A solid start to the year for Lesaka Technologies (JSE: LSK)
They’ve kicked off FY26 with positive operating income
Lesaka Technologies is a rare breed on the local market. This is a fintech play that uses terms like “adjusted EBITDA” and throws out growth rates close to 100%, yet the net profits aren’t where they need to be yet. This is because the group is scaling rapidly, so the earnings profile is more akin to a startup than the mature, dividend-paying companies that South Africans are so used to.
Before I jump into the latest earnings, I want to highlight the excellent podcast that I recorded with Executive Chairman Ali Mazanderani after the release of earnings. We focused on the strategy, not the latest numbers, so it gives you great insights into the long-term view at the company. To understand what they are building and how they think, you should check it out here.
Back to the numbers. For the quarter, the group posted solid growth in net revenue of 45%. Merchant Segment net revenue was up 43% and Consumer Segment revenue was up 43%. The Enterprise Segment is the smallest area of the group and looks set to stay that way for now at least, with net revenue growth of 19%. It’s not bad when your slowest growing segment is up 19%!
Adjusted EBITDA is very important to look at, as this is where they are charging up the J-curve (although the sector is more of an S-curve long-term). Adjusted EBITDA jumped 61% and was in line with guidance. The Merchant Segment was up 20%, the Consumer Segment increased 43% and the Enterprise Segment was up a delightful 241%. That Enterprise Segment may be slower on revenue growth, but the economic profile is juicy indeed.
The first quarter has been strong enough for the group to affirm the FY26 guidance. Importantly, this guidance excludes the Bank Zero acquisition, as the timing of regulatory approvals is uncertain.
They still have a long way to go in scaling this thing. The headline loss was $3.7 million for the quarter, an improvement vs. the loss of $4.6 million in the comparable period.
There’s a lot of attention on the fintech sector at the moment. Lesaka has struggled to get much love from the market this year, with the share price down 22% year-to-date. They will need a strong combination of organic and inorganic growth to get risk-averse South African investors to believe in the story. But if they get it right, one day people might look back and wonder how they missed it.
Motus has highlighted ongoing strength in new car sales in South Africa (JSE: MTH)
The influx of affordable models is making a huge difference
The car industry is absolutely fascinating at the moment. After a period of strong outperformance thanks to its used car model and brand agnostic approach, WeBuyCars (JSE: WBC) experienced a significant slowdown in the recent numbers (I look forward to understanding the detailed results when they come out later this month, as I’m a shareholder there). Conversely, CMH (JSE: CMH) and Motus have enjoyed an acceleration thanks to a shift in demand towards new vehicles, specifically affordable ones.
At the AGM, Motus gave us some more commentary to work with, as they released a short update on trading conditions in the first quarter of the new financial year. The South African new vehicle market is doing so well that new vehicle market guidance has now been revised higher for the 2025 calendar year. Importantly, Motus is performing in line with the broader market, which means they have a decent spread of brands across their offering.
The UK market is struggling in heavy commercial vehicles (down 14% for the quarter), but passenger cars are up 6% and showing signs of life. In Australia, new vehicles were up 4%. Guess what? That’s right – Chinese cars are starting to make progress in Australia. Motus is performing in line with the market in the UK, but is slipping in Australia and needs to make changes to the brand representation in the dealer network.
Interestingly (especially in the context of the WeBuyCars performance), Motus notes that pre-owned vehicles in South Africa achieved both volume and margin growth. Performance in used vehicles is stable in the UK and positive in Australia.
The aftermarket parts business in South Africa increased volumes and margins despite a weaker overall environment. There’s also growth in that area of the UK market.
Looking at the other segments, it seems as though performance was decent in the workshops, vehicle rental and mobility solutions businesses.
It’s a good start to the year for Motus, with the share price having gone to hell and back this year thanks to tariffs and then a recovery in car sales:
A short and sweet trading statement from Purple Group (JSE: PPE)
But oh so sweet!
Regular readers may recall that I’m long Purple. I waited and waited, avoiding the silly prices during the pandemic. When the rights offer at 81 cents per share was successfully concluded in 2023, that was a sign for me to start really paying attention to finding an entry point.
Things got worse before they got better. I found it interesting that nobody swooped in to acquire Purple Group at a depressed price, with Sanlam (JSE: SLM) as the obvious choice given their stake in EasyEquities.
Eventually, we reached a point where the underlying financials seemed odd in the context of the share price – and in a good way. Purple Group had built a solid annuity revenue base and all the growth flywheels were spinning beautifully, but the market had lost interest. That’s a golden opportunity.
I checked on my EasyEquities app (how poetic) while writing this, confirming that my average in-price is R1.06 per share. With Purple now trading at R2.32, my patience was certainly rewarded.
The trading statement for the year ended August only increases my enthusiasm for their J-curve. HEPS is expected to increase by between 133% and 153%!
Of course, this didn’t stop people from commenting that the mid-point of guidance is a P/E of 54x. Sure, and what does the two-year forward P/E look like if the earnings keep growing at these rates up the J-curve?
I remain happily long.
SA Corporate Real Estate sells R514 million worth of properties (JSE: SAC)
They have taken the step to reduce single-tenant risk
SA Corporate Real Estate doesn’t mind owning industrial property. But they do mind owning property that has too much risk of vacancies, emanating specifically from exposure to a single tenant across multiple buildings. For that reason, the fund is selling two properties on Yaldwyn Road in Jet Park that have the same tenant across all the buildings.
To make it worse, the tenant advised that it was vacating the properties at the expiry of the current lease in September 2027.
Now, just because the current tenant is leaving doesn’t mean that the properties lose their value. They just need to find the right owner. JAM Trust is paying SA Corporate Real Estate R514 million for the properties. For context, they were independently valued at the end of June 2025 at R515.8 million.
If you use the net property income for the six months to June 2025 and just double it as a quick-and-dirty calc, you get to an annual yield of 8.8%. They’ve sold it at a decent price, especially since we know that the tenant is leaving.
Sappi is having a very tough time at the moment (JSE: SAP)
Earnings are suffering and there’s too much debt
Sappi has released results for the quarter ended September 2025, bringing an end to a year that they will want to forget as quickly as possible. Zooming out is the right place to start, with a drop in full-year revenue of 1% and a 27% decrease in adjusted EBITDA. They swung from profit of $33 million to a loss of $177 million for the year, while net debt ballooned by 35% to $1.9 billion. Ouch.
I’m afraid that the fourth quarter is anything but good news, with a loss of $194 million that took the annual numbers into the red. Market conditions are terrible for Sappi at the moment, driving poor results and negative valuation moves in the underlying forestry assets.
The only real highlight this year was the completion of the Somerset Mill PM2 conversion, although the short-term impact has actually been negative as they are now depreciating the asset in a weak demand environment. In other words, they’ve thrown a shiny new toy into a dark hole. The hole is winning.
The higher debt levels are certainly a concern, with the leverage ratio close to the debt covenant of 4x. The bankers have given the company some headroom for the next 12 months, but it shows that Sappi has taken big chances with their capex and now finds themselves in an ugly part of the cycle with an even uglier balance sheet.
The dividend is suspended and they are pulling back on capex. There are hard times ahead, with maintenance shuts scheduled for the first quarter of the new financial year. This will put even more pressure on earnings, with adjusted EBITDA for the first quarter of 2026 expected to be below the fourth quarter of 2025.
Is this only a near-term issue? Maybe, maybe not. There are plenty of structural concerns in this market. Sappi is perhaps best-suited to those who are bored of sports betting and would like to gamble on the market instead.
Gold and PGM exposure is doing the things for Sibanye-Stillwater – at last! (JSE: SSW)
The earnings show why the share price has nearly tripled this year
Sibanye-Stillwater broke many hearts on the way down in the post-pandemic era. It’s also broken the hearts of those who sold too early, as the recent rally has been exceptional. I sold out at around R41 (the first time the rally this year faltered), so I missed the subsequent surge:
The reason for the rally is pretty simple, really: gold and PGMs are doing much better than before. Gold is a helpful contributor at Sibanye, but PGMs are the key. SA PGMs saw adjusted EBITDA increased by 213% year-on-year, while US PGMs were up more than 100% (if you include the S45X10 credits that will phase out in several years’ time). SA gold increased 177%.
In the June quarter, the gold business in South Africa actually generated more EBITDA than the SA PGM business (R3 billion vs. R2.25 billion). In the September quarter, PGMs jumped into the lead with just under R5 billion in EBITDA vs. gold at R3.7 billion. The swings in this sector are violent, which is exactly why the share price behaves the way it does.
Every dog has its day. In this environment, this dog is having the kind of day that starts with a trip to the park and follows it up with a gigantic bone and a custom-made cake of doggy biscuits.
Transpaco is acquiring Premier Plastics for R128 million (JSE: TPC)
This looks like a classic bolt-on acquisition
Transpaco has announced the acquisition of Premier Plastics, a retail plastic carrier bag manufacturer focused on Gauteng and the inland regions. They have a manufacturing facility in Tshwane and they also own a recycling business that supplies the raw materials for the production of bags (including by third party customers).
This ties in perfectly with the rest of the Transpaco business model, so this is a great example of a bolt-on acquisition: a deal to bring more of the same into the group.
The net assets are valued at R98.6 million and Transpaco is paying R128 million for the business (subject to some adjustments). Net profit after tax for the year ended June was R16.8 million, so the purchase price (pre-adjustments) is a Price/Earnings multiple of 7.6x.
That seems rather high to be honest, particularly with Transpaco currently trading on 6.6x. I also don’t see any indication of the payments being spread over time and subject to profit warranties. Strategically this deal might make sense, but the financial structuring looks too basic for my liking.
There are various conditions to be met, including Competition Commission. Given the overlap in the businesses, that’s not a slam-dunk. It’s a category 2 transaction, so shareholders won’t be asked to vote on it.
Truworths continues to go backwards locally (JSE: TRU)
The SA performance has offset the growth in Office UK
Truworths released a business update for the 18 weeks to 2 November. As we’ve become accustomed to, the performance in South Africa is incredibly poor. Truworths Africa saw sales drop by 4%, a shocking result in the context of better discretionary spending visible across the economy.
The announcement just seems to gloss over this issue, with a throwaway comment that: “Several strategic initiatives have been initiated to reposition Truworths Africa for the future” – what exactly does that mean?
Office UK is doing all the work, with sales up 6%. This was enough to offset the drop in Truworths Africa, leading to flat sales year-on-year.
Although the announcement doesn’t give an indication of earnings in this period, it’s going to be pretty hard for this sales performance to translate into a happy outcome for shareholders. One of the mitigating factors is that gross margin has moved higher in Truworths Africa due to the extent of promotional activity in the base period when they were clearing stock.
Despite the fact that the business model is clearly broken, Truworths Africa expects trading space to increase by 1% for the 2026 financial year. After all, if you have a problem, isn’t it sensible to just turn it into a bigger problem? Not.
At least the trading space expansion of 10% to 12% in Office UK makes sense, as that business seems to be doing well.
The share price is down 44% year-to-date and there’s no indication of management doing anything significant about it. A complete shake-up at Truworths is so overdue, yet nothing ever happens. It just shows you how utterly pointless corporate boards actually are, with all these non-executive directors sitting around and just watching the value plummet into oblivion while management gets away with weak performance and sky-high remuneration.
A revised trading statement from Vodacom gives an idea of the Please Call Me settlement (JSE: VOD)
It looks to be roughly R540 million
In the aftermath of the release of the first trading statement for the six months to September 2025, Vodacom agreed to settle the Please Call Me dispute with Kenneth Makate. This has led to the release of a further trading statement, with the differential primarily attributed to that settlement.
As I wrote earlier this week, my suspicion is that Vodacom used a strong period to just get this out of the way. They initially expected HEPS to be up by between 40% and 45%. It will now be up by between 30% and 40%. If you go back 12 months, shareholders would’ve happily signed up for 30% – 40% growth and the end of the Please Call Me overhang.
This means that the mid-point of guidance has fallen from 503 cents to 476.5 cents. The Please Call Me settlement is an impact of roughly 26.5 cents per share, or around R540 million.
Nibbles:
- Director dealings:
- The CFO of Spear REIT (JSE: SEA) bought shares worth R231k.
- The CEO of Vunani (JSE: VUN) bought shares worth R6k.
- With Libstar (JSE: LBR) trading under cautionary announcement regarding a potential offer coming through, it’s relevant to note that there’s been a major reshuffling of the chairs on the register. It appears that private equity shareholder Actis did some moving around of its ~41% stake to make it possible for Ribbon Ventures to acquire a 34.90% stake from Actis. That’s just underneath the mandatory offer threshold. It’s not clear to me who Ribbon Ventures Limited is, but I think we can safely speculate that they are firmly in the running to make an offer for all of Libstar.
- FirstRand (JSE: FSR) is still dealing with the considerable headache of the proposed redress scheme in the UK motor finance industry. Essentially, the regulators on that side got very angry about the commission practices in vehicle finance and put forward a proposed solution that goes way beyond what FirstRand anticipated (or believes is fair). The lawyers will be hashing this one out for a while still. This creates an overhang for FirstRand, as the jury is out on whether the current provision is sufficient. FirstRand has noted that there’s a higher likelihood of the provision needing to be increased, but they aren’t doing it until the redress process is finalised.
- Not that I thought there was any chance of shareholders not approving the deal, but it’s still good to see confirmation by Accelerate Property Fund (JSE: APF) that shareholders gave a strong approval to the disposal of Portside. This is an absolutely critical step in fixing the balance sheet.
- MTN Uganda adds its name to the MTN (JSE: MTN) African subsidiaries that have been doing so well recently. This isn’t a surprise though, as Uganda has been one of the most dependable subsidiaries in the group. It’s just small in the overall group context, so it can’t get the same attention as e.g. MTN Nigeria. For the nine months year-to-date, revenue is up 13.8% and EBITDA climbed 18.5%, so margin expanded by 220 basis points to 53.9%. If we look at just the third quarter, revenue was up 15.2% and EBITDA 19.9%, with margin at 54.2%. Although Uganda isn’t without some of the usual African risks (like regulators who might hurt the business), the macroeconomic picture is solid and MTN is taking advantage. Medium-term guidance has been maintained as upper teens service revenue growth and stable EBITDA margin.
- It looks like Europa Metals (JSE: EUZ) might spring back to life as a listed company, having found a suitable asset as an acquisition target. Marula Africa Mining Holdings has assets in Kenya, Tanzania, Burundi and South Africa that will be reverse listed into Europa Metals. These are battery and critical metal projects, including lithium, manganese, copper and even rare earths. Due to this being a reverse takeover, they will have to submit all the required listing docs to the London Stock Exchange to get the AIM listing sorted out (it is currently suspended from trading). Although there are a lot of hoops to jump through, this is effectively another new listing on the JSE!
- NEPI Rockcastle (JSE: NRP) announced that Marek Noetzel, currently the COO, will take the CEO role with effect from April 2026. Noetzel has been the COO since June 2022. Outgoing CEO Rudiger Dany had a four-year mandate and has achieved a great deal in that time period.
- Montauk Renewables (JSE: MKR), the company with the laziest SENS strategy on the market (they just point to the SEC filings and that’s it), released results for the quarter ended September 2025. Revenue is down 31% year-on-year and earnings fell by 67%. At least they made a profit this quarter, taking the nine-month view to a small loss per share.
- Sable Exploration and Mining (JSE: SXM) has withdrawn the cautionary related to the agreement being put in place with Daemaneng. This isn’t because the deal is off, but rather because it doesn’t seem to be categorisable after consultation with the JSE.
