Harmony Gold pushes further into copper (JSE: HAR)
Eva Copper, acquired in 2022, is ready for development
Harmony Gold has completed the updated feasibility study related to the Eva Copper mine in Australia that was acquired a few years ago. The mine is described as a long-life asset (15 years) with high margins as an open pit development.
The gold mining giants are all taking different approaches to how to deploy their incredible recent wealth. Some are taking the opportunity to invest in gold in new regions, while others are paying down debt or executing major capex projects. As for Harmony, it’s all about adding copper to the portfolio as a “future-facing” commodity. With an estimated project capital budget of $1.55 billion to $1.75 billion for Eva Copper, there are big numbers being allocated here.
As you might recall, Harmony recently acquired MAC Copper in Australia. The two assets are expected to deliver around 100,000 tonnes of copper annually once fully commissioned.
Harmony is committed to paying dividends, so they are looking to fund the Eva project through a mix of internally generated cash flow and external debt instruments. The balance sheet is in great shape (net debt to EBITDA below 1x) and so they shouldn’t have any troubles in raising debt.
There seems to be a great deal of global activity in copper in anticipation of higher demand. This demand will need to materialise, as any disappointment in copper prices will impact the economic returns of the various projects around the world.
Invicta’s growth was boosted by share buybacks (JSE: IVT)
This is a great example of how useful share buybacks can be
Invicta released results for the six months to September 2025. Although revenue was only up by 6%, HEPS was up 15% and the company’s view of “sustainable HEPS” was up 19%.
These HEPS numbers were helped along by the company’s extensive share buybacks, with the weighted average number of ordinary shares outstanding having decreased by over 8% in the past year. If we look at headline earnings instead of HEPS, the increase was only 5.4%.
This means that Invicta has been a mid-single digit growth story, so you shouldn’t expect too many fireworks when digging into the segmental view. Sure enough, most of the year-on-year moves are muted.
There are a couple of interesting stories though. The Capital Equipment (CE) segment was a highlight from a revenue perspective, up 25% thanks to a stronger mining sector in South Africa. Operating profit was up 36%, so that’s a strong story. Replacement Parts for Earthmoving Equipment (RPE) also grew revenue by 25%, but this was largely thanks to the acquisition of Spaldings. Operating profit was up just 6%, so margins need to be watched carefully there.
It’s a solid set of numbers overall in a highly volatile trading environment. The company is following a conservative balance sheet strategy, which means that they should be able to continue allocating cash to share buybacks rather than paying back debt.
Share buybacks boost Netcare’s results (JSE: NTC)
They are making the most of modest real growth in revenue
The hospital sector is a funny old thing. This is a classic case of a mature business where you wouldn’t expect to see high levels of revenue growth. In fact, you wouldn’t want to see rapid revenue growth, as it means that something has gone badly wrong in society that year!
This means that Netcare needs to focus on cost control and other ways to turn modest revenue growth into an excited HEPS story. They’ve gotten it right recently, with revenue growth of 4.5% for the year ended September 2025 and a jump in HEPS of 18.3%. If you use adjusted HEPS, it’s even better with a 20.7% increase.
Operating profit increased by 13.2%, with improved operating margin telling you that they are delivering operational efficiencies. Share buybacks did the rest of the work, with R1.8 billion allocated to recent repurchases.
It’s nice to see that there was a 4% increase in births, bucking the recent trend we’ve seen of pressure on volumes in that space. Mental health paid patient days were up 0.5%. These numbers are obviously skewed by where Netcare is investing in services etc. so I know this isn’t a perfect lens on society by any means, but I always look at these numbers as an indication of how people are doing out there. It seems that the pandemic horrors are truly behind us and that people’s lives are back on track.
With total dividend growth of 21.4%, Netcare itself is certainly on track!
Can they do it again in FY26? The expectation for revenue growth is 4% to 5%, although they do note that EBITDA margin is a high base in FY25. Keep an eye on those share buybacks, as they will be key to driving growth in HEPS.
Fish oil prices drag Oceana lower (JSE: OCE)
Is there a more difficult sector than seafood?
Whenever I write about the seafood sector, I always think about how this is basically the lovechild of all the cyclical and agricultural businesses, combined with the inherent volatility of the ocean. If you crave a life on easy mode, this probably isn’t the sector for you.
These risks have come through strongly in the year ended September at Oceana, where HEPS has dropped by 38.4% despite revenue only decreasing by 0.7%. Group gross profit margin dropped sharply from 31.8% to 27.8%. The main culprit is US dollar fish oil prices, which more than halved from the record levels in the prior year. For the Africa and US fishmeal and fish oil businesses, operating profit fell by 67.1% and 54.4% respectively. Ouch!
A strong performance in Lucky Star (revenue up 6.1% and operating profit up 9.3% as canned fish volumes held steady) just wasn’t enough to offset this impact. Another bright spot is Wild Caught Seafood, where the hake business put in a record performance that helped this segment swing from an operating loss of R53 million to an operating profit of R222 million. For context, the group operating profit was R1.25 billion.
Oceana did their best to limit the pain from fish oil prices in their largest segments, with group operating expenses actually decreasing by 12.3%. Still, operating profit fell by 23.2%, and the rest of the damage to HEPS was done by higher net interest costs due to slightly increased borrowings.
Group net debt to EBITDA increased from 1.3x to 1.7x, but this is mainly due to lower EBITDA rather than a jump in debt. Although capex has now returned to normalised levels, there was pressure on cash from operations due to working capital investment.
The total dividend for the year was 285 cents, down 42.4%. This is worse than the drop in HEPS, so the payout ratio also headed in the wrong direction in this period.
The outlook statement is filled with what you would expect to see: much uncertainty over global catch rates and lots of challenges that they need to overcome in sourcing product. The share price is down more than 22% year-to-date.
Much better margins at PPC (JSE: PPC)
This turnaround is wonderful to watch
PPC has released financials for the six months to September. Their turnaround strategy is called “Awaken the Giant” and they are certainly doing a good job of that!
Revenue increased by 6.2% and EBITDA jumped by 23.5%, with a 260 basis points improvement in EBITDA margin to 18.3%. Although a foreign exchange hedge related to the new Western Cape plant had a negative effect on HEPS, they still grew that all-important metric by 15%. Without the hedge, HEPS would’ve been up 32%.
Here’s a number that speaks volumes about the progress in the turnaround: return on invested capital (ROIC) increased from 7.1% to 13.4%. Sure, it was off a weak base, but just look at that uplift!
In South Africa, revenue was up just 2.4%, yet that was enough for EBITDA to increase by 30.5%. This shows you how lucrative this sector would be if there was meaningful investment in infrastructure in South Africa, as the operating leverage is immense.
In Zimbabwe, revenue was up 23.4% and EBITDA increased by 11%. Margins suffered there due to a planned shutdown in Q1, but dividends of $20 million were upstreamed during the period vs. just $4 million in the prior period.
It’s hard to believe that this company was once focused on reporting its debt metrics and the balance sheet turnaround. Today, profits are flying and finance costs are just R37 million vs. EBITDA of R983 million!
The second half of the year is seasonally weaker than the first half, but they have a number of important projects to keep them busy.
Adjusted EBITDA has doubled at Prosus – Naspers (JSE: PRX | JSE: NPN)
These are great numbers alongside a busy period of deals
Gold may have been the asset on the JSE that shined the brightest this year, but owning Prosus this year has also been a treat. There’s been an interesting correction over the past month in response to pressure on global tech stocks, so volatility is part of the journey here. But I remain a happy shareholder, especially based on the latest numbers.
For the six months to September, group consolidated revenue was up 22% and eCommerce adjusted EBITDA jumped by 70%. Group consolidated adjusted EBITDA doubled (up 99%), so the typical tech sector metrics look great.
South African investors care about HEPS more than anything else (as they should). Core headline earnings increased by 13% and HEPS was up 24% thanks to the extensive share buybacks.
Free cash flow is where the rubber truly hits the road, up meaningfully from $900 million to $1.3 billion. But here’s what I think tells the story best: excluding the Tencent dividend, free cash flow was an inflow of $59 million vs. an outflow of $104 million.
Remember, the strategy here is based on going from “Tencent minus” to “Tencent plus” in terms of the group value. In other words, they want the market to place value on the assets other than Tencent. Showing consistent positive free cash flow in those assets is the way to cement this.
With $2 billion invested in M&A in the first six months of the year, they’ve been on quite the acquisition spree. They’ve also been selling non-core assets, with total proceeds of $1.2 billion over the period. This capital discipline is very important to the investment thesis. They expect another $800 million in divestments in the second half of the year, taking the FY26 total to $2 billion.
2026 guidance has been affirmed for revenue and adjusted EBITDA, excluding any of the numbers at Just Eat Takeaway.com. All eyes will be on the integration of that asset and finding growth through the AI strategy.
Looking at Naspers specifically, the Takealot group (which includes Mr D) grew revenue by 23% in rand and improved adjusted EBITDA by $10 million to $28 million. It’s a rounding error in the broader group context, but still an interesting trajectory as a read-through into online shopping adoption in South Africa.
Stefanutti Stocks locks in a settlement with Eskom (JSE: SSK)
It’s less than the award in favour of the company, but the legal battles are over
Stefanutti Stocks previously announced that they were awarded R685 million by the Dispute Adjudication Board in a claim against Eskom. This was a lifeline for the company, as it would help them sort out a huge chunk of debt.
Eskom played hardball and notified the company that they intend to have the award set aside by the High Court. If successful, this would cause the entire claims process to start again.
In this high-stakes game of chicken, we have a situation where one player is in the private sector and owes a fortune to the banks, whereas the other benefits from government guarantees. Unsurprisingly, Stefanutti Stocks had to blink first.
The companies have agreed to settle not just the claim that was already awarded, but also all the other potential claims in play for a total of R580 million. Eskom has to pay the amount by 12 December 2025. Sure, just one of the claims had been awarded to the quantum of R685 million, but bird-in-the-hand theory and all that jazz.
By the end of February, Stefanutti Stocks has to use at least 80% of the proceeds to settle debt with Standard Bank.
Nibbles:
- Director dealings:
- A director of Southern Palladium (JSE: SDL) bought shares worth R501k.
- A director of KAP (JSE: KAP) bought shares worth R69k. The share price is at very depressed levels after a terrible run, so that’s a bullish indicator.
- The CEO of Vunani (JSE: VUN) bought shares worth R20k.
- After they had another round of discussions with Anglo American (JSE: AGL), we now have confirmation from BHP (JSE: BHG) that they won’t be making an offer to merge the companies. This leaves a clear path ahead for the “merger of equals” (ahem) between Anglo American and Teck Resources, unless of course another bidder emerges.
- A trading statement from HCI (JSE: HCI) for the six months to September 2025 reveals a juicy jump in HEPS of between 69.0% and 79.0%. This is a great example of how HEPS doesn’t catch every possible distortion, as there was a R250 million negative fair value adjustment in the base period (related to the oil and gas prospects in Namibia) that didn’t repeat in this period. Results are expected to come out on 27 November.
- There are ugly scenes at Novus (JSE: NVS), with a trading statement for the six months to September revealing a drop in HEPS of between 45.2% and 65.2%! This means that earnings probably more than halved, yet the share price is down just 7% over 12 months. The announcement came out after market close on Monday and I suspect we will see a lot of negative action on Tuesday.
- Here’s another trading statement, this time for small cap Nictus (JSE: NCS). It’s a whole lot bigger than it used to be, with the share price up more than 250% in the past year! HEPS has increased by between 45% and 65% for the six months to September.
- YeboYethu (JSE: YYLBEE) released results for the six months to September 2025. Thanks to the significant growth in the Vodacom (JSE: VOD) share price as the only underlying asset of the company, the net asset value per share increased by 80%. The final dividend was up 5%, although the dividends in these structures are rarely a good reflection of the underlying economics or the balance sheet. In an effort to pay “trickle dividends” to investors, B-BBEE structures tend to have artificially created payout ratios. The share price is where the action is, with the company up 155% in the past year thanks to the leveraged exposure to Vodacom!
- Southern Palladium (JSE: SDL) released an update on the drilling activity at the Bengwenyama Project. I’m certainly no geologist, so I have to rely on the management commentary in these types of announcements. This is also why I don’t invest in junior mining, as I’m not qualified to understand any of it! The latest drilling results appear to “reinforce the confidence” of management, so I guess that’s good news.
- For those following Marshall Monteagle (JSE: MMP) closely (and I suspect there can’t be more than a handful of you doing so), the company’s disposal of property in KwaZulu-Natal for R68.5 million has reached another milestone. The seller has provided a bank guarantee for the full balance, so the transfer can now go ahead. Property deals tend to fall through quite often, so it’s important to reach this step.
