Double-digit growth in earnings at ADvTECH (JSE: ADH)
The business model continues to work
ADvTECH is an interesting local company to follow. They have a mix of primary, secondary and tertiary education offerings in South Africa and elsewhere in Africa, generally catering to higher income families. This means they are targeting people who can afford to have more kids – the way middle-income people used to do! When it comes to filling up their schools, that’s a critical element of the story.
There’s also a resourcing business, although it remains an odd strategic fit with the rest of the group in my opinion.
Still, for the six months to June 2025, HEPS is expected to be between 13% and 18% higher. That’s a solid outcome, with detailed results due for release on 25 August.
Jubilee Metals has released the circular for the PGM and chrome disposal (JSE: JBL)
The deal would unlock substantial capital for the copper strategy
If you had tried to hunt down a PGM enthusiast a year ago, you would’ve been lucky to find one cowering in a cave somewhere, fighting off the last of the predators. The sector went through an absolutely terrible time, as evidenced by recent results from major players that reflect a sharp drop in earnings. The recent rally in the share prices has been driven by an improved outlook for PGMs, rather than historical earnings that have already been banked.
The problem for Jubilee Metals is that they have an ambitious copper strategy in Zambia that they need to deliver. Copper is in vogue at the moment and if Jubilee gets this right, they might become an attractive acquisition target. Even if a potential suitor doesn’t knock on the door, they should become a cash generative company with commodity exposure that is less erratic than PGMs. That’s the theory, at least.
But to get there, they need to be brave enough to cut their PGM and chrome businesses loose – at exactly the time when people actually want those assets again. This has raised few eyebrows, with some questioning why they don’t keep those assets instead. The point is that you always want to sell an asset when the market is strong, not weak.
I will never forget one of my early bosses in my career selling a truly magnificent home in Hout Bay. It had even been featured on Top Billing. I remember asking him why on earth he was selling, as everything was booming in Cape Town property at the time and foreigners were buying like crazy. I pointed out how idyllic and perfect it all seemed, with nobody able to understand the reason for the sale. “Exactly!” he said, teaching me a lifelong lesson about selling high and buying low, not the other way around. Had he not sold at the peak at that time, it would’ve been years until that price was available again – if ever.
So, with that anecdote out of the way, we return to Jubilee Metals and their disposal of the chrome and PGM operations for up to $90 million. This is based on an enterprise value (which isn’t the same as equity as it considers the underlying debt in the operations) of $148 million, which is a 6x EBITDA multiple based on FY24 EBITDA.
We’ve now reached the more valid criticism than the timing: the pricing of the deal. The FY24 earnings base is a highly depressed period, as evidenced by broader sector performance. A 6x forward EBITDA multiple would be a great outcome, based on expected earnings in the next financial year. A 6x trailing EBITDA multiple doesn’t seem very appealing. The timing of selling this house is probably right, but the asking price is much too low as the owner is arguably desperate to buy somewhere else – in this case, copper in Zambia.
Jubilee first announced this potential disposal on 5 June 2025, with the share price trading at R1.00. It is now trading 31% lower at 69 cents per share. That’s a pretty strong message from the market, but is there a further nuance worth consideration?
Well, maybe. You see, it would be incorrect to see Jubilee as a PGM player with a modest chrome add-on. In the first half of FY25, they generated 86% of their revenue from chrome, with earnings being far more sensitive to a change in the chrome price than the PGM basket price. Although PGM basket prices have climbed sharply recently, chrome prices have fallen.
There’s no easy answer here. EBITDA for FY24 was $24.6 million. At the halfway point in FY25, they were already on EBITDA of $16.5 million. If we just take the simplistic approach of doubling the interim number, this deal is a forward EBITDA multiple of 4.5x.
As a final comment, I must point out that Jubilee’s approach to this deal would consider not just the expected cash flow from the PGM and chrome operations, but the total potential return from reallocating the sales proceeds into the copper operations and giving themselves the real option of capital structure flexibility.
Holders of 30.42% of shares in Jubilee have given a letter of support to vote in favour of the transaction. There’s a long way to go to get the deal done.
Merafe’s earnings more than halve (JSE: MRF)
And the interim dividend has dropped by 80%
Merafe released results for the six months to June 2025 and they don’t make for pleasant reading. Revenue has fallen by 47%, driven by a 55% decrease in ferrochrome sales volumes, a 14% drop in chrome ore sales volumes and only the slight mitigating factor of a 9% uptick in PGM sales volumes.
Naturally, with revenue down to that extent, things don’t improve further down the income statement. Merafe took steps to suspend operations in response to weak market demand, so they managed to stem the bleeding at a 56% drop in EBITDA and a 55% decrease in HEPS.
Although they still have R1.14 billion in cash on the balance sheet, that number is down by 36%. Along with the overall pressure on earnings, it’s therefore no surprise that the dividend has fallen by 80% to 4 cents per share.
The outlook statement has a more bullish undertone than you might expect from numbers like these, but there are many risks here from demand factors through to energy costs.
Primary Health Properties managed to secure control of Assura (JSE: PHP | JSE: AHR)
Talk about a last-minute outcome!
Shareholders in Assura certainly took their sweet time in deciding whether or not to accept the offer from Primary Health Properties. This is because they would’ve wanted to retain maximum flexibility in case either a new competing offer arrived, or perhaps KKR and Stonepeak improved their offer. Neither thing happened in the end, so we have now reached the point where we have the final results of the Primary Health Properties offer.
Holders of 62.93% of shares in Assura accepted the offer, which means that Primary Health Properties will now have a controlling stake in Assura and the minimum acceptance condition has been met, as the offer was only going ahead if holders of more than 50% in Assura accepted it.
Shareholders who gave irrevocable undertakings to the KKR / Stonepeak special purpose entity will be pleased that those undertakings have now lapsed, as that offer is dead. As the Primary Health Properties offer is still open for acceptance, those shareholders will have the opportunity to accept the Primary Health offer if they so choose.
Some love from the market for Sasol – but you can’t just look at a chart for one day (JSE: SOL)
Everyone’s favourite pain trade closed 11% higher after a trading statement
Sasol has truly been one of the wildest stories on the local market in recent years, with many retail investors climbing in and being taken on a rollercoaster ride. Just look at this chart over 5 years:
As you can see, Tuesday’s 11% rally is literally a blip on this chart. It will nevertheless fuel a new wave of people talking about Sasol in a positive light, so brace yourself accordingly.
The reason for the rally was a trading statement reflecting growth in HEPS for the year ended June 2025 of between 85% and 100%. Yes, that means that HEPS almost doubled!
As always, there are a lot of messy factors at play here. For example, the Transnet settlement of R4.3 billion pre-tax has been recognised in these numbers. In fact, among the positive factors in these numbers, the only one that gives an indication of maintainable earnings is a comment that average chemicals basket prices moved higher and that there was strict cost control. As Sasol explained to the market earlier this year, their medium-term plans depend on getting earnings much higher in the chemicals business, so that’s good to see.
Unfortunately, that story is blunted by a 15% drop in the average rand price per barrel of Brent Crude, along with a 3% decrease in sales volumes as Sasol disclosed in their recent production and sales update.
There are also huge movements in impairments, but this doesn’t impact HEPS.
I have no position here, as the Sasol turnaround still feels too hard for me. Good luck to those who do! If you are interested in why I feel that way, you can refer to this Supernatural Stocks podcast that I did for Moneyweb back in May, based on Sasol’s Capital Markets Day.
With a substantial deal in the UK, Sirius Real Estate has now fully allocated the recently raise capital (JSE: SRE)
The latest transaction grows the UK gross asset value by 20%!
Sirius Real Estate raised equity capital at the end of 2023 and in mid-2024. They also raised further debt capital on the bond market in May 2024 and January 2025. It takes time to deploy this level of capital into acquisitions, with a balance needing to be struck between going too slowly (cash drag for investors) and going too quickly (potentially into poor quality deals with long-term negative impacts).
If there’s one property fund out there that knows how to do deals, it’s Sirius. Their track record in the UK and Germany is impressive. To add to the flurry of deals needed to deploy capital, they’ve now added a particularly large transaction in the form of the acquisition of the Hartlebury Trading Estate in Worcestershire for £101.1 million.
That’s a big number – and big enough to grow Sirius’ BizSpace portfolio in the UK by 20% in terms of gross asset value and 18% in terms of floor size – but only by 10% in terms of revenue. Sirius will obviously aim to improve the property over time from its current occupancy rate of 84%.
The net initial yield is 6.45%, so they’ve paid quite a lofty price for this property vs. some of the other deals we’ve seen. This is because of the future potential of this property rather than what it currently generates. There’s obviously room for improvement in the occupancy rate, as well as opportunities to increase rental revenue through positive reversions when leases are due for renewal, along with other strategies to actively manage the asset. This could include further development on the property, as building coverage is very light at the moment.
Interestingly, as the business park was originally built as an RAF maintenance base, Sirius reckons that it could be appealing to tenants in the defence sector. From an investment perspective, that’s probably the single most appealing sector in Europe at the moment.
Sirius will now need to focus on extracting the best it can from the newly acquired assets, as doing so will then give support to the next round of capital raising activities when they eventually come.
Weaver is doing lovely things for my portfolio (JSE: WVR)
I firmly believe in the BNPL growth story
As I’ve mentioned before, attending an Unlock the Stock event is a great opportunity for you to do your company research alongside not just me, but also my co-host Mark Tobin and everyone else who is on the call with great questions. I use the platform to make decisions with my own money, like my investment in Weaver Fintech (when it was still called HomeChoice) shortly after they presented on Unlock the Stock.
This has proven to be the right decision, with my position now up by a rather delightful 40%. An 11.3% increase in the share price after the release of results certainly helped with that.
Weaver is a growth stock, which is rare in South Africa. In the results for the six months to June 2025, revenue grew by 29% and the Fintech segment saw its profit before tax climb by 46.2%, now contributing 98% of Weaver’s profits.
This doesn’t mean that the retail business is a waste of time – it’s an important distribution channel for the fintech products, plus I think the HomeChoice brand has a clear understanding of their target market and what they do, something that is rare in retail in South Africa.
Importantly, with HEPS up by 45%, the interim dividend has also increased by 47%. This points to the cash quality of earnings.
Although the slight uptick in capex is one way to see the expansion in the group with 10 new retail showrooms, the better measure is net interest expense. In order to grow the fintech business, they need access to capital. Capital comes at a cost, which is why the net interest expense increased by 40.6%. You can expect more of this to come, with a new R1.25 billion bullet loan concluded in August 2025.
With growth like this in the underlying business, the next obvious thing to solve would be liquidity in the shares. Weaver is far too tightly held for institutional investors to get involved. Also, my 40% gain on paper would be very hard to realise due to the wide bid-offer spread. Luckily, I have no plans of selling anytime soon. This is a long-term thematic play for me.
Nibbles:
- Director dealings:
- A director of British American Tobacco (JSE: BTI) sold shares worth over R2.5 million.
- TeleMasters (JSE: TLM) announced an extension to a related party consulting arrangement that carries a cost of R155k per month. The counterparty is an entity owned by a related party to the CEO of the company. It relates to two subsidiaries of TeleMasters and the arrangement was already in place when those companies were acquired. The correct governance procedures seem to have been followed, with “disinterested” directors considering the contract and the CEO reclusing himself from the discussion. To give further comfort to shareholders, the extension of the arrangement is for two years with no increase to the amount.
