Datatec had a great financial year (JSE: DTC)

They’ve carried on from where they left off in the interims

In the six months to August 2024, Datatec had a grand old time during which HEPS jumped by 67% (measured in US dollars). This performance was driven by a significant improvement in gross margin, along with efficiencies in expenses that drove EBITDA higher. This is old news of course, but important context.

The new news is that a trading statement for the year ended February 2025 shows us that the second half was even better, as the full-year guidance is for HEPS growth of between 76.1% and 83.1% (measured in USD).

The shape of the income statement is changing, as evidenced by Logicalis Latin America improving its overall performance for the year despite lower gross profits. Ultimately, net profit is what matters for shareholders, although it’s important to keep an eye on trends throughout the income statement.

Look out for detailed numbers on 27 May. With the share price up 55% over 12 months, they should get plenty of attention.

DRDGOLD had a disappointing quarter (JSE: DRD)

The company is vulnerable to any impacts on throughput and yield

DRDGOLD processes reclamation material (like mine dumps) to extract gold. This is clearly a much lower margin process than the operation of an established, deep mine. It is therefore more sensitive to not just gold price moves, but also anything that can impact surface-level production.

It was therefore bad luck that the quarter ended March 2025 was impacted by rainfall, as the company couldn’t take advantage of a 10% quarter-on-quarter increase in the gold price. Yes, it was up 10% vs. the quarter ended December 2024, not just the equivalent quarter last year. But this only served to mitigate the pain in the end, as gold sales were down 13% quarter-on-quarter.

The blame lies at the door of a 12% knock to production, which was a combination of a 5% deterioration in the amount of ore milled and a 7% decrease in yield. They attribute both these drops to the weather. This is easy to understand in terms of total ore milled. For yield, they explain that this is because of limited access to material, hence they couldn’t process the desired blend. Fair enough, although I must add that yield has been a challenge at DRDGOLD before.

With all said and done, adjusted EBITDA was down 2% quarter-on-quarter. This is frustrating, but they certainly still made money, as evidenced by cash increasing by R289.3 million to R950.5 million despite the payment of the interim cash dividend of R258.7 million.

As this was the third quarter of the financial year, there isn’t much time left to make up for the disappointment. This is why the company has warned that it may fall marginally short of full-year production guidance.

Despite this, the share price is up 71% year-to-date. The market firmly believes that gold prices will remain strong.

MTN Uganda: another African winner this quarter (JSE: MTN)

The good news just keeps flowing for MTN

MTN Uganda has been the most stable of MTN’s African subsidiaries. The inflation rate is low by any standard, leading to a sensible macroeconomic environment in which to operate. It’s therefore not surprising that at a time when even the crazy uncles (like Nigeria and Ghana) are behaving at the dinner table, the class captain (Uganda) is still doing well.

How well, you ask? With inflation at just 3.6%, they grew revenue by a delightful 13.0%. EBITDA was up 13.7%, so EBITDA margin expanded slightly – up 40 basis points to 52.4%, which is a lucrative level. Profit after tax grew by 20.6%, coming in at a margin of 21.3%. This is a fantastic business by any metric.

And in case you’re wondering about where the cash is going, capex (ex-leases) actually decreased by 2.8%. Capex intensity is in line with their medium-term guidance.

This really is the icing on the cake for the recent updates coming from the MTN Group. The MTN share price is up 30% year-to-date, making it one of the best places that you could’ve had your money on the local market.

I must of course note that the longer term performance isn’t nearly as exciting, as MTN has been through some immense volatility. This is the same company that had to extend its B-BBEE deal at the end of last year because the group share price was under so much pressure!

Things change quickly in Africa.

Nibbles:

• Director dealings:
  • Here’s yet more selling by a Standard Bank (JSE: SBK) executive, this time the COO. She’s sold shares worth R4.9 million. It really is quite remarkable how many Standard Bank execs have sold shares recently, with the share price up 2% year-to-date.
  • The marketing and communications executive at Capitec (JSE: CPI) – a prescribed officer – bought shares worth R2.4 million.
  • There’s some clever wording in the Nedbank (JSE: NED) director dealings announcement. A few directors / executives sold shares to cover purely the tax on share awards, but the COO sold shares that were only partly for the tax. The total sale by that director was R8.5 million but we don’t know how much was for tax and how much was on top of that.
  • Europa Metals (JSE: EUZ) announced that certain directors will be receiving shares in lieu of fees to the value of £48.2k. This works out to a substantial 4.6% of the current issued share capital! To be fair, this includes the acting CEO, so these aren’t just non-executive director fees.

• Absa (JSE: ABG) announced that Sello Moloko will step down as chairman and independent non-executive director of the group. He will be focusing on other business interests and community projects. René van Wyk will replace him as chairman, subject to regulatory approval. He was interim CEO of Absa in 2019 and rejoined the board in 2020 as a non-executive. He also has tons of other banking experience, including at the SARB.

• Oasis Crescent (JSE: OAS) shareholders should be aware that the circular dealing with the reinvestment of the dividend has been sent out to shareholders. The trick here is that if no election is made, the default is that the distribution is reinvested. The second trick is that the reinvestment is made at the NAV of the units, which is R28.07 per unit, when the current share price is R20.50. Hence, read carefully.

• Universal Partners (JSE: UPL) has very little liquidity, so I’ll just give the results a passing mention down here. The net asset value (NAV) per share is down 9.1% year-on-year. Forex moves are certainly relevant here, as they directly impact the fair value of foreign assets once translated to rand. If you read through the updates on the various portfolio companies, it’s the usual selection of hit-and-miss. It doesn’t feel like there are any standout businesses in this portfolio, which is probably why the market doesn’t pay much attention.