Hyprop unlocks more capital – but what will they do with it? (JSE: HYP)

There’s no mention in the announcement of a MAS-related plan

Hyprop is disposing of a 50% share in Hyde Park Corner for R805 million. The timing of this is what makes it so interesting, as Hyprop raised a similar amount in a recent rights offer. The rights offer cash has already landed of course, whereas the disposal proceeds will take a while to come through.

Are these corporate actions completely unrelated? Would this disposal have happened regardless of the rights offer and a potential attempt to acquire MAS? As Hyprop has yet to commit to any kind of offer for MAS, I think this disposal has probably been in the works for some time anyway. There’s also no mention of MAS in the disposal announcement, other than an overall comment that Hyprop is looking to allocate more capital to not just the Western Cape, but also to Eastern Europe. But then to squash any thoughts of a MAS deal, they note that these proceeds from the Hyde Park disposal are for new investments within Hyprop’s existing operations, rather than acquisitions. Hmmm.

The buyer is Millennium Equity Partners, an unrelated party. The disposal yield is capped at 8.75%, reflecting the premium nature of this property.

As for the other 50%, there will be a call and put option structure in place that gives Millennium Equity Partners a route to control. The option can be exercised at any time in September to November 2027.

This is great and all, but what I would really like to see is some clarity on what Hyprop plans to do with the rights issue cash that is currently burning a hole in shareholders’ pockets in the form of cash drag.

Primary Health Properties shareholders give the green light to the Assura deal (JSE: PHP | JSE: AHR)

This is the first of many important steps

Large corporate transactions come with a number of conditions, including shareholders on both sides of the equation being happy with the deal. The good news for the proposed merger of Primary Health Properties and Assura is that the former’s shareholders have given strong approval for the deal. In fact, around 99% of them voted yes!

This sends a strong message to Assura shareholders – and perhaps the message is that the deal is too favourable from the perspective of existing Primary Health Properties shareholders? I still think that the premium above the alternative cash offer from KKR and Stonepeak wasn’t high enough, but the Assura board thinks otherwise. What really matters is what Assura shareholders will think when they vote on the deal.

Trellidor disposes of Taylor Blinds and NMC South Africa

But don’t be fooled by the share price closing 19% higher

You have to be very careful when looking at how the share prices of illiquid stocks react to news. If you just have a cursory look, you’ll see news of a major disposal by Trellidor and a share price that closed 19% up, so it’s easy to assume that the market loved it. The next things you need to look at are (1) the time the SENS came out vs. when the stock traded and (2) the volumes on the day vs. the average.

At Trellidor, the volumes on Tuesday were firmly in line with averages and the stock traded at 9am, well before the announcement came out at 11:30am. The jump is therefore based on the bid-offer spread, not the announcement.

Now, this isn’t to say that the Trellidor announcement isn’t good news. They are getting out of a business that isn’t a good strategic fit with their security offering, unlocking up to R90 million in the process for a reduction in group debt and other purposes. Trellidor has been really struggling, so this gives them some breathing room and renewed focus.

For context, in the six months to December 2024, Taylor Blinds and NMC achieved attributable profit before tax of R8.9 million in total. If we ignore debt and just take the tax off, that’s around R6.4 million in interim profit or R12.8 million on an annualised basis. This suggests a Price/Earnings multiple of roughly 7x on the disposal, so I’m not surprised that they took the money and ran – after all, Trellidor as a group is only trading on a Price/Earnings multiple of 4x!

Nibbles:

• Director dealings:
  • The Discovery (JSE: DSY) directors are back to make you feel poor, this time with a sale of shares by Barry Swartzberg to the value of R161 million as part of a hedging and financing arrangement. As I always remind you with these sales, they are related to the strike price on the underlying options rather than a bearish view on Discovery.
  • One of the long-standing top executives at Investec (JSE: INL | JSE: INP) sold shares worth around R22.5 million.
  • A director of Argent Industrial (JSE: ART) sold shares worth R8.8 million.
  • Although most of the directors and execs at The Foschini Group (JSE: TFG) sold only the taxable portion of their awards, there were two who sold their entire awards worth R3.7 million.
  • The profit-taking at Santova (JSE: SNV) continues, with a sale by a director to the value of R2.65 million.
  • There’s yet more selling by the managing director of the feed business at Astral Foods (JSE: ARL), this time to the value of over R1.1 million. At the moment we’ve only seen selling from one prescribed officer at Astral, so that’s a less bearish signal than selling by numerous execs and directors.

• Property developer Acsion (JSE: ACS) may have a R2.4 billion market cap, but liquidity in the stock is far too light for meaningful institutional activity. For retail investors who like to play in the wide bid-offer spread though, the company has achieved a revenue increase of 6.4% in the year ended February 2025 and a jump in HEPS of 29.5%. The final dividend is up from 18 cents per share to 20 cents per share.

• Impala Platinum (JSE: IMP) has decided to consolidate its Impala Platinum and Impala Bafokeng Resources operations into a single structure. This is mainly a housekeeping thing, with some cost synergies along the way. Although they aren’t explicit about it, I suspect that there will be some savings from duplication of roles as well.

• Shuka Minerals (JSE: SKA) has given an update on its acquisition of Leopard Exploration and Mining, as well as the Kabwe Zinc Mine in Zambia. The company has increased the loan facility with its second largest shareholder, Gathoni Muchai Investments, giving Shuka enough cash for the final payment to the sellers of the assets and the initial exploration work at the Kabwe Mine. Combined with the parties agreeing on how the share-based consideration will be settled, this means that the deal can close as soon as possible.

• Supermarket Income REIT (JSE: SRI) has raised £215 million in bank debt for its joint venture managed by Blue Owl Capital. Priced at a margin of 1.5% above SONIA, this is an interest-only facility that has two further one-year extension options at the discretion of the lenders (a consortium of banks).

• There is absolutely no trade in Numeral Limited (JSE: XII), so results for the year ended February 2025 get only a passing mention here. The year-on-year moves are huge, as the business has been making acquisitions. The group generated a profit of $182k for the year, which means HEPS of 0.014 US cents.

• Back in March this year, Safari Investments (JSE: SAR) announced the disposal of Safari Investments Namibia to Oryx Properties. The deal has now become unconditional and was implemented with effect from 30 June.

• As part of the leadership handover at Sun International (JSE: SUI) outgoing CEO Anthony Leeming has resigned from the board. He will remain with the company until the end of December 2025 to assist the new CEO, Ulrik Bengtsson, who has been appointed as a director with effect from 1 July.

• Stefanutti Stocks (JSE: SSK) announced that the period for fulfilment of suspensive conditions for the disposal of SS-Construções (Moçambique) Limitada has once again been extended to 8 July 2025.

• There’s a rather crowded naughty corner of companies on the JSE that are late with the submission of their annual reports: African Dawn Capital (JSE: ADW), Brikor (JSE: BIK), Copper 360 (JSE: CPR), Efora Energy (JSE: EEL), Visual International Holdings (JSE: VIS) and Sable Exploration and Mining (JSE: EXM) all earned themselves a dishonourable mention.