Libstar is looking better, but be careful of period comparability (JSE: BAT)

There’s an extra week of trading in the latest update

The market seemed to really latch onto the Libstar update, with the share price closing a whopping 16.6% up. Although the revenue growth rate of 10.1% looks strong at first blush, it’s extremely important to take note that the update compares a 21-week period to a 20-week period.

In other words, if we assume steady sales for each week, the 21-week period should be 5% higher purely due to the extra week. Now add in some inflation and hopefully improved trading conditions and the difference is even bigger. To make it even less comparable, the latest period is for the 21 weeks to 31 May and the comparable period was the 20 weeks to 24 May, so the additional week is a payday week of trading. In practice, I am confident that the extra week makes a difference of more than 5%.

Although Libstar does adjust for the disposal of Chet Chemicals in the update in an effort to get to like-for-like sales, there’s no adjustment for the extra week. So, when you see revenue growth of 10.1%, be very careful. The group’s volume growth of 5.2% was in all likelihood due to the extra week, leaving investors with little more than price and mix effects of 4.9% to hang their hats on.

If we look deeper into the numbers, Ambient Products saw revenue up by 11.5%, with volumes up 5.4% and price/mix changes of 6.1%. In Perishable Products, revenue was up 8.9% thanks to growth in volumes of 4.9% and price/mix changes of 4.0%. In both cases, I would ignore the growth in volumes.

In terms of outlook, Libstar just provides a generic comment around how they expect “positive trading momentum” for the rest of the year. This is despite an expectation for beef sales to remain weak in the winter months after the foot-and-mouth disease outbreak in May.

The games continue at MAS, with PK Investments calling a shareholder meeting (JSE: MSP)

Perhaps the message is landing that nobody wants a weird, inward-listed preference share

The MAS story has been an interesting one to follow. Essentially, PK Investments (MAS’ joint venture partner) has been trying to execute a cheeky offer for the company, structured as an offer by the joint venture entity itself (if that sounds strange, that’s because it is strange). To add to the weirdness, they hoped that shareholders would accept a modest share payment along with a new preference share that would be inward listed in South Africa. The initial offer was at a weak price relative to where MAS was trading, just to take this deal into the stratosphere of weirdness.

It didn’t take long for a white knight to appear in the form of Hyprop, using the MAS situation as an excuse to raise equity capital in the market in preparation for a potential bid for MAS. Incredibly, there’s no firm offer on the table from either Hyprop or PK Investments, so this is all posturing at present.

Hyprop seems to be able to sit back and let PK Investments blink first, as PK has now taken two additional steps. I must point out that Hyprop is now sitting with a cash drag problem on the balance sheet, so they can’t just hang back forever. But the strategy is working for now, as PK Investments keeps playing its hand.

The first step was to try and improve the offer and simplify it, although the structure was still far too fussy. The second and latest step is a request to convene a shareholders meeting, which the various PK Investments entities are able to do as the company holds more than 15% of MAS’ shares in aggregate. The meeting is to consider advisory resolutions that are not binding on the company. In other words, PK Investments is looking to get the opinion of shareholders.

PK Investments claims that engagements with shareholders have yielded generally positive views on the plan to unlock value from MAS through asset sales over a five-year period. This shouldn’t be a shock to anyone, as most property counters trade at a discount to NAV and hence a liquidation strategy would technically create value. Shareholders have indicated to PK Investments that there’s no need for PK to obtain control of MAS for this strategy to be followed though, which is a nice way of telling them to go away with their cheeky potential bid.

A few fluffy paragraphs later in the announcement and we get to the crux: PK Investments will refrain from proceeding with its bid and will distribute the cash in the joint venture if shareholders support a strategy to realise assets. This reads to me as PK essentially holding a gun to the head of MAS’ board and shareholders, saying that the funds in the joint venture won’t find their way to shareholders in any other manner. They literally say: “the Enhanced Value Unlock Strategy is expected to unlock significant value currently inaccessible to Shareholders and to return that value to them.”

This whole thing feels pretty weird. If MAS has no ability to extract cash from the joint venture without PK agreeing to do the same, then it was a horribly structured agreement from the start that gave all the power to PK. This power is now being used to dangle a carrot of €72.5 million in front of MAS, being the company’s share of the cash in the joint venture.

There are still many moving parts here. The question now is whether either MAS or Hyprop can find a way to put a better proposal in front of shareholders.

STADIO’s business update looks solid (JSE: SDO)

Student numbers continue to grow

STADIO is doing the right stuff. I’m a big fan of the business model and the results speak for themselves.

At the AGM, the company delivered a presentation giving an update on their performance. The most interesting part of the update related to student numbers as at June 2025, which is obviously new information. Distance learning numbers grew 8% to 43,837 and contact learning grew 11% to 7,041. Total student numbers increased 8% to 50,878, as the contact learning piece is so much smaller than distance learning and hence the total growth rate was similar to the growth in distance learning.

Another important point is that the Durbanville Campus is on track for opening in January 2026, housing 7 faculties. This is a big step for the group as they move towards being a full-suite university vs. having a collection of specialist tertiary facilities. This will also drive an increase in contact learning students relative to distance learning students. They must be happy with the initial signs of interest, as the board has already approved phase 2 of the development, due to open in August 2026.

If you’re keen to learn more about the company, the podcast that I did in April with the CEO and CFO is still highly relevant. You’ll find it here.

Standard Bank is still managing double-digit earnings growth (JSE: SBK)

The flurry of selling by company execs in recent months remains a mystery to me

It’s unusual to see several executives selling shares at roughly the same time, unless they specifically relate to a share award. But at Standard Bank, the theme in recent months has been considerable selling by company insiders, including the CEO. This is typically a red flag. Although Standard Bank’s growth is telling a different story at the moment, there are some underlying concerns that are worth looking at in the context of the director dealings.

The company is keeping investors well informed regarding performance. After an update for the first quarter, they’ve followed up with an announcement dealing with the performance for the five months to May. They’ve carried on where they left off in the first quarter, with headline earnings growing at roughly 10% in rand. In constant currency, the growth rate is in the mid-teens. Return on Equity remains in the target range of 17% to 20%.

This performance has been achieved despite sluggish demand for credit in South Africa and a decline in the net interest margin as rates have slowly decreased. Net interest income was thus flat, with rate decreases that are big enough to impact margins and too small to really drive economic growth. All the growth is coming from non-interest revenue sources that grew by mid-teens for the period. Market volatility is helpful for trading revenue, but the challenge is that this is a non-recurring source of revenue in comparison to a steady uptick in net interest income (which is what is lacking at the moment).

The group’s credit loss ratio is just above the targeted range of 70 to 100 basis points, but has improved vs. the comparable period. South African retailers have really turned on the taps for credit sales, so it will be interesting to see how the credit environment evolves this year.

The outlook for the year ending December 2025 still reflects banking revenue growth of mid-to-high single digits (in rand), improvement in the cost-to-income ratio and a group return on equity in the 17% to 20% range. Having said that, Standard Bank has warned that June 2024 is a demanding base and that headline earnings growth for the six months to June 2025 is likely to be lower than for the five months to May 2025.

The reasons may not be obvious yet in the numbers, but I would continue to be nervous of this story after all the recent insider selling.

Nibbles:

• Director dealings:
  • Dealings really do come in all shapes and sizes. The latest example at Super Group (JSE: SPG) is especially interesting, as the disposal of SG Fleet and the subsequent special dividend left the CEO and CFO in a position where they no longer met the minimum shareholding requirement of holding shares equal to at least three times their historical annual base pay. This is because the special dividend naturally led to a large drop in the share price, as the company literally became smaller. To rectify this, the CEO and CFO bought shares worth R7.9 million and R4.3 million respectively.
  • A couple of MultiChoice (JSE: MCG) directors and the company secretary aren’t waiting for the Canal+ deal to go through, with sales of shares worth close to R1.4 million in relation to the vesting of share awards.
  • A director of a major subsidiary of Vodacom (JSE: VOD) sold shares worth R980k.
  • An associate of a director of Trematon (JSE: TMT) sold shares worth R43.4k.
  • A person closely associated with a director of Hammerson (JSE: HMN) bought shares worth around R29k through a dividend reinvestment plan.

• Brikor (JSE: BIK) has released results for the year ended February 2025. The market cap is just R142 million and there is very little liquidity in the stock, so it only gets a passing mention down here. Brikor’s revenue increased by 8.6%, but HEPS fell by 61.5% to just 0.5 cents per share. The major negative contributors were the coal segment (a loss of R21.3 million) and the income from associate which fell from R23.8 million to R5.3 million.

• Southern Palladium (JSE: SDL) has finalised the issuance of shares to raise A$8 million to fund the definitive feasibility study and near-term mine development activities at the Bengwenyama project. As I frequently remind you, ongoing capital raising activities are simply part of the game when it comes to junior mining houses.

• Coronation (JSE: CML) has confirmed that Mary-Anne Musekiwa’s last day as Finance Director will be 30 June 2025. There will then be a structured handover period. As for who she is handing over to though, we still don’t know – the company hasn’t named a replacement.

• HomeChoice (JSE: HIL) achieved 100% approval at its general meeting to change its name to Weaver Fintech Ltd. I think this is a good move as it indicates exactly where the growth opportunity lies.