News / Industry

Monday 13 -17 November 2017



In good news for Q3 economic growth‚ the retail sector did better than expected in September. Retail trade sales increased 5.4% in September from a year earlier‚ to R74.12bn‚ Statistics SA said on Wednesday. They were up 1.4% in the Q3 from the second. Retail trade sales have registered y/y gains for the past six months. Seasonally adjusted retail trade sales increased by 0.7% in September from August‚ following a m/m increase of 2.4% in August 2017 and a 0.7% fall in July.


Global consultancy firm McKinsey had set aside the R1bn Eskom had demanded it repay‚ and was keen to pay back the money‚ McKinsey global leader for the public and social sector practice David Fine said on Wednesday. Fine was giving evidence before the inquiry into state capture being held by Parliament's public enterprises committee. The money was paid for McKinsey's work on a turnaround plan‚ but the Treasury did not approve of the contract.


TransUnion consumer credit index on Tuesday continued to reflect marginally improving consumer credit health‚ despite the difficult economic environment. The index dropped marginally to 53.9 points in Q3 from 54.1 in Q2. The gradual rise in the index compared to 2016 reflected the benefits of cautious lending‚ deleveraging‚ a stronger currency and a global growth upswing since then.


BMI Research on Tuesday said it lowered its forecast for the renewable energy capacity it expects SA to have installed by 2026‚ to 8.5GW from 9.9GW‚ due to the government’s chaotic policies and inability to get Eskom to follow its orders. The latest Cabinet reshuffle has done little to reduce policy uncertainty in the country’s energy sector and we believe these factors will weigh on investor sentiment across the country’s power sector, said BMI. 



Naspers opened firmer on the JSE on Thursday after results from Chinese internet company Tencent‚ of which Naspers owns about a third‚ beat analyst expectations. Naspers was up 0.62% at R3‚680‚ bringing gains for the year so far to 82.7%. It rose 1.95% on Wednesday to a record R3‚739.83. Tencent was up 2.5% in Hong Kong trade on Thursday‚ after falling on Wednesday.


Woolworths would need strong Christmas sales for its interim turnover growth to outpace inflation‚ a trading update for the first 20 weeks of its financial year released on Thursday indicated. The retailer said its overall sales for the 20 weeks to November 12 grew 2.6%‚ with weak performance from its Australian unit David Jones dragging down strong growth from its South African food division.


Strong growth in Investec’s southern African specialist banking division offset declines in its UK specialist banking and South African asset management divisions. Investec’s interest income grew 18% to £1.23bn and its fee and commission income grew 12.4% to £754m in the six months to end-September from the matching period in 2016. After-tax profit grew nearly 20% to £238m. Investec raised its interim dividend by 5% to 10.5p.


Reinet said on Thursday that its NAV dropped EUR604m to EUR5.4bn in the six months to end-September‚ partly reflecting a drop in the value of its investment in BAT. The share price of BAT‚ which makes up two-thirds of Reinet’s asset value‚ decreased to £46.72 during September‚ from £53 in March. The weaker pound against the euro also knocked the value of Reinet’s investment in BAT.


Mediclinic International incurred a loss of £50m in the H1 to end-September‚ which the group blamed on the impairment charge on the equity investment in Spire Healthcare Group and other exceptional items. Mediclinic’s underlying earnings were down 11% to £84m‚ affected by the performance of the Hirslanden and Middle East operating divisions. Group revenue was up 10% to £1.40bn and underlying ebitda up 5% to £232m. The interim dividend was maintained at 3.3p.


Sappi’s share price rose 3% on Thursday‚ after the company upped its dividend for the year to end-September to 15 US cents from the prior period’s 11c. HEPS rose 10% to 64c during the period‚ despite overall flat volumes for the period in its core paper business. Ebitda increased 6% during the period to $785m. Higher paper pulp prices and the negative effects of a stronger rand weighed on performance‚ but this was offset by lower interest charges and reduced operational costs.


Lucky Star canned pilchards producer Oceana was forgoing a final dividend for its 2017 financial year‚ it said on Thursday. Oceana paid a R3.57 final dividend in 2016. Its investors received an interim dividend of 90c for the H1 of the 2017 financial year‚ down from R1.12 in the matching period in 2016. Revenue for the year to end-September declined 17% to R6.8bn‚ which Oceana blamed on a stronger rand.


Taste Holdings said on Thursday it planned to raise R398m in a rights issue fully underwritten by its shareholder‚ Riskowitz Value Fund. The rights offer is at 90c/share‚ a 20% premium to the 75c that Taste was trading at on Thursday morning. This indicates Riskowitz was willing to buy all the new shares.


Sales at fast-food restaurant franchiser Gold Brands tumbled by more than two-thirds in the six months to end-August. Gold Brands’ revenue fell to R27.6m from R100.6m in the matching period‚ and it fell into an after-tax loss of R2.7m from a profit of R3.5m. The company said it suffered from “losses experienced from store closures due to lease expiries”.


Gemgrow Properties said on Thursday it remained focused on its core portfolio even as it actively pursued yield enhancing acquisitions. In its maiden FY results‚ the company declared a dividend of 26.09c per A share and 19c per B share for the quarter ended September. COO Alon Kirkel said the company had to be very cautious and turned down various possible acquisitions in the reporting period.


Financial services group Peregrine on Thursday reported a 6% rise in its H1 headline earnings to R272m‚ boosted by its underlying businesses. Annuity earnings grew 20% to R163m in the six months to end-September‚ accounting for 79% of the aggregate earnings of the operating entities. Peregrine Capital’s asset base grew to R8.5bn from R8.1bn a year ago‚ mainly as a result investment performance.


Double-digit liquor sales growth outweighed lower grocery sales for Spar in the year to end-September. The group‚ which cut its interim dividend to R2.40 from R2.55 as it struggled to turn its Swiss acquisition profitable in the first half of its financial year‚ compensated for this by raising its final dividend to R4.35 from R4.10. Spar’s overall revenue grew 5.4% to R97bn. Pretax profit was up 1% to R2.5bn.


Impala Platinum‚ the majority owner of Zimplats‚ said on Wednesday its operations were unaffected by political developments in Zimbabwe‚ where the military had sent tanks and armoured vehicles into Harare and taken over key points. Implats owns 87% of Australia-listed Zimplats.


Even after writing the value of UK fashion chain New Look down to zero‚ investors think Brait is only worth about three-quarters of its book value. Brait’s closing price on Tuesday was R48.69‚ or 73% of its R66.62 NAV per share on September 30‚ the UK-focused investment holding company said in its interim results released on Wednesday. Brait reported the overall value of its portfolio fell by 31% to R40bn from R58bn following its decision to discount New Look from R18.7bn to zero.


Nampak shares had dropped 6% by mid-afternoon trade on Wednesday‚ suggesting the market expected more than the packaging group was able to provide in its earlier trading update. HEPS in the year to September would rise by as much as 17%‚ to R1.26‚ from the year-ago period. Trading profit was expected to increase by between 1% and 4% to between R1.93bn and R1.99bn‚ from R1.90bn in the matching period. Total impairments and contract provision and related costs were likely to be between R720m and R760m‚ from R360m.


Australia’s Walkabout Resources bought Lonmin’s entire Northern Ireland exploration portfolio for USD100‚000‚ the first in the SA-focused platinum miner’s asset sales to pump cash onto its balance sheet. The sale of the assets showed intent to streamline Lonmin’s focus and raise cash in a variety of methods including sales‚ joint ventures and securing debt.


Real estate investment trust Dipula Income Fund had overcome tough macroeconomic conditions to post a 5.8% increase in combined dividends for the year to end-August‚ driven entirely by organic growth‚ said CEO Izak Petersen on Wednesday. Petersen said it had managed to edge revenue over the R1bn mark during its 2017 financial year. The property portfolio was valued at R6.9bn at year-end.


Hospital group Netcare’s share price dropped 5% on Wednesday morning‚ after the company warned EPS would decline as much as 135% for the year ended-September‚ following weaker trading conditions in the UK. In a statement after markets closed on Tuesday‚ the group said recognition of onerous lease conditions had also weighed on results‚ with EPS expected to decline to between 159.4c and 165.5c.


Life Healthcare said on Wednesday it had appointed Shrey Viranna as its new CEO. A medical doctor by training‚ Viranna was a partner at McKinsey‚ where he spent 12 years. Viranna also worked for Discovery‚ where he was both the CEO of Discovery Vitality and DiscoveryCard. Viranna will start his new job in February‚ replacing André Meyer.


Investec Property Fund said on Tuesday it had upped its dividend by 12.2% to 98.37c for the H1 to end-September‚ bolstered by a one-off antecedent dividend from Investec Australia Property Fund. On a normalised basis‚ core y/y dividend growth was 7.2%‚ with the fund’s NAV per share remaining stable since March 2017 at R16.94. The fund said this was due to negative mark-to-market movements on the interest rate swaps and foreign exchange hedges.


Consolidated Infrastructure Group said on Tuesday its share price crashed 37% to R5‚ after it said its expected earnings decline would be worse than its earlier forecast of 55%. It said it had suffered from political and civil unrest‚ delays in the award of and technical signoff on the start of projects‚ and the contraction of opportunities in the SA power sector.


Capital Appreciation on Tuesday declared a maiden dividend of 2c ‚ after increasing its H1 net profit by 124% to R60.13m. Group revenue rose to R224.4m in the H1 to end-September‚ from R39.7m in the year-earlier period. HEPS rose 87% to 4.02c.


Retail group Edcon reported on Tuesday that its net profit improved by 3.8% to R2bn‚ although sales declined in the September quarter from the matching period in 2016. Edcon said its overall retail sales suffered from “fierce price competition through ongoing promotions by competitors” and its decision to close unprofitable stores. In its flagship Edgars clothing chain‚ sales declined 0.9% to R2.46bn during the three months to September 23. Sister clothing chain Jet’s retail sales declined 1% to R2.28bn.


Vodacom on Monday reported a 7% increase in H1 net profit to R6.7bn‚ boosted by the acquisition of a 35% interest in Safaricom in a R35bn deal that concluded earlier in the year. It said HEPS rose just 1.1% to R4.45‚ after issuing 2.33.5m shares to secure interest in Safaricom. Revenue in the H1 to September was up 4.6% to R42.0bn‚ supported by strong demand for devices‚ particularly smartphones.


Old Mutual announced on Monday it now held 5.5% interest in Old Mutual Asset Management‚ after selling down its interest as part of the restructuring process. The group had raised a total of USD426.4m‚ after selling 24.45% interest in two tranches to financial services group‚ HNA Capital. Old Mutual was little changed at R36.12 on the JSE‚ valuing the company at R178.15bn.


Datatec said on Monday it intended to distribute about R5bn to shareholders as a special dividend after selling some its assets. However, the performance of the underlying operations was weaker in the H1 to end-August‚ with the company attributing this to the roll-out of software across some of its operations. Underlying EPS dropped to 1.4 US cents‚ from 12.5c a year ago. This was off the revenue of USD2.99bn‚ which was down from USD3.04bn a year ago.


Tongaat Hulett on Monday said it was starting to see the positive effects of the end of a devastating drought that hit its operations in KZN ‚ Zimbabwe and Mozambique. Group operating profit of R1.471bn was up 9% from R1.35bn a year earlier‚ despite revenue falling 4.5% to R8.2bn. Sugar contributed R835m to operating profit‚ from R825m a year earlier. It declared an interim dividend of 100c.


Lewis said on Monday the proportion of furniture it sold on credit in the H1 of its financial year widened to 68.8% from 63.4% in the matching period‚ helping it grow merchandise sales 5% to R1.3bn. Lewis maintained its interim dividend at R1 despite its after-tax profit falling 18% to R143.4m. HEPS fell 16% to 163.9c‚ midway between Lewis’s guidance of a 12%-18% decline.


PPC on Monday announced that it had a third suitor — Dublin-based CRH — competing against LafargeHolcim and Fairfax. PPC said it received a nonbinding expression of interest from CRH‚ “indicating that it was considering submitting an all-cash proposal to acquire a controlling stake”. This offered PPC shareholders an alternative to the nonbinding expression of interest received from LafargeHolcim on October 27. Fairfax would have to raise the R5.75 per share offer it made on September 9.


Argent Industrial said on Monday its share price was unchanged‚ after it reported a decline in HEPS of 25.8% to 31.5c‚ towards the lower-end of recent guidance. It declared a 10c dividend for the H1 to end-September‚ reporting a total loss of R262m for the period‚ compared with a R37.25m profit a year ago. The decline in large part was due to the economic slowdown in SA.


Harmony Gold’s most troubled mine‚ Kusasalethu‚on Monday said it was at a standstill because of labour strife spilling violence into nearby communities. The miner said workers embarked on an unprotected stoppage to protest against the company’s dismissal of the branch leadership of Amcu‚ for its role in unprotected industrial action at the mine earlier in 2017. The company was prompted to seek an urgent interdict against the strike from the labour court.



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