In this edition of Ghost Bites:
- When will Labat Africa engage with the market and tell their story?
- Old Mutual reminds us just how well our market infrastructure works in South Africa
- South Ocean Holdings expands in Cape Town
When will Labat Africa engage with the market and tell their story? (JSE: LAB)
They now own 100% of Classic International, yet the share price remains stuck at R0.03
Labat Africa has now concluded the acquisition of the remaining 24.45% in Classic International. This means that they’ve issued another 900 million shares (at R0.03 per share) to settle the purchase price of R27 million.
Classic International is an IT company. Unsurprisingly, it doesn’t take long for the words “artificial intelligence” to be thrown around as well. This is part of Labat’s broader transformation into a tech company, something that the market is finding difficult to understand. Historically, Labat was a cannabis business, so you can’t really blame the market for the confusion.
Ghost Bite: Labat Africa has been promising to talk to the market and explain the strategy. This implies that a Capital Markets Day is in the pipeline. Let’s see if (and when) that happens.
Old Mutual reminds us how well our market infrastructure works in South Africa (JSE: OMU)
By emerging and frontier market standards, we are very spoilt here
There’s never a dull moment when it comes to frontier markets like Zimbabwe.
Old Mutual has been suspended from trading on the Zimbabwe Stock Exchange (ZSE) for years now, despite the suspension having absolutely nothing to do with Old Mutual itself.
After years of engaging with regulators, Old Mutual has determined that the easiest route to achieving some liquidity for investors in Zimbabwe will be via a transfer of the listing from the Zimbabwe Stock Exchange to the Victoria Falls Stock Exchange (VFEX).
Interestingly, VFEX now has 19 counters listed on its exchange vs. just one listing in 2020 when the nonsense started with the ZSE suspensions. Another element worth highlighting is that VFEX trading is all denominated in USD, so you also don’t get the same currency volatility that you’ll find on the ZSE.
Ghost Bite: This makes no difference to South Africa investors in Old Mutual, but I think it’s a good reminder of some of the difficulties in doing business in markets like these. Our financial markets infrastructure in South Africa is literally world-class.
South Ocean Holdings expands in Cape Town (JSE: SOH)
A related party deal gives them a foothold
South Ocean is a R200 million market cap company with thin liquidity in its stock.
The company is focused on low voltage electrical cables. This is a difficult business that saw profitability plummet in the year ended December 2025, hence why the share price is down 41% over 12 months.
South Ocean is now acquiring Southern Atlantic Cables for R4.5 million. South Ocean will pay for the deal through the issuance of shares at 98 cents per share. The current traded price is R1.00 per share.
The unusual element to this deal is that it is a related party transaction, thanks to the involvement of the Chairman of South Ocean in this asset. It’s a rather convoluted story, with the summary being that the Chairman got involved in this asset a year ago to acquire it from a former customer. For whatever reason, the opportunity wasn’t available to South Ocean at the time.
As with all related party deals, the director with a conflict of interest reclused himself from the meeting to discuss the transaction. The rest of the board believes that the deal is fair, particularly in the context of the cost of setting up distribution in Cape Town.
Southern Atlantic Cables generated net profit of R968k in the period ended December 2025, so they are picking it up on a P/E of roughly 4.5x.
Ghost Bite: Single-digit P/E multiples are market practice for industrial assets in South Africa. If anything, given the size of this business, 4.5x is probably slightly on the high side. With part of the justification being the route-to-market in Cape Town, this valuation is being substantiated by more than just the existing earnings. A build-or-buy analysis is common in corporate transactions.
Results of previous poll:
Nibbles:
- Director dealings:
- As part of broader share awards, the CFO of Lewis Group (JSE: LEW) sold shares in excess of the taxable portion worth R1.34 million.
- A founding director of Famous Brands (JSE: FBR) sold shares worth R98k. This adds to the recent selling by that director.
- Accelerate Property Fund (JSE: APF) made a mistake in their last SENS announcement. Distributable earnings will be between 1.96 cents and 2.31 cents, not between R1.96 and R2.31. With the share price at R0.49, I imagine that most people just read straight over the error without realising it. Anyway, the company has now corrected it. For anyone who thought that the company is trading on a P/E of around 0.25x, this will be an unpleasant correction.
- Visual International (JSE: VIS) has confirmed that Serowe Industries has terminated its non-binding offer to acquire up to 34.9% of the company. This is yet another reminder that a corporate deal is never done until the cash has flowed. Even binding offers can fall over, so non-binding offers are little more than a promise to meet up for dinner at some point.
- Novus (JSE: NVS) continues to build its stake in Mustek (JSE: MST). These are on-market trades, so it takes a long time to meaningfully add to an existing position via this approach. Recent purchases have taken Novus from a direct stake of 50.44% to 50.67%. Together with concert parties, the stake has increased from 70.73% to 70.96%.
- Shuka Minerals (JSE: SKA) released another set of drilling results at the Kawbe Zinc Mine. As usual, you need a degree in geology to understand anything about the technical elements of the announcement. It seems like the latest drilling was in a northern area of the project that isn’t as well understood as the rest, so this was exploratory drilling in the truest sense. Having now learnt more about the orebody, they will return to more central areas that aren’t as unknown.
