Aspen has released the circular for the APAC disposal (JSE: APN)
This is the deal that will massively improve the balance sheet
If you feel like some light reading this weekend, Aspen’s 134-page circular is now available here. They are selling off their operations in Australia and New Zealand, regions that contributed 26% of group EBITDA for the year ended June 2025.
In other words: this is important.
With Aspen having been through tough times recently, the market has welcomed this deal. Not only does it lead to a much stronger balance sheet, but it also allows management to focus on the key initiatives that need to be delivered. This includes driving the GLP-1 business in South Africa, and winning additional manufacturing contracts in France and South Africa to replace the holes that have been left by the loss of contracts.
Aspen is one of the very few South African companies that achieved success in Australasia. They started in the region in 2001. 25 years later, Aspen Australasia is one of the top five OTC companies in Australia by both value and volume. I’m sure they’re sad to see it go, but they can at least celebrate a solid value-creation journey.
The price of R26.5 billion represents an EV/EBITDA multiple of 11x (on a normalised basis). That’s a decent price.
Perhaps the most impressive thing about this transaction is that they got it done for a cost of R25 million. There’s no massive fee payable to a corporate finance advisor, with RMB only acting as the transaction sponsor. This is less than 0.1% of the deal value. Keep this in mind next time you see a transaction with ridiculous fees!
If everything goes ahead in this transaction, which I’m sure it will, then Aspen will be on much firmer footing going forwards.
But what do you think? Is there more value to be extracted from this story?
Exxaro’s dividend policy makes a difference (JSE: EXX)
There’s a juicy payday for investors
Exxaro has released earnings for the year ended December 2025. The HEPS story was decent in the end, with the dividend as the real highlight.
We begin with the coal business, which generates almost all of the group’s EBITDA.
Exxaro’s total coal production increased by 1% for the year, as did sales. Volumes to Eskom were down 2%, exports were up 2% and other domestic thermal sales increased 28%. Revenue increased by 3% and EBITDA was slightly up.
The renewable energy business had flat revenue due to lower generation. EBITDA came in 17% lower, with cost pressures related to strategic initiatives. Ouch!
Although there was a 16% improvement in corporate costs, it wasn’t enough to avoid group EBITDA dipping by 2% year-on-year. Not only was there the pressure in the energy business, but there were also additional costs related to the manganese acquisition.
Despite what sounds like a rough start to the income statement, HEPS increased by 8%. Equity-accounted investments in iron ore and base metals played an important role here. These come in below the EBITDA line.
Thanks to a revised dividend policy, the final dividend is up 15%! They will now have dividend cover of 1.5x – 2.5x, instead of 2.5x – 3.5x.
Guidance for full year 2026 is coal production and sales of 39.4Mt to 42.8Mt. The midpoint of guidance suggests some improvement from production of 39.9Mt and sales of 39.6Mt in 2025.
There is also a significant expected increase in capital expenditure in coal in 2026 and 2027, so that is going to put pressure on free cash flow after a few years of running below the typical capex levels required to sustain operations.
Only single-digit growth at Investec (JSE: INL | JSE: INP)
They have a lot to do to bring ROE closer to the top of the target range
Investec has delivered a pre-close update for the year ended March 2026. Remember, they report in GBP rather than ZAR, so these are all hard currency returns.
Despite a significant share buyback programme, HEPS will move by between 0% and 2% for the year – so growth is hard to come by. Adjusted earnings per share will be up by between 3% and 6%.
Pre-provision adjusted operating profit will increase by between 3% and 5%. The company has indicated that the credit loss ratio will be within the through-the-cycle range of 25 basis points to 45 basis points. The specifics on that for the full year will be interesting.
If we dig a bit deeper, Southern Africa is expected to be at least 4% up in terms of adjusted operating profit. Return on equity in that business should be around 18%, right in the middle of the medium-term range of 16% to 20%.
As for the UK, adjusted operating profit is expected to be at least flat vs. the prior year. There’s pressure in the banking operations there, specifically in terms of the credit loss ratio. Return on tangible equity (not quite the same as return on equity) should be between 13.3% and 13.7%, right near the bottom of the target range of 13% to 17%.
The UK market is anything but easy at the moment. With Investec so heavily involved in that market, it’s going to be challenging to bring returns up to where they should be.
A tasty jump in the dividend at Momentum (JSE: MTM)
But as we’ve seen across the sector, investment returns have been a drag
Momentum has released results for the six months to December 2025. We will get into the details, but the highlights reel is that normalised HEPS increased by 12% and the dividend per share jumped by 29%. Things are going well.
At the aggregate segmental level, normalised operating profit was up by 9% and normalised investment return increased by 20%. This took normalised headline earnings up by 11%. There are then some group-level adjustments to bring it down to 8%.
How did we get from 8% growth in normalised headline earnings to 12% growth in HEPS? The answer is share buybacks. If there are fewer people eating at the dinner table, there’s more food for each person. Importantly, the repurchases were achieved at a price that reflects an average discount of 17.5% to the embedded value per share.
The recent trend among the life insurers has been one of growth in premiums and pressure on value of new business (VNB). This is due to a change in consumer preferences around product mix. Sure enough, at Momentum, single premiums grew by 12% and VNB fell by 15%. New business margin fell from 0.7% to 0.5%.
For the most part, operating profit increased in the underlying segments.
There are some exceptions, with Momentum Retail as the ugly duckling thanks to various market factors like the yield curve and the spot rate. This is a highly technical space. It’s also worth noting that India’s operating loss was worse than the prior period due to non-recurring gains.
The star of the show was Momentum Investments, where operating profit increased by 38% thanks to various initiatives around product repricing and increases in assets under management. Momentum Africa also deserves a mention, swinging spectacularly from losses to profits. They’ve done a lot of restructuring in that part of the business.
As a final comment, return on equity decreased from 24.6% to 24.0%. The embedded value per share as at December 2025 was R44.55, with the group achieving return on embedded value per share of 14.3%. The market is demanding a lot more, hence the share price trading at R35.70 – a discount to embedded value per share of just under 20%.
Time for more share buybacks?
Schroder European Real Estate declares its first interim dividend (JSE: SCD)
Watch out for the NAV – and especially the tax
Schroder European Real Estate Investment Trust has announced its net asset value (NAV) as at 31 December 2025. They’ve also declared their maiden interim dividend of 1.48 euro cents per share.
The NAV return over this period is just 0.8%, with property valuations going sideways.
The portfolio vacancy has increased due to a major departure at a property in the Netherlands, so that’s a worry for earnings. There have been some positive movements in leases elsewhere in the portfolio.
Here’s the risk that I still can’t get my head around: the French Tax Authority has issued an assessment for €14.2 million. The group has appealed the assessment, but they haven’t raised any kind of provision for this amount in the financials. Zero. Nada.
The board might have a strong view that nothing is payable here, but this still seems like an aggressive approach.
There are so many property companies I would buy before this one. But if I was going to invest here, I would at least apply a reasonable haircut to the NAV based on that tax assessment. On a market cap of R1.85 billion, a tax issue of around R275 million is material.
Nibbles:
- Director dealings:
- Des de Beer has now opened his wallet properly, buying R22.8 million worth of shares in Lighthouse Properties (JSE: LTE).
- The chairman of Sibanye-Stillwater (JSE: SSW) bought shares worth R668k.
- An executive director of Libstar (JSE: LBR) bought shares worth R109k.
- Novus Holdings (JSE: NVS) announced a disposal of properties for R91.7 million. They are in KZN and currently owned by Novus Print, with Mthembu Paper Mill as the lessee. Novus is a shareholder in Mthembu Paper Mill after previously doing a deal with that company, hence the relationship around this property. There’s really no reason for Novus to own the property itself though, so I’m sure shareholders will be happy to see it go. The profit before tax attributable to the letting enterprise was R7.3 million for the year ended March 2025. There are clearly much better uses for the cash.
- Visual International (JSE: VIS) is looking to raise up to R2 million in cash via a bookbuild. The timing and closing of the bookbuild are at the discretion of the advisors, which is how you know that they aren’t expecting investors to fall over each other in a rush to participate. The bookbuild is in a closed period, so directors may not participate. It’s going to be interesting to see what happens here. Worryingly, the bookbuild is for “working capital requirements while projects come to fruition” – not exactly bullish.
