Subsidiary of ASP Isotopes (Quantum Leap Energy) raises $64.3 million – including from Trump family members (JSE: ISO)
Given the underlying strategy and importance of the US, this is big
ASP Isotopes continues to keep SENS busy with interesting announcements. The group is moving quickly in markets like the US and the UK, with subsidiary Quantum Leap Energy living up to its name.
The latest from the company is that Quantum Leap Energy has raised $64.3 million through the issuance of convertible notes, which are debt instruments that can become equity later on. This is common in unlisted companies, with one of the conversion triggers being an IPO or future equity financing. Quantum Leap Energy is being prepared for a future separate listing.
But here’s the really interesting part: the leading external investor in the offering was American Ventures LLC, with capital contributions from Eric Trump and Donald Trump Jr. If your current strategy is to offer products to the US and UK that are matters of national security, then you better be on the right side of the current chief. It seems that they are getting that right!
If ISA Holdings ends up being acquired, they will be going out on good numbers (JSE: ISA)
The group is (mostly) growing
ISA Holdings released results for the six months to August 2025. These have come soon after a cautionary announcement regarding a non-binding expression of interest for a possible deal that would see an unnamed acquirer take a controlling stake and delist the company. There’s no guarantee of this turning into a firm intention announcement, hence the need for caution.
Potential deals aside, the underlying numbers are mostly very good. Turnover grew by 52%, albeit boosted by some lumpy, lower-margin projects. This is why the company’s measure of gross profit was up by 20%, with margins down from 55% to 43%.
Thankfully, operating expenses were up just 7%, so profit after tax from the company’s operations was up by 41%.
But there’s a catch: group HEPS increased by 11%, which is much lower than any of the other juicy growth rates. The problem is Dataproof, an equity-accounted investment where the income is recognised on the income statement in the gap between operating profit and group profit after tax. The share of profits from Dataproof fell by 31%. No dividend was declared by Dataproof as management needs to implement initiatives there to address the slide.
Despite the lack of cash flow from Dataproof, ISA’s cash and cash equivalents were up 17%. This allowed them to declare an interim dividend to shareholders of 9.4 cents per share – a rather incredible 100% payout ratio based on diluted HEPS!
I can see why this is an interesting takeout target. Now we wait and see whether a deal actually materialises.
Sephaku Holdings is growing, but SepCem has swung into losses (JSE: SEP)
The cement game is all about regional exposure
Cement is a difficult and expensive thing to move around, so the industry tends to be quite regionalised. In other words, there are manufacturing facilities across the country that supply customers within a reasonable radius. As we know, the level of investment in infrastructure varies dramatically across the country, so some players are doing well and others are floundering.
It gets even trickier once you add in the impact of imports. It’s amazing to me that it’s economically difficult to justify moving locally manufactured cement across the country, yet imports are able to compete on price!
This is important context when looking at the results for Sephaku Holdings for the six months to September. The groups consists of two major operations: Métier and SepCem.
Métier is the key, being the larger business and also the one that Sephaku controls. That also happens to be where the positive story can be found, with profit after tax up by a spectacular 52% to R55.5 million. This was driven by an improvement in EBITDA margin from 11.2% to 14.8%.
Before you get too excited, SepCem suffered a net loss after tax of R31.3 million for the six months to June 2025 (the reporting calendars are slightly different, as SepCem is a subsidiary of Dangote Cement). Sephaku’s 36% share of that loss is R11.3 million, an ugly swing from the share of profits of R1.5 million in the base period. Unlike at Métier, EBITDA margin went the wrong way with a decline from 11.3% to 9.8%.
My understanding is that SepCem has more exposure to the provinces in the north of the country, including North West and Mpumalanga in addition to Gauteng, which explains why volumes are under pressure. In contrast, Métier is more of a KZN and Gauteng play.
At group level, HEPS was up by 5%. It’s in the green, but would’ve been much better if not for SepCem.
The Foschini Group’s share price has halved this year (JSE: TFG)
And no, this isn’t because of online gambling
The Foschini Group’s share price shed another 6.4% on Friday after the release of results for the six months to September. Before the Capital Markets Day on 7 August, it was trading at around R120 per share. It’s now below R85.
The more management talks to the market, the worse it gets.
When you cast your eye over group sales growth of 12.7%, you’ll immediately be confused. Why would the share price be behaving this way in response to low-teens growth? The clue lies in the growth of just 3.5% excluding the acquisition of White Stuff. Once you peel away the layer of that acquisition, you find a very weak organic growth story (for the most part).
One of the highlights remains Bash, with TFG Africa’s online sales up 40.2%. They are capable of doing well at TFG when they focus on something. The problem is that they are spread far too thin and aren’t doing anything about it, choosing to do more acquisitions rather than fixing and optimising what they already have.
With gross margin down 20 basis points, operating profit fell 9.9%. HEPS was down by 21.3%. The interim dividend is down 18.8%. It’s bad, but the share price dropping 50% year-to-date tells you that the market sentiment is even worse than the numbers.
If we dig deeper, we find TFG Africa with sales growth of 5.3% and a contribution to group sales of 65.3%. The group included an entire slide in the investor presentation about online gambling and the risk this poses to the business. Given the uninspiring performance, I’m cynical about this argument based on the obvious incentive for the business to attribute the performance to external factors. Pepkor (JSE: PPH) released a trading statement with strong numbers recently, so let’s wait and see if they raise any concerns around online gambling and the impact on sales. They have far less of an incentive to find a scapegoat.
TFG’s market share in South Africa was up 30 basis points in womenswear and 10 basis points in kidswear. They shed 90 basis points in menswear. Are the men all gambling, or are they simply buying elsewhere? The market share stats suggest the latter.
The funny thing is that TFG Africa isn’t the biggest issue in the group. They certainly aren’t doing well, but they aren’t falling out of the sky rapidly. TFG London could only grow sales by 0.7% in local currency if you exclude White Stuff. TFG Australia saw sales decline by 0.5%. With TFG London and TFG Australia contributing 20.3% and 14.4% of group sales respectively, they simply cannot afford to be doing so badly in the offshore businesses.
One of the bright spots, as we’ve also seen at Woolworths (JSE: WHL), is in the Beauty category. They achieved 23.6% sales growth in Beauty at TFG Africa. Sadly, it’s only 3.4% of local sales. Homeware with 9.3% growth also deserves a mention, contributing 15% to local sales. Clothing is 70.8% of TFG Africa and only grew by 4.2%, so therein lies the biggest issue.
The biggest worry for investors is that this muted sales growth came at the cost of a 90 basis point decline in gross margin in TFG Africa. They had higher markdowns than expected, which means either a poor assortment or a weaker than expected trading environment. Again, it’s easier to blame the latter than the former. This margin decline took TFG Africa’s EBIT down by 9.7%. That’s an ugly number after the bullish outlook that the company delivered at the Capital Markets Day (an outlook that the market didn’t really believe anyway).
All of this looks absolutely wonderful in comparison to TFG Australia, where weak sales and inflation drove an 18.4% decline in segmental EBIT. TFG London may have grown EBIT by 9.1%, but this is including White Stuff’s earnings and before the impact of the finance costs incurred for that acquisition.
The year-to-date performance has been horrible across all the apparel retailers, as evidenced by this chart:
I have a position in Mr Price (JSE: MRP) that I entered a few months ago at just over R203 per share. My view is that it’s the baby thrown out with the bathwater in the sector. The position is flat currently, which works for me. I’m certainly hoping that Mr Price’s performance is closer in nature to that of Pepkor rather than TFG or, heaven forbid, Truworths (JSE: TRU).
Nibbles:
- Director dealings:
- The Chief Investment Officer of Quilter (JSE: QLT) sold shares worth R2.5 million.
- Barloworld (JSE: BAW) announced that the offeror consortium has reached a stake of 94.1% if you include all related and concert parties, or 70.8% if you only look at their SPV. It’s hard to see how the company won’t end up being delisted.
- Delta Property Fund (JSE: DLT) sold their shares in Grit Real Estate for roughly R18.5 million. The buyer is Peresec Prime Brokers, which almost certainly means the buyer is actually one of Peresec’s clients. This represents 3% of Grit’s shares.
- If you’re following Powerfleet (JSE: PWR) in detail, then you’ll want to know that the company’s debt facilities with RMB have been amended. There are two facilities, each with a principal amount of $42.5 million. One of the facilities has been extended by 12 months to March 2028. There are also some amendments to covenants and other terms. Generally speaking, companies enjoy having longer-dated debt that gives them more flexibility, so extensions are usually welcome.
- Astoria (JSE: ARA) continues to hedge the movements in its own share price, entering into a CFD trade over shares worth around R73k.
- At the Truworths (JSE: TRU) AGM, the resolution related to the remuneration policy was voted against by holders of 36.82% of shares represented at the meeting. Now, whilst there are many investors who vote against these things as a matter of policy to force subsequent engagement (hence I almost always ignore this outcome at company AGMs), this is one company where far more votes should be against the current state of play. Company performance is poor and director remuneration is high. This vote is enough to make the company at least engage with investors based on the recommendations in King IV. Will anything meaningful come of it? Probably not.
- Numeral (JSE: XII), one of the most obscure companies on the market with a very difficult past that included disastrous acquisitions and an entirely new board to sort out the mess, released updated listing particulars. This helps investors understand what is actually going on at the company. The group has made various recent healthcare acquisitions, building on the success in recovering at least a 50% interest in the Cryo-Save business after it was improperly transferred out of the group. Like I said, a difficult past! The company intends to raise up to R100 million through a capital raise, of which R34.5 million has been locked in via the capitalisation of a loan from a shareholder. This is a penny stock with a market cap of R25 million, so this planned capital raise is almost certainly going to dilute existing shareholders severely (I suspect they will raise at R0.01 per share, as the stock is currently at R0.02 per share). Let’s wait and see what the details look like. At least the company seems to actually have a future!
