Araxi has pulled the trigger on a major acquisition in the payments space (JSE: AXX)
This is why they have been trading under cautionary
Araxi consists of two businesses: a payments operation that everyone thinks is a great business, and a software operation that very few people think is a great business. Thankfully, in their decision to execute a R1 billion acquisition, they’ve decided to push further into payments rather than software.
Araxi will acquire 80% of Pay At Holdings and its international affiliate. This is the Pay@ business, founded in 2007 and now enjoying over 9,000 retailer locations and many access points across mobile POS payments and downloaded integrated apps. They operate in South Africa, Namibia, Botswana, Zimbabwe, Eswatini and Lesotho.
To make this deal happen, Araxi will need to tap the banks for debt. They are funding the transaction using R200 million of existing cash resources and R800 million in new debt, so the days of having a net cash balance sheet are over.
What are they getting for this price? Well, Pay@ processed over R60 billion in transaction value in the past 12 months, with a compound annual growth rate (CAGR) in revenue of 22% over the past three years.
Does it make money though? For the six months to August 2025, Pay@ generated revenue of R158.8 million and EBITDA of R72.4 million. Net profit was R49.7 million. So yes, it does make money.
With 80% of the company valued at R1 billion, the implied value for 100% is R1.25 billion (even though it doesn’t quite work that way because of the control premium in the 80% stake). But for simplicity, and with the conservative additional step of annualising the recent interim profit without adding on any further growth, the Price/Earnings multiple is roughly 12.5x.
I have no doubt that some synergies are part of the plan, but the good news is that this company makes a profit and is being acquired at a decent multiple that doesn’t require heroic assumptions about the integration strategy.
This is a Category 1 transaction, so shareholders of Araxi will be asked to vote on the deal. Investors are often nervous of large transactions, but this one seems pretty sensible to me.
Aveng flags slightly positive HEPS (JSE: AEG)
At least they aren’t making a headline loss anymore
Aveng has released a trading statement for the six months to December 2025. HEPS of between A$0.1 cents and A$0.3 cents won’t set anyone’s hair on fire, but it’s a whole lot better than the headline loss per share of A$26.7 cents in the comparable period.
Notably, there’s still a small loss per share without the adjustments made to get to the headline number.
The market will have to wait for the release of results on 24 February to get further information. The share price is down 37% in the past year. The chart has odd recent activity that took the share price from below R5.00 to around R7.40 in the space of a few weeks, all before it fell back down again to the current level of R5.13. If you don’t like volatility, the construction sector certainly isn’t for you.
HEPS almost doubled at DRDGOLD (JSE: DRD)
The gold price did the heavy lifting here, as gold production was down
In the gold sector, it always feels like DRDGOLD has to play life on hard mode. By processing tailings, they find themselves dealing with difficulties ranging from security around the Joburg mine dumps through to actually getting access to decent materials to process. It’s not easy, which is why they are particularly reliant on the gold price going the right way.
This is exactly what has happened of course, so the results for the six months to December 2025 look great. Despite a 9% drop in gold production and a 7% decrease in gold sold, they achieved a 72% increase in operating profit and a 98% jump in HEPS.
The average gold price received was 43% higher. It’s pretty hard to go wrong when the product you sell has gone up so sharply in price.
The company acknowledges that the gold price was the “main actor” in these numbers. It helped DRDGOLD add nearly R430 million to the cash position despite having capex of R1.65 billion. The group is undertaking a major capital programme at the moment, with the gold price increase coming at exactly the right time.
They’ve also enjoyed a jump in the interim dividend from 30 cents to 50 cents per share. For all the challenges in the model, this is the company’s 19th consecutive year of declaring an interim dividend. That’s impressive.
The share price is up nearly 190% in the past year.
Glencore met full-year guidance for key commodities (JSE: GLN)
And of course, copper is where you’ll find most of the focus
Glencore has released results for the year ended December 2025. They met guidance for full-year production volumes for their main commodities, so that’s good news for investors. But perhaps the best news of all is that copper production was up nearly 50% in the second half vs. the first half of the year. That’s the kind of momentum that people want to see.
And “momentum” is also where Glencore wants you to focus, particularly because adjusted EBITDA was actually down 6% for the full year. The exit velocity from 2025 is what the bulls will point to here, with second-half EBITDA being 49% higher than the first half.
Glencore has exposure to a number of underlying commodities, so volatility in the numbers is to be expected. It was the energy and steelmaking coal business that dragged the story down in 2025, with metals pricing helping to offset much of the pain.
With steady net debt and illustrative free cash flow generation of $7 billion based on current commodity prices, Glencore feels confident enough to pay a top-up dividend that takes the total dividend for the year to 17 US cents per share. They will pay it in two instalments.
Separately, Glencore announced that they finalised an agreement with Gécamines for land access at Kamoto Copper Company (KCC). In simple terms, this means that KCC can expand the tailing storage facility and related operations, while maximising the recovery of ore reserves within the existing permitted areas. In Big Mining at the moment, it’s all about increasing production of copper wherever they can. Notably, Gécamines maintains the rights to any ore reserves extracted from the leased land.
The share price is up 42.5% in the past year as the market has focused exactly where Glencore wants them to focus: on copper.
Grindrod’s core business is working (JSE: GND)
The market has shown its appreciation
Grindrod closed over 6% higher on Wednesday in response to the release of a trading statement. This takes the 12-month share price performance to 43%, which tells you that they have given the market a lot to feel good about.
For the year ended December 2025, HEPS from continuing operations increased by between 15% and 20%. This puts it at between 172.8 cents and 180.3 cents. For context, the share price closed at R18.74, so the Price/Earnings (P/E) multiple is in the double digits.
The core operations have been boosted by the Port and Terminals business, with the Matola Terminal and the Maputo Port operated terminal achieving record volumes.
Due to the extent of corporate activity in the past couple of years, Earnings Per Share (EPS) will differ significantly from HEPS. The growth rate in total HEPS (vs. HEPS from continuing operations) is also enormous. The number to focus on, though, is HEPS from continuing operations, with the high teens growth rate as an impressive confirmation that the strategy is working.
Merafe’s Lion Smelter roars back into life (JSE: MRF)
Eskom has given them a lifeline – for now
With the ferrochrome industry in dire straits (as confirmed by adjacent casualty Afrimat (JSE: AFT) in their recent update), the likes of Merafe desperately needed a break. Electricity costs have made it impossible to run the smelters.
Keep in mind that Merafe’s business is a joint venture with Glencore (JSE: GLN), so this is relevant to shareholders in that company too.
Now, there are a lot of very good arguments to be made around whether an industry should ever be given a preferential tariff. After all, what makes one special vs. the other? And why should taxpayers subsidise it?
I suspect that the country is better off if an industry like this receives cheaper electricity and continues to employ many people. It’s hard to imagine that the contribution isn’t a net positive.
This debate will no doubt rage on. But in the meantime, Merafe’s Lion Smelter can at least get back to work, with the successful recommissioning of 50% of its operating capacity and a plan to return to 100% by 31 March 2026. This comes after NERSA approved a 12-month interim electricity tariff of 87.74 cents per kWh.
But here’s the catch: Merafe says that the long-term commercially viable tariff needs to be 62 cents per kWh. That’s a long way down from the freshly approved level. It’s also the level at which the Boshoek and Wonderkop smelters can be brought back online, so this shows you how wildly unprofitable these operations would be at a market-related tariff.
The negotiations around the tariff continue. If a viable solution for Boshoek and Wonderkop isn’t found by 28 February 2026, the s189 retrenchment consultation process will begin at those operations.
Pan African Resources and a casual six-fold increase in HEPS (JSE: PAN)
They expect to shortly be in a net cash position shortly
Pan African Resources has been a wonderful story, especially for me as a shareholder. The combination of higher production, strong gold prices and a rolling off of gold price hedges has done wonders for the recent performance.
For the six months to December 2025, revenue was up by 157.3% and HEPS jumped by an astonishing 511.7% (more than a six-fold increase) 1.20 US cents to 7.34 US cents. The record profits have of course led to an even stronger balance sheet, with net debt down 69.3% as at December. By the end of February 2026, they expect to be in a net cash position rather than a net debt position – and this is despite paying large dividends.
The old saying, “it’s a gold mine” is making a lot more sense in this environment.
It isn’t all good news, of course. Although production looks good overall, there were some drags on that story. For example, the Mogale Tailings Retreatment (MTR) facility was around 10% below expected production, with mined grades and recoveries leading to that outcome.
The other obvious negative is that all-in sustaining cost (AISC) was miles above guidance ($1,874/oz vs. guidance of $1,525/oz – $1,575/oz). The stronger rand impacted this by $115/oz, while other negative impacts came from higher share-based payments due to the rally in the company’s share price, as well as third-party material costs at Evander Mines and MTR and the higher royalty payments based on the gold price.
So, some of the cost pressure is actually just a function of success. But some of it isn’t, so shareholders will want to just keep an eye on that. The revised guidance for the full year is $1,820/oz to $1,870/oz.
In terms of total production, they expect between 275,000 and 292,000 ounces of the yellow stuff to come out of the ground. I went back and checked: in the year ended June 2025, production was 196,527 ounces. You can therefore see why earnings are so much higher.
Sibanye-Stillwater’s HEPS increased by 3.6x in 2025 (JSE: SSW)
When cyclicals deliver, they really deliver
It really wasn’t that long ago that the narrative at Sibanye-Stillwater was focused on battening down the hatches and preparing for a long, cold winter in PGMs. Fast forward to today and the company is celebrating a trading statement that reflects a 3.6x increase in HEPS to between 232 cents and 256 cents for the year ended December 2025!
There are two important lessons here. The first is that hope is not a strategy. Companies must always follow a self-help strategy of giving themselves the best chance of surviving long enough to get lucky. The second is that if you can survive, your chance of getting lucky is probably better than you think it is. A mix of realism and optimism is a cocktail that most entrepreneurs will be highly familiar with.
With the average gold and PGM prices (up 39% and 28% respectively) delivering a much better operating environment, lucky is exactly how Sibanye-Stillwater must feel right now. But they also made plenty of tough (and necessary) decisions along the way to get to this point.
Local PGM production was within guidance, as was local gold production. US PGM production was ahead of the upper end of guidance. Overall, there’s an increase in group revenue of at least 160%, so that does great things for profits.
Interestingly, they are still loss-making from an EPS perspective. This is due to non-cash impairments of a whopping R14 billion. One of the main adjustments between EPS and HEPS is to reverse the impact of impairments, giving investors a better indication of cash earnings.
This doesn’t mean that impairments should be ignored entirely, though. They reflect bad outcomes from previous capital allocation decisions. Just one such example is the R7.8 billion impairment of the Keliber lithium project. There has also been some unfortunate luck, like the Kloof impairment due to the reduced life of mine based on geotechnical factors, and the R4.2 billion impairment of the US PGM operations that was triggered by the One Big Beautiful Bill Act.
Those who bought at the bottom of the cycle have had some Big Beautiful Returns, that much I can tell you. The share price is at around R64, miles higher than the 52-week low of R13.88!
Transpaco’s numbers have gone the wrong way (JSE: TPC)
And operating leverage has worked against them here
Transpaco has released results for the six months to December 2025. Revenue fell by 1.5%, with the company blaming the current economic conditions. If we look a bit deeper, the Plastics business increased by 1.1%, while Paper and Board was down by 4.6%.
When revenue dips in a manufacturing company, there’s little chance of profits moving higher. This is because of the prevalence of fixed costs in an industrial model. Sure enough, operating profit fell by 6.1% and operating margin contracted from 8.2% to 7.8%.
HEPS has dropped by 6% to 253.6 cents. The dividend is 6.7% lower at 70 cents per share.
The bigger concern is that the interim period is typically when Transpaco enjoys the seasonal strength of the festive shopping season and the impact on demand for various packaging materials. With a disappointing set of numbers for the first six months of the financial year, the second half is under real pressure.
The share price isn’t the most liquid thing in the world, but it is up 6.9% in the past year. These results don’t support that move.
Nibbles
- Director dealings:
- A non-executive director of British American Tobacco (JSE: BTI) bought shares worth around R475k.
- The financial director of KAL Group (JSE: KAL) bought shares worth R189k. A director of a subsidiary also bought shares, in that case to the value of R69k. KAL is seen as a solid local company, so further purchases by insiders will only add to that sentiment.
- An associate of a director of Visual International (JSE: VIS) sold shares worth R76k.
- The CFO of Mantengu (JSE: MTU) has added another R12.6k to his recent purchases.
- British American Tobacco (JSE: BTI) is presenting at the 2026 Consumer Analyst Group of New York Conference. You’ll find the slides here if you want to check them out. The company also reaffirmed the guidance that was announced on 12 February 2026, just in case people were perhaps worried that something had changed in the past week. This means 3% – 5% revenue growth, 4% – 6% adjusted profit from operations growth and 5% – 8% adjusted diluted EPS growth for FY26.
- Efora Energy (JSE: EEL) has renewed its cautionary announcement regarding negotiations for a potential transaction. No further details are available at this stage.
