniel Kahneman Fooled by Randomness - Nassim Taleb
Simon Shares Anthony Clark on small caps Purity baby powder products were recalled by TigerBrands (JSE code: TBS) due to traces of asbestos. PSG (JSE code: PSG) unbundling effective at close on Tuesday. Holders at the close will receive 3.87 PSG Konsult (JSE code: KST) 1.82 Curro (JSE code: COH) 0.12 Kaap Agri (JSE code: KAL) 1.04 CA Sales (JSE code: CAA) 1.02 Stadio (JSE code: SDO) The bear and bull case for investing in Shoprite Shoprite* (JSE code: SHP) results saw the stock down 7.5%. Let's dig into what the market maybe didn't like. Only 10% earnings growth? With one week less and the 2021 riots in the numbers, decent albeit not knock the lights out. Only 600c dividend for the full year? Very much in line with the average. Expensive on PE of over 20x? Always is, but mid-range is about 15% lower. So yes, maybe a little more than usual? Opening 275 new stores? Cost and are they cannibalising their other stores? RSA operating margin 6.8%? The top end of the long-term range, worries that it may move lower? But Shoprite remains one of the best food retailers globally and a core holding in my portfolio. I have bids in the market at around R170 which would put it on a PE closer to the mid-range from the last decade. Sixty60 grew 150% and remains the absolute market leader in the grocery delivery space. Checkers Xtra Savings has 24.7m members and it turning into a bank account. * I hold ungeared positions. Sold my Murray & Roberts (JSE code: MUR) Murray & Roberts weekly chart Not a lekker chart, I've held for a while, but am now out #JSE pic.twitter.com/BKKP4HOLhr — Simon Brown (@SimonPB) September 4, 2022
Simon Shares Save R500k with a deposit. ETF closing prices are an absolute mess. Cashbuild (JSE code: CSB) results see them coming back to earth after a pandemic boost. Education stocks all published results. ADvTECH* (JSE code: ADH) is my pick, but all showing student growth and cash generation. Shoprite* (JSE code: SHP) gets permission to turn their money market account into a bank account. Grindrod (JSE code: GND) currently runs the service for Shoprite and African Bank is buying Grindrod Bank. Walmart (NYSE code: WMT) is set to make an offer to the Massmart (JSE code: MSM) minorities for the remaining 47% at 6800c. Netflix (Nasdaq code: NFLX) plans to price its ad-supported plan at $7-to-$9 per month with about 4 minutes of adverts per hour. Purple Group* (JSE code: PPE) back at 203c, always be very careful of casing a news story (the Asia deal announced last week with very few details). Tsogo Sun Hotels (JSE code: TGO) changes its name on 7 September. They will become Southern Sun Limited (JSE code: SSU). UK inflation, Goldman Sachs now saying 22% is possible next year. Sun International* (JSE code: SUI) strong results. Consumers under pressure shouldn't hurt too much as they mostly target higher LSMs and they paid the first dividend (88c) since 2016. Currently, ±3200c is resistance. Greylisting Financial Action Task Force (FATF) Cracking down on money laundering and funding terrorism. Greylisting can reduce a country's capital flows by as much as 7.6%, according to an IMF working paper. Cabinet has approved a raft of new amendment bills but leaving it late, very late. Our deadline is September/October after being put on the watch list last year. The important questions; Will we get greylisted? What happens if we do? If greylisted, how do we get off the list? * I hold ungeared positions.
Simon Shares Nasdaq (650 points), S&P500 (80 points) & Euro Stoxx50 (22 points) trades all closed. FTSE100 still going currently +100 points. Old Mutual BEE deal, will go into details, but it only closes in late October so no rush. Spur (JSE code: SUR) looking very good. PE ±15x and DY ±5% From the Spur earnings call "And we know that only 18% of the South African adult population represents 80% of economically viable consumer segment." Revenue at record with space to get margins back to pre-pandemic levels. Net income margin was ±5%, historically over 20%. [caption id="attachment_36416" align="aligncenter" width="849"] Spur; revenue, net income, NI margin[/caption]Afrimat (JSE code: AFT) Gravenhage manganese mine deal failing due to the Water Use License being materially different. They raised ±R650million last month. Purple Group* (JSE code: PPE) does a deal in Asia. Kap Industrials (JSE code: KAP) good results and great insights into other industries. Citi now says UK inflation to hit 18% early next year (last week they said 15%). Sasol (JSE code: SOL) pays a dividend, 1470c. Sasol: To answer a separate Q: The EBIT profit split is: •Energy: 58% •Chemicals: 42% (Despite the high chemicals contribution, it is amazing to see how closely Sasol's profit still conforms to the old back-of-a-matchbox calc of 5% of the Rand oil price.) — Karin Richards (@Richards_Karin) August 23, 2022 * I hold ungeared positions.
Simon Shares BHP Group* (JSE code: BHG) results, have we peaked? Absa (JSE code: ABG) results, but maybe the ore important point of the results is their expectation that prime will hit 11% early in 2023. Chip shortage seems to be easing. Nasdaq is in a bull market, +20% off mid-June lows. Brent oil falling. Current petrol price reduction is 260c for September. UK inflation is 10.1% for July. Charles Savage tells us his fav ETFs Rochelle Writes, pay down debt or save more with high rates. Thungela resources (JSE code: TGA) still a buy? R60 dividend, 40% forward DY HEPS 6723c, forward PE 2.5x Mis-priced at listing, unbundling often cause this to happen. Ukraine's war gave it new legs. Risks Coal price Rand strength Ukraine war Transnet * I hold ungeared positions.
Simon Shares Renergen* (JSE code: REN) the Central Energy Fund has successfully completed their due diligence on the R1billion, final approval is still required. Mpact (JSE code: MPT) results. US jobs data and unemployment continue to belie the recession talk. US inflation for July was 8.5%, a good number. A gallon of gas has fallen below $4 in the U.S. for the first time since March. Credit Suisse has lowered its 2023 UK GDP forecast to -0.6% from 0.5%; expects the UK to enter a recession from Q4 2022 until Q3 2023. Elon Musk sold $6.9-billion (R14.5-billion) of his shares in Tesla (Nasdaq code: TSLA) – his largest sale yet – saying he may need the cash if he has to buy Twitter (NYSE code: TWTR). Embrace the risk Investing is about risk Without risk, there is no reward Without risk, you are saving But the risk needs to be reasonable and the returns realistic * I hold ungeared positions.
Simon Shares Massmart (JSE code: MSM) update, retail margins are being squeezed, the exception is clothing retail. Thungela Resources (JSE code: TGA) very strong trading update. JSE (JSE code: JSE) results, strong. Nancy Pelosi lands in Taiwan and markets don't really care and China will complain - but this is not leading to war. Uber (NYSE code: UBER) finally hits cash flow positive. OPEC+ 100,000 b/d output hike, expectations (hopes?) were for 4-5x that and the second smallest increase since 1986. Earn 11% with Retail Savings Bonds What's the only thing we control in markets The price we pay Everything else is beyond our control So use your one power carefully
Simon Shares New energy rules for South Africa. Who wins? Silverleaf Investments on Easy Equities. Know what you're buying. Food retailer updates, Shoprite* (JSE code: SHP) winning. Pick n Pay (JSE code: PIK) bounding back and Woolies* (JSE code: WHL) struggling. Cashbuild (JSE code: CSB) and Mr Price (JSE code: MRP) updates show consumers under pressure IMF upgrades SA GDP growth for 2022 to 2.3% up from 1.9% they expected in April. Results from Kumba Iron Ore (JSE code: KIO) and Anglo Platinum (JSE code: AMS) US data Wednesday and Thursday. Omnia (JSE code: OMN) was ex-div 800c on Wednesday and is now back in the longer-term channel. If you've been waiting to buy, now's your chance. * I hold ungeared positions.
Simon Shares Local June inflation, 7.4%, MPC tomorrow. BHP Group* (JSE code: BHG) update, they are worried. ArcelorMittal South Africa (JSE code: ACL) trading update says global growth and recessions fears "present challenges for the outlook of commodities and steel demand in the next 12 to 18 months.". China's holdings of U.S. debt fell below $1 trillion for the first time since 2010 Alviva (JSE code: AVV) delisting at 2500c. Brent oil trade keeps on trucking, buy below $100 exit $113. Brent oil Nasdaq, triggered a buy, waiting for confirmation which is a close above 12,250 while 7 EMA remains above 21 EMA. Building resilient portfolios for tough markets Lithium & Battery Tech ETF Stats and data on 95 years of bear markets. How much longer? How much lower? * I hold ungeared positions.
Simon Shares US June inflation 9.1%, and core inflation was also up a 5.7%! Still stage 4. Rand continues to weaken. Back backs between 4 July 2022 & 8 July 2022 Naspers JSE code: NPN) bought 659,095 shares at an average price of R2 648.3315/share for R1.745 billion (US$104.73 million). Prosus (JSE code: PRX) bought 6,240,339 PRX shares at an average price of €67.1361/share for €418.95 million (US$428.59 million). SARB now considers cryptocurrencies as a financial asset and will create regulations around them. This means cryptocurrencies can be listed on SA exchange platforms but the process will take 12-18 months. Dividends, love them but be careful. But we also need to remember a few important things about dividends. They can disappear as we saw in 2020. Even the most stable dividend payer can stop paying. REITs which have to pay them by law being a REIT structure) stopped paying because payment would see them fail their solvency tests. They are backwards-looking. A high dividend yield is certainly attractive, but is it because the price has been falling? Could this be a warning of a dividend cut? Cyclical stocks (think commodity stocks) pay massive dividends sometimes, then nothing for years. Boards can change the cover ratio. This is the percentage of HEPS they pay as dividends. In tough times they can cut them. As the company matures they pay more. Progressive dividends are the worst. The idea is that every year the dividend goes up a set percentage regardless of profits. A few local stocks have tried the idea, all have abandoned the idea. Cash dividend vs. script dividend. I'll usually take the script. Reg28, proposed a two-pot system Sam Beckbessinger: My fav ETFs
Simon Shares Still stage 6. Rand continues to weaken. Naspers (JSE code: NPN) and Prosus (JSE code: PRX) both are holding well after the hard run the previous Monday on results and buy-back news. Resources under pressure, all of them. Supply chains adjusting Just in time is now just in case Higher inventories Higher costs More localisation Upcoming events; 13 July ~ To short or not to short with Markets.com 14 July ~ JSE Power Hour: Building a resilient portfolio for tough markets
Simon Shares Episode #500. Huge thanks to all, I go into some background about the show. Where and how it started, lessons learnt and more. Stage 6, the Rand lost 30c. Sun International* (JSE code: SUI) update for five months to 31 May 2022 shows they are nearly back at pre-pandemic revenue and this while we still had some restrictions and fewer international travellers. Naspers (JSE code: NPN) / Prosus (JSE code: PRX) results. Tencent (Hong Kong code: 700) is 125% of profits. The other businesses are all loss-making and in tough markets. They plan to sell down Tencent and buy back Prosus shares, but the discount to NAV remains around 50%, even after a massive move on the announcement. Grindrod (JSE code: GND) good update and share has been flying. This remains a very cyclical business and right now the cycle is paying off. Invicta (JSE code: IVT) saw strong results albeit some accounting points improved them a bunch. JSE (JSE code: JSE) trading update is surprisingly strong with HEPS expected +24%-32% for six months ending June. * I hold ungeared positions.
Simon Shares Thungela (JSE code: TGA). Coal prices doing great, production is good but rail is the problem but HEPS is expected at 5800c. If we double for the full year we can expect ±R116 and a dividend of ±R100? Stor-Age* (JSE code: SSS) results are not exciting but steady. Omnia (JSE code: OMN) results were really strong, another special dividend and good future prospects. Orion Minerals (JSE code: ORN) raises money to get their Prieska up and running. Expected to take some 19 months. Amazon prime coming to South Africa next year. It will seriously challenge Takealot, owned by Naspers (JSE code: NPN)). City Lodge* (JSE code: CLH) trading update show them cash flow positive with occupancies back in profit. * I hold ungeared positions. Crypto in trouble Not an inflation hedge nor a store of value. Just another risk asset. The problem is as QE ends and rates rise, will it still see a strong inflow of money? I think not. It's not the end crypto, but new highs could be some way off.
Simon Shares US May inflation, 8.6%. Federal Reserve announced rates last night and surely it was 0.75% for the first time in 28 years? Either we have continued high inflation or a recession, maybe even both? Time for a Paul Volcker and do a 1% raise? It's ugly, Nasdaq and S&P500 both closed at lows for 2022 and are both are now in a bear market. S&P500 draw down at close 13Jun22 And failing a real test or liquidity and exchanges halt withdrawals.
Simon Shares Sygnia (JSE code: SYG) results and a forward dividend of maybe as high as 10%. Local GDP at 1.9% for Q1 2022. The economy has now recovered to its pre-pandemic levels. Consumer cracking? I interviewed Evan Walker 36One Asset Management. Inverse ETFs that go up as the market falls. * I hold ungeared positions. Upcoming events; [events_list limit="3"] ddd Are Robinhood's troubles Purple concerns? [caption id="attachment_34522" align="aligncenter" width="761"] Robinhood since listing vs. Purple Group[/caption] Robindhood Purple Group (Nasdaq code: HOOD) Purple Group* (JSE code: PPE); Listed July 2021 at $38, hit $85 and now under $10 (-75%) July 2021 145c, high since 350c and now 260c (+81%). Makes most of their revenue from selling the deal flow and Gold accounts. Revenue is from transactions. The majority of transactions are in options or crypto. The majority of transactions are in equity, but crypto, EC10, is growing. Needed a quick $billion to settle meme stock trades. The balance sheet is fine. Huge repetitional damage when they halted trade in some meme stocks. Value traded by clients has been falling since Q1 2021. Value traded by clients fell in the last set of results. Not yet profitable. Profitable, PE ±50x. Users declined in 2022. Users grew in last results to +1million active accounts. Market cap per user = $478 (ZAR7,400) Market cap per user = ZAR3,263 Revenue per user (2021) = $80 (ZAR1,250) Revenue per user = R109
Simon Shares The good news is the US had a green week last week, for the first time in 8 weeks Goldfields (JSE code: GFI) is down on news it paying a chunky 33.8% premium to acquire Canadian Yamana Gold in an all-share deal We finally got the petrol price increase and the 150c fuel levy reduction remains in force, for now. German inflation hits 7.9% for May. Highest since the 1950s. EU inflation for May 8.1%, the highest ever. EU agrees on a partial ban on Russian oil imports Monthly dividends in a JSE equity portfolio Offshore ETFs paying monthly dividends Demand destruction in commodities There comes a point at which a commodities price is simply too high and the price itself reduces demand. Depending on the commodity high prices often need to be high for protracted periods of time.
Simon Shares Results are pouring in, food producers are struggling. Coronation (JSE code: CML) results with DY of over 10% and PE ±9X. Snap Inc (NYSE code: SNAP) profit warning. It now trades at half its listing price. Current under recovery in petrol price is 236c, + the 150c fuel levy suspension means we could see a 386c increase in June to over R25 a litre! What's your fav ETF? We ask our readers, Rochelle is first up and likes an offshore ETF with a monthly dividend payment of almost 1%. Hello Eskom, best budget power banks. Slightly better than average is enough Investors and traders love big winners. That 10 bagger that happens in a matter of months or maybe a few years. But by consistently hunting for those big winners we're taking larger risks. We're better off aiming for the modest winners. Beating your benchmark by 2% a year sees you with almost 50% more after twenty years. A recent Planet Money Podcast, Investing in mediocrity, talks about a fund manager who only ever aimed to be in the top third of all funds. After a decade of succeeding at that, they were the top fund over ten years.
Simon Shares 10X Investments buying CoreShares. MPC, 0.5% expected. Balwin (JSE code: BWN) results vs. Calgro M3 (JSE code: CGR). Pick n Pay (JSE code: PIK) results vs. Shoprite* (JSE code: SHP). * I hold ungeared positions.
Simon Shares US April CPI 8.3%; Core CPI 6.2% (month-on-month core was +0.6%) FOMC Sibanye-Stillwater* (JSE code: SSW) update the market hated. Kaap Agri (JSE code: KAL) results Wandile Sihlobo on agri in SA. New Satrix global healthcare ETF. Thungela Resources (JSE code: TGA) could pay an R100 dividend this year, putting them on a +40% DY. US Tech selloff continues 1-year FAANG returns ° Meta ° Apple ° Amazon ° Netflix ° Alphabet pic.twitter.com/VybsCoWDfh — Simon Brown (@SimonPB) May 9, 2022 * I hold ungeared positions.
Simon Shares Combined Motor Holdings* (JSE code: CMH) results, Best ever. Renergen* (JSE code: REN) cold commissioning of phase 1 going well. New global healthcare ETF coming from Satrix. Currently in IPO and listing 26 May. EU unveils a proposal to ban Russian oil imports within 6 months, all refined oil products by the end of the year. OPEC+ Sees Production From Non-Opec Participants in OPEC+ at 18.2 mln Bpd in May, 600,000 Bpd Lower Than Last Forecast Lyft (Nasdaq code: LYFT) shares fall 26% on disappointing forecast (earnings 75% below expectations) as they say they'll pay drivers more. Intel says chip storage till 2024 at least. Stagflation "Stagflation is most commonly referred to as the simultaneous experience of three separate negative economic phenomena: rising inflation, rising unemployment, and the declining demand for goods and services." The best defence is generally commodities. * I hold ungeared positions.
Simon Shares US inflation 8.5%, UK 7.0% Capitec* (JSE code: CPI) results and a special dividend. Dave Segall asking about "Looming food and fertiliser shortages" and impact on local agriculture stocks. Purple Group* (JSE code: PPE) trading update (here are my previous expectations). * I hold ungeared positions.
Simon Shares I have closed my Nasdaq long position. Still long FTSE100. Purple Group* (JSE code: PPE) trading update. Looks a little better than I expected. MTN (JSE code: MTN) more Nigerian woes. Reports that Woolies* (JSE code: WHL) may be selling David Jones. Elon Musk buys 9.2% of Twitter (NYSE code: TWTR). Moodys upgrades sovereign and banks from negative to stable. Deutsche Bank says: US recession in 2023 and stocks to fall 20% by summer 2023 * I hold ungeared positions. The Rouble is almost back at pre-war levels against the US$. 20% interest rates, capital controls, no foreign selling on the Moscow Exchange, selling oil & gas in Roubles (maybe), reports of paying interest on debt with Roubles and of course traders in for a buck.
Simon Shares Just One Lap is 11 years old :) FOMC, as expected. Local MPC tomorrow. Nasdaq, time to buy? Also FTSE100. Both a technical buy, not taking a view on the fundamentals. Brent almost back at US$120. China opened up already, well Foxcon at least. Tencent results, flat-lining. The end of an era! So says Tencent as revenue grows in single digits, the lowest quarterly number since listing back in 2004. Tencent's declaration is resignation that any expansion will be cautious and controlled. Prosus down 8.2%, Naspers down 8.4%. Prices still look vulnerable — David Shapiro (@davidshapiro61) March 23, 2022 Thungela Resources (JSE code: TGA) results and 1800c dividend. "developments in terms of new thermal coal projects which have been hampered by financing opportunities, given ESG pressures on carbon fuels" * I hold ungeared positions.
Simon Shares Big banks now all have released results, mostly good albeit off low base. Covid cases in China surge, new lockdowns. Hello, more supply chain mess. People asking if I updated my view on Purple Group* (JSE code: PPE). Nope, volatility likely helping the revenue, but I need new data (results) first. Commodities weak, brent oil now in a technical bear market. China makes peace with tech Prosus (JSE code: PRX) and Naspers (JSE code: NPN) now flying (+20% n Wednesday). Discount still +50%. Reports of WeChat being hit with a massive fine for money laundering?money laundering China's state council has in one move just: *Pledged to keep capital markets stable *Vowed to support overseas stock listings *Said dialogue with US re ADRs is 'good' *Promised to handle risks for property developers *Clarified regulation of Big Tech will end 'soon' *BOOM pic.twitter.com/xHYgcbchCo — Sofia Horta e Costa (@SofiaHCBBG) March 16, 2022 * I hold ungeared positions.
Simon Shares Shoprite* (JSE code: SHP) results, it's all about innovation. Strong un International* (JSE code: SUI) update. War in Europe, commodities still the story. Very volatile, that's expected. But I expect more upside and I am happy to hold. Upcoming events; 17 March ~ JSE Power Hour: Geopolitics, inflation and markets Prosus (JSE code PRX) / Naspers (JSE code: NPN) / Tencent (Hong Kong code: 700) Tencent has been under pressure Naspers and Prosus have been hit even harder Live Prosus discount to net asset value (NAV) is now some 55% after hitting 60%. VK (old mail.ru) has been written down to zero. Generally unlisted is worth a lot less than stated? Buy / Sell / Hold? VIE structure China has not taken sides in the war, so far Tax on profits if they sell Tencent More Chinese crackdowns? Prosus has been wasting money from the sale of 2% stake in Tencent? Buying back shares Buying Delivery Hero (Frankfurt code: DHER) * I hold ungeared positions.
Simon Shares City Lodge* (JSE code: CLH) results, fair valuation around 800c? BHP Group* (JSE code: BHG) will see a significant reduction in its weighting in Top40 and Resi10 indices. PSG (JSE code: PSG) exiting the JSE. Wilson Bayly Holmes (JSE code: WBO) has lost investor confidence. Murray & Roberts* (JSE code: MUR) results. HEPS at 29c a little light, but back in profit. War in Europe Inflation is the biggest economic issue. Energy, PGMs and agriculture. Will central banks stick to their rate rising trend? People want to buy the Russian ETF, why? Even if peace happens today, sanctions will be in place for some time to come. Buy Satrix Resi10 ETF* (JSE code: STXRES). The Oil ETN (JSE code: SBOIL). Local stocks impacted Barloworld (JSE code: BAW) about 20% of revenue. Mondi (JSE code: MND) about 12% of revenue. * I hold ungeared positions. Upcoming events; 07 March ~ JSE Power Hour: Geopolitics, inflation and markets
Wednesday was budget day and our tax experts, AJM Tax, hosted a live panel discussion covering the budget; highlights and low lights. We've included the recording for this week's episode. The panellists were; Divan Botha – moderator Dr Albertus Marais ~ Director at AJM Tax Laila Razack ~ CFO of Equites Property Fund Simon Brown ~ Founder Just One Lap and host MoneywebNOW
Simon Shares Strong Nedbank (JSE code NED) trading update. If you held Steinhoff (JSE code: SNH) when it all went wrong in 2017 you have until 15 May to submit a claim. Oceana (JSE code: OCE), now the CEO quits? * I hold ungeared positions. Upcoming events; 22 April ~ Introducing the CoreShares Total World ETF 06 March ~ JSE Power Hour: Finding income in JSE listings What's down with Purple Group* (JSE code: PPE), owners of EasyEquities? After a high of 349c a month ago it's now 261c. Firstly it's more sellers than buyers. The hype of the pandemic trading is fading and easy returns are fading. So less trading, slower new accounts (albeit reports that they still have great new account rates). Vacation is wild. For the year ending August 2021 737k active accounts (up 45.7%). Each account makes R69 profit. But as accounts age profits per account increase. What can we expect to see for the year ending August 2022? (NOTE, the interim results to end February will be out early April). 1million accounts? That's 263k new accounts and growth of 35%. Profit per account R76 (10% growth, older account more profitable BUT less market volatility means less transactions). = R76million profit (I ignore GT247 and Emperor Asset Management) With 1.2billion shares in issue that's HEPS of 6.3c = forward PE of ±40x That seems fair, but there are risks. The assumptions above could be wrong GT247 could lose money New projects cost money Dilution with new share issues I am only using EasyEquities, ignoring other business units. There are of course potential upside surprises as well The assumptions above could be wrong Growth is better GT247 makes money and EasyProperties kicks in strongly I sold 35% of my holding at 315c-345c on the way up, this was because it simply became too large within my portfolio (was the biggest holding after buying at 50c less than 2 years ago). But I am happy to continue holding.
Simon Shares Great Sappi (JSE code: SAP) results. Strong Hudaco (JSE code: HDC) results. Top40 is trading at all-time highs, as is Resi10 and MidCap is almost there. Kastle back to work barometer shows office attendance in the US is still not back to levels from before the most recent pandemic wave and around 33% (on average) of pre-pandemic levels. Back in November, the average was just over 38%. IPO process explained. Ashburton ETFs have moved over to FNB. Meta Platforms (Nasdaq code: FB); Facebook, Instagram and WhatsApp Down 25% on the day of the results. Fell further and now off 43% from September 2021 highs and back at May 2020 levels. Market cap below US$600billion, that happens to be the number House legislators picked as the threshold for a “covered platform” in a package of competition bills aimed at Big Tech. Active users declined $10billion lost revenue due to new iOS privacy rules $10billion on metaverse. Regulatory issues. Meta threatens to shut down Facebook and Instagram in Europe over proposed regulations. The EU says, 'please do'. All said this is just one quarter, the next few quarters will tell us the true story. Upcoming events; 17 February ~ JSE Power Hour: Tax-free investing
Simon Shares PGMs are on the move, most notably palladium and rhodium. But the miners are not. Combined Motor Holdings* (JSE code: CMH) strong trading update. MTN (JSE code: MTN) vs. Vodacom (JSE code: VOD) updates. Who's winning? Strong Astral (JSE code: ARL) update, but for the half ending March - so off low base. Ascendis (JSE code: ASC) looking to sell three businesses, but that won't leave much behind. OPEC+ agrees to a 400k barrel/day increase from March, this was the initial plan from last year. The local CPI basket is changing. Satrix is listing an India ETF, currently in IPO. The local prime interest rate increased 0.25% last week. This adds R152 per R1million of a bond. Not a lot, but this is the second one already and we have many more coming. The ARK Innovation ETF (NYSE code: ARKK) has had a tough year and at a point, in January, it was behind the Nasdaq over the life of the fund and it is trailing the Nasdaq over one and three years. That all said, they publish all their research and released their Big Ideas 2022 report which is well worth the read. * I hold ungeared positions. Upcoming events; 9 February ~ Wealth Creation through Trading and Investing with ThinkMarkets 17 February ~ JSE Power Hour: Tax-free investing
Simon Shares PGMs are on the move, most notably palladium and rhodium. Oil also still moving, remember the ETN for that. Cashbuild (JSE code: CSB) update shows the pandemic home improvement boom is over. ArcelorMittal South Africa (JSE code: ACL) update sees them into profit and on a PE of under 2x. Steinhoff (JSE code: SNH) settlement approved, but still lots of debt. Markets are spooked Lots to be spooked by; FOMC, it's all happening in March Asset purchases are also to end in March, but what of the US$9trillion of bonds the Fed holds? Valuations are high. Rates are rising. Inflation is at decade highs. Value winning over growth for the first time in an age. Upcoming events; 09 February ~ Wealth Creation through Trading and Investing with ThinkMarkets
Simon Shares BHP Group* (JSE code: BHP) is unifying its dual-listed company (DLC) corporate structure effective close 28 January. This will count as a CGT event for shareholders who will have been deemed to have sold their shares and bought the new ones. Microsoft (Nasdaq code: MSFT) is buying Activision-Blizzard for $69 billion, but who's the largest gaming company in the world? Tencent (Hong Kong code: 700). German 10-year back above 0%. [caption id="attachment_31941" align="aligncenter" width="888"] German 10-year yield[/caption] Oil at 7-year highs. There's an ETN for that. * I hold ungeared positions.
Now for the tenth year in a row, we kick off the new year with a predictions show. Marc Ashton, Keith McLachlan and Simon Brown put their heads on the block with three wild and woolly predictions for the markets for 2022 followed by a call on the Top40 and ZAR for the year ahead. Importantly we start each show with a review of the previous year's predictions and you'll find the 2021 predictions show here.
Holiday show Back in 2010 the world watched as Greece plunged further and further into a debt crisis with many expecting the EU to not survive. But Angela Merkel saved Greece and the day. [caption id="attachment_31826" align="aligncenter" width="888"] Greek 10Y bond rates[/caption] Greek debt to GDP (%) source: tradingeconomics.com
Offshore / Strong year of returns globally, CAC40 (France) top index / US inflation, not transitory / US unemployment looking decent / China crackdown / Commodities mostly a soft year, the exception is oil / Supply chain chaos Local / Good year for local markets / Delisitng galore / GDP / Rand
Simon has a look back at the winners and losers from the JSE for 2021, year-to-date returns. There certainly are some losers, but mostly it is about winners as the Top40 did 21.5% so far and the top major global index was the Cac40 which returned 29.9%. Find the top ETFs here.
Offshore / US Labor Nov Nonfarm Payrolls +210K; Consensus +573K, unemployment improved to 4.2%. Fed's target for 'maximum employment' is for unemployment rate of 4.5%. / Didi leaving NYSE / Google will no longer require workers to return to the office on Jan. 10, delaying the return indefinitely. / Dorsey leaves Twitter / OPEC+ agrees to January production hikes Local / Implats comes for RBPlats / Capital Appreciation results / Tharisa results / Bidcorp updates / Murray & Roberts update
Simon Shares Bidcorp (JSE code: BID). Strong update, they're coming out of this pandemic much stronger. Aspen (JSE code: APN) announces manufacturing deal with Johnson & Johnson (NYSE code: JNJ). Implats (JSE code: IMP) wants RBPlats (JSE code: RBP), sorry Northam Platinum (JSE code NPH). Powell, Fed chair, says inflation is not transitory. Oil under severe pressure, OPEC+ meeting was pushed back to Wednesday. New variant, I bought City Lodge* (JSE code: CLH) and Sun International* (JSE code: SUI) on Friday. I did buy somme leisure on Friday, CLH at 400c and SUI at 2100c .. will see shortly if that was a good idea or not ..#JSE https://t.co/aHKZOIxLbu — Simon Brown (@SimonPB) November 29, 2021 * I hold ungeared positions.
Offshore / Powell second term as Fed chair / Fed's Bostic says he remains open to faster taper and one or two rate hikes in 2022 / Online Black Friday sales in the US fell according to data from Adobe Analytics ($8.9bn vs. $9bn) / Opec+ meeting this week, production likely to remain unchanged / Turkish lira losses 20% Local / New variant crashes markets and leisure stocks (everything) / Good Invicta results, but no dividend / Good PPC results / Brait apital raise via convertiable bond / Hospital stock results; Life Healthcare & Netcare / Banking stocks
Simon Shares Coronation* (JSE code: CML) grows assets, fees and dividends. PPC (JSE code: PPC) results look good. Purple Group* (JSE code: PPE) price action looking weak. PGMs fading again. Hospital group stocks; Life Healthcare JSE code: LHC) and Netcare (JSE code: NTC) both had fair results as they get better at managing the pandemic. Shoprite* (JSE code: SHP) launched their banking account, under pinned by Grindrod Bank (JSE code: GND) who also stand to benefit from the MTBPS last week whereby the minister said they'd allow independent traffic on the Transnet rail network by end of 2022. Turkish lira collapse. This is what happens when your central bank is not independent. Two stocks that made a real difference to my portfolio over the last two decades, Capitec* (JSE code: CPI) and Shoprite* (JSE code: SHP). * I hold ungeared positions. Twenty years of food retailers on the #JSE pic.twitter.com/BDKeOPU11t — Simon Brown (@SimonPB) November 23, 2021 Twenty years of local banks .. only really one bank in it as the other 4 battle along the bottom as Capitec does 46% CAGR over the two decades ..#JSE pic.twitter.com/yMx0NSDYrV — Simon Brown (@SimonPB) November 24, 2021
Simon Shares Iron ore below US$100. Kumba (JSE code: KIO) halved since July highs. And still falling. But Q3 sales were at US$180 / tonne and even at current lows likely they get US$150 / tonne for the second half. Mid-year cost per tonne was US$26 and sale price US$165 / tonne. So the share is pricing in horror stories which likely aren't true fr the full year ending December. BUT next year will be different and you don't try to catch falling knives, wait for a confirmed reversal. Woolies* (JSE code: WHL) trading update, really weak. Shoprite* (JSE code: SHP) trading update, really strong. Strong PPC (JSE code: PPC) update. Local inflation came in at 5%, the fourth month we're below US inflation and likely we'll see no change at MPC on Thursday. * I hold ungeared positions. [caption id="attachment_31691" align="aligncenter" width="888"] Top40 daily[/caption] Upcoming events; 18 November ~ JSE Power Hour: Opportunities in local and global property 25 November ~ The inflation threat, is it becoming structural? 02 December ~ JSE Power Hour: Position your portfolio for 2022 09 December ~ Portfolio construction with Keith McLachlan
Offshore / US inflation, 6.2%. Core inflation highest since 1991. / Johnson & Johnson announced plans to split its company into two, separating its consumer health division from its pharmaceutical and healthcare businesses. / Elon Musk selling Tesla shares, some planned n September. Rest thanks to the Twitter poll. / Singles day in China, muted (+8.5%) but still huge, Alibaba $84.5billion / Tencent results. Slowing in all areas. Common prosperity is visible in the results. Local / MTBPS, not much happening - as expected. / Vodacom buying Vodafone Egypt, nice deal and adds a strong growth region. / Purple Group results, really top class and much better than I expected. 737k funded accounts. / Sappi results, doing well as dissolving pulp prices boom. But energy costs hurting. / Raubex results strong with a really good pipeline and well positioned for infrastructure / Northam scopes Implats and buys 33% of RBPlats
Simon Shares Iron ore below US$100. Kumba (JSE code: KIO) halved since July highs. Tencent (Hong Kong code: 700) results. Northam (JSE code: NPH) buys stake in RBPlats (JSE code: RBP). Telkom (JSE code: TKG) results. Purple Group* (JSE code: PPE) results. [caption id="attachment_31661" align="aligncenter" width="888"] Purple Group daily chart[/caption] * I hold ungeared positions.
Offshore / US tapering begins / Strong US jobs data / US passes $1trillion infrastructure bill / Bank of England leaves rates unchanged / Strong Pfizer results / Elon Musk asks Twitter if he should sell 10% of his Tesla shares, and pay tax Local / Mini budget this week / Renergen reserves / Dis-Chem results / MTN update / Purple Group update / Petrol increase