Can Afrimat stop the slide in the share price? (JSE: AFT)
They took a big risk on Lafarge – and the environment hasn’t been kind to them
Businesses go through good times and bad. This is simply a reality of the world that we operate in. This is why investing in shares is a risk, as growth is by no means guaranteed and things can go wrong. The reward for that risk is that you could earn high returns.
Some investors prefer to operate with highly concentrated portfolios that chase the highest possible returns (for the most risk), while others (like me) prefer to spread the risk across many names.
The Afrimat share price chart is a perfect example of why I believe strongly in diversification:
This is a good time to point out that Afrimat is actually a very good company with a strong management team. But if you keep rolling the dice on acquisitions, sooner or later you’re going to roll a 1 instead of a 6.
The share price has lost more than a third of its value in the past year because the timing of the high-risk Lafarge acquisition happened to coincide with several other things going wrong. Perfect storms can happen to the best of us.
Naturally, this means that the market is looking for the bottom in this share price chart. Much like Donkey in Shrek 2, we continuously find ourselves asking: “Are we there yet?”
The answer isn’t easy to figure out.
In a pre-close business update, Afrimat has given plenty of narrative and only a handful of detailed numbers to work with. At least we know that the debt/equity ratio is consistent with previously reported levels, so the balance sheet isn’t getting worse – and also isn’t getting any better. This should improve going forward thanks to asset disposals and the related proceeds being used to reduce debt. They are also in the process of refinancing debt to have a longer-term profile.
Digging into the underlying businesses, we begin with the Construction Materials segment and specifically the aggregates business, where Afrimat expects margin in FY26 to improve slightly, provided you take out the non-core businesses that have been disposed of. They’ve been focused on delivering numerous improvement projects aimed at enhancing margin in the continuing operations. Time will tell what that really means for the numbers.
In the cement business, sales volumes are expected to be up vs. the prior period. The business is sadly still in a loss-making position, but the losses did at least reduce in the second half of the year.
Moving on to the Bulk Commodities business, the significant underlying risk for the iron ore operations is the exposure to ArcelorMittal (JSE: ACL), a business in crisis. Government has been in negotiations with ArcelorMittal for ages now, but there’s still no resolution to the situation that will impact thousands of jobs. At least offtake to the Flats business in Vanderbijlpark increased, but even that part of the ArcelorMittal group isn’t safe in the current environment of massive disruption to the South African industrial base.
The natural response to a lack of domestic demand would be to export the surplus iron ore and tap into the export market. But this isn’t so easy, as volumes are only expected to be flat year-on-year thanks to shipment capacity being 16% lower than the committed rail allocation. The infrastructure in South Africa just keeps letting our companies down. To add insult to injury, international iron ore pricing has dipped from $105 to $101 – and that’s even worse in rand.
In anthracite, the domestic business is suffering with a decline in volumes thanks to the shutdown of the ferrochrome smelters. The Nkomati Anthracite Mine was closed from November 2025 to January 2026 based on the disastrous state of the ferrochrome industry in South Africa. Afrimat had skeleton staff in place this month in anticipation of a restart date for the smelters, but such a date has not been confirmed.
This is one of the places where Afrimat does give specific numbers: local volumes of anthracite are expected to be half of the levels achieved in 2025. Yikes!
In this case, there was a significant boost in exports to try and offset the dramatic decrease in local volumes. They put in a valiant effort, but total volumes for FY26 will still be around 3% less than FY25.
The Glenover project is still important to the long-term plans, but Afrimat has more than enough other things to keep them busy right now. They are assessing different processing methods for this asset and engaging with potential international partners. I can’t imagine that this is getting much headspace from management at the moment. Ditto for Industrial Minerals, which was also impacted by the smelters.
At this stage, it feels like Afrimat is truly between a rock and a hard place – and in a way that even the execs of a quarrying business wouldn’t enjoy. 20 years into their corporate journey, they are dealing with major challenges. I worry about the extent of exposure to major underlying risks like the ferrochrome smelters, and ArcelorMittal, not to mention Transnet in terms of exports. To top it all off, the stronger rand is making exports less attractive for Afrimat and imported alternatives more affordable for its customers.
To answer Donkey’s question: no, I don’t think we are there yet. But what do you think?
BHP is off to a great start in FY26 (JSE: BHG)
There’s a sharp increase in HEPS for the first half of the year
Mining giant BHP has released earnings for the six months to December 2025. With underlying EBITDA margin up by 7 percentage points to 58%, it was a strong period for them. Net operating cash flow increased by 13% and HEPS was up by 30%!
It won’t surprise you that copper features strongly in the story, with an EBITDA margin of 66% and production up 2%. Iron ore isn’t exactly far behind, with an EBITDA margin of 62% (thanks to extensive focus on efficiencies at Western Australia Iron Ore) and production growth also sitting at 2%.
Steelmaking coal is far less lucrative, with an EBITDA margin of only 15%. Production was up 2% in that commodity as well.
BHP certainly knows how to play the game from an investor relations perspective, with the presentation including striking references like “world’s highest margin major iron ore business” and “world’s largest copper producer and resource” – it’s nice to sit at the top of the pile!
And the top is where BHP will remain, now that we know that Glencore (JSE: GLN) and Rio Tinto abandoned talks to create the world’s largest mining company.
With copper production guidance for FY26 increased, BHP is on track for a great year. This is why the share price is up 21% over 12 months.
In a separate announcement, BHP confirmed that they have entered into a streaming agreement with Wheaton Precious Metals International. This has nothing to do with Netflix and everything to do with obtaining upfront funding of $4.3 billion for the delivery of silver from the Antamina mine.
Interestingly, BHP is only a 33.75% shareholder in CMA, the company that owns the Antamina mine. CMA is not a party to this streaming agreement. There’s clearly some fancy financial and legal footwork here, as the streaming deal also doesn’t come through as debt on BHP’s balance sheet, even though it strikes me as an obligation to deliver silver.
The core of the deal is that BHP will deliver 33.75% of the silver produced by Antamina to Wheaton until they have delivered 100 million ounces. After that milestone is reached, BHP will deliver 22.5% of Antamina’s silver to Wheaton. In addition to the upfront payment, Wheaton will pay BHP 20% of the spot silver price at the time of delivery.
MTN is moving ahead with the deal for IHS (JSE: MTN)
But they only want the African towers, not the LatAm footprint
MTN recently confirmed that it was in discussions regarding the potential acquisition of the 75.3% in IHS that it doesn’t already own. IHS has over 28,700 towers across five key markets in Africa, including in South Africa. They serve 10 out of the 13 mobile network operators in Africa.
This deal is an unusual approach to capital allocation, as the industry has been focused on separating the tower infrastructure from the telco operators. With this transaction, MTN is effectively undoing that.
IHS has already announced the disposal of its Latin American (LatAm) business, with MTN very happy to see that go. MTN is only interested in the African tower portfolio, giving it control over much of its infrastructure footprint in Africa. IHS derives around 70% of its revenue from MTN.
This is a chunky deal, with cash of $2.2 billion changing hands. Cleverly, they are using $1.1 billion of cash on IHS’ balance sheet and $1.1 billion from MTN, funded by available liquidity and debt. MTN doesn’t need to do an equity raise for this deal.
The offer price to IHS shareholders is a premium of 9.7% to the 30-day volume-weighted average price (VWAP) of IHS. Once you adjust for the disposal of the LatAm assets, the African tower portfolio has an enterprise value of around $4.8 billion.
Will that be a high enough price to convince shareholders to say yes? Thanks to engagement with other shareholders, MTN has support for the transaction from holders of 40% of the voting shares. They need to achieve two-thirds approval, so there’s still a way to go.
At least they don’t need approval from MTN shareholders as well, as this is only a Category 2 transaction.
IHS generated interim profit of around $106 million for the six months to June 2025. The LatAm assets would be in those numbers I’m sure, so that’s not a pure indication of the earnings that MTN is acquiring. Still, annualising this number shows that they are paying a modest Price/Earnings multiple. This is exactly why MTN’s management sees this as an accretive deal.
Naturally, IHS will still continue to serve all customers, including MTN’s competitors. This is key to the economics of the towers themselves. And even if there was an economic way to squeeze competitors out, I’m quite sure that regulators would be sitting on MTN’s head immediately.
Sirius Real Estate had no trouble raising nearly R1.7 billion in just a few hours (JSE: SRE)
This is the power of the market for successful property funds
You’ll often hear people complain about the pain of being a listed company and how the juice just isn’t worth the squeeze. The property sector is an exception, with Real Estate Investment Trusts (REITs) capable of raising hundreds of millions (and sometimes a few billion) in the space of a morning.
Sirius Real Estate is just the latest example, with the company kicking things off on Tuesday by announcing a raise of approximately £77 million. This was structured as a non-pre-emptive placing of £75 million and a retail raise of £2 million.
They had no struggles in securing this capital, with an announcement just a few hours later confirming that they raised £77 million at a premium of 1% to the closing share price on 16 February 2026.
This means they raised nearly R1.7 billion without even offering a discount to investors. If you can believe it, they managed this at a premium of 1.4% to the 30-day volume-weighted average price (VWAP). Impressive!
To be fair, the company confirmed that they spoke to certain shareholders before the time, so they had lined up their institutional supporters. They will also allow new institutional shareholders onto the register as part of this raise. Another important point to raise is that certain directors and executives will participate in this raise to the extent of £100k. That’s small in the context of the total raise, but still a large number for individuals to be adding to the pot.
The management of the capital raise certainly contributed to the success, but the real story is the underlying strategy and the track record in deployment of capital. Sirius Real Estate is focused on the property market in the UK and Germany, with a particular tilt at the moment towards the defence theme that is playing out in Europe. This means industrial assets in strategically important locations that can attract defence tenants.
This raise will be used for two acquisition opportunities in Germany. The company is in exclusive negotiations and they expect to notarise the properties in the second quarter of 2026, subject to being happy with the due diligence. One of the properties is a long-term sale and leaseback in southwest Germany, while the other is a multi-tenanted site in northern Germany.
The total value for the two acquisitions is £113 million. In case you’re wondering about the gap between the £77 million equity raise and the value of the deals, remember that property funds make extensive use of debt to help achieve the right return on equity. Sirius Real Estate targets a loan-to-value ratio of 40% for the group, although they can obviously tweak that on a deal-by-deal basis if needed.
To give you a sense of pricing, the properties have a net initial yield of 7.6%. As always, Sirius Real Estate sees the potential for value-add strategies aimed at improving the returns over time. The company talks about a “window of opportunity” to do deals at this point in the cycle, which speaks directly to capital discipline.
Keen to learn more about the strategy, especially elements like the defence sector in Germany? Listen to this podcast from December 2025 with the CEO, CFO and CIO of Sirius Real Estate (and you can access the transcript here):
Nibbles:
Director dealings:
As mentioned above in the Sirius Real Estate (JSE: SRE) update, directors subscribed for around £100k (almost R2.2 million) in new shares. The CEO was good for half this amount, with the rest spread across a few executives.
PBT Holdings (JSE: PBT) announced that Spalding Investments, the B-BBEE investment vehicle that holds just over 26% in the company, sold some shares to directors of PBT Holdings and subsidiaries. Various directors bought shares worth almost R1.5 million in aggregate at R6.50 per share. This is small in the greater scheme of things, with Spalding’s stake reducing from 26.61% to 26.39%.
ASP Isotopes (JSE: ISO) announced that the headquarters of Quantum Leap Energy will be established in Austin, Texas. The choice of Texas makes sense based on the recent corporate trends in the US and the customer base that Quantum Leap Energy is looking to reach. In rather colourful language, the CEO of Quantum Leap Energy refers to Texas as the “epicentre of the American nuclear renaissance” – nice! Jokes aside, with all the power demand of data centres and the seemingly endless investment in that space, this feels like the right time to really get the hammer down on accessing the US market.
Tsogo Sun (JSE: TSG) confirmed that over the period since the authority was granted at the AGM in August 2025, they have repurchased 3.12% of shares that were in issue at that date. This has been done at an average price of R6.95 per share, which is slightly lower than the current price of R7.10.
Sibanye-Stillwater (JSE: SSW) released a Mineral Sources and Mineral Reserves declaration. A lot of work goes into these estimates each year. Aside from the obvious reduction from ongoing mining activities, there are other changes to the reserves based on geotechnical considerations. The one that sticks out is Kloof, where the economic viability of the operation was impacted by the removal of isolated blocks of ground. The majority of the Mineral Reserves were written down at that operation. On the plus side, the completion of feasibility studies at various mines helps to increase the reported mineral reserve.
Oando (JSE: OAO) is not a name that comes up very often, yet the company has announced that it plans to issue a whopping 4.4 billion shares in a rights issue. They’ve indicated a price of 50 naira each, which is roughly R0.60 per share. The current share price is only R0.18. I’m not sure where they are going to find over R2.6 billion in support for their rights offer, but I look forward to seeing the circular for this raise. The current market cap is R2.2 billion.
Barloworld (JSE: BAW) had a busy day. One of the final steps in the take-private dance for this group is the redemption of the listed preference shares. The first announcement on the day was that the redemption will be delayed, as approval hasn’t been received yet from the South African Reserve Bank (SARB). They clearly tempted fate here, as the approval came through later in the morning and Barloworld then released a finalisation announcement. The preference shares will be delisted on 3rd March.
Caxton and CTP Publishers and Printers (JSE: CAT) is another company that is waiting for approval from the SARB, although they need the approval to pay special dividends rather than to redeem shares. Caxton has had to push out this special dividend to an unknown date, as they are not sure when the approval will come through. You really have to wonder why we find ourselves in a situation where companies cannot do something as basic as pay a special dividend without waiting for approval from a regulatory body that seems to regularly miss the deadline.
South Africa’s 2026 Budget arrives at a pivotal moment.
Debt is hovering near 78% of GDP. Growth is forecast at just 1.5%. Debt-servicing costs absorb around 5% of GDP. And yet, bond yields have fallen, sentiment has improved and S&P maintains a positive outlook.
Is this genuine fiscal stabilisation or simply a window of opportunity?
In the latest episode of No Ordinary Wednesday, Jeremy Maggs sits down with Investec’s Chief Economist Annabel Bishop and Treasury Economist Tertia Jacobs to unpack:
What it would take to secure a credit-rating upgrade
Whether debt has truly peaked
How meaningful the commodity revenue windfall is
The risk of further “stealth” tax pressure on households
Municipal reform and infrastructure momentum
What it would take to secure a credit-rating upgrade
Hosted by seasoned broadcaster, Jeremy Maggs, the No Ordinary Wednesday podcast unpacks the latest economic, business and political news in South Africa, with an all-star cast of investment and wealth managers, economists and financial planners from Investec. Listen in every second Wednesday for an in-depth look at what’s moving markets, shaping the economy, and changing the game for your wallet and your business.
Volatile EBITDA margins at AECI, but earnings are up overall (JSE: AFE)
The choppy share price reflects the underlying economics
AECI’s share price has been on quite the journey. It’s up 25% in the past year, but this has been anything but a linear story. And as you can see from this chart, a major jump on Monday contributed strongly to the return over 12 months:
You’ll note that the starting date matters tremendously when we talk about the return over 12 months. If you had bought in June 2025 rather than February, you would now only be flat! As is so often the case, the volatility in the share price is echoing the underlying business.
For the year ended December 2025, even though there was pressure in revenue, the company expects Headline Earnings Per Share (HEPS) to be up by between 43% and 58%. This is a very encouraging update.
There are important discontinued operations here, as the company has been on a mission to exit non-core businesses and reduce debt. Disposal proceeds of R2.3 billion were put to good use in decreasing net debt. The gearing ratio is now just 5%, as net debt is only R460 million vs. R3.7 billion at the end of the prior period.
If you isolate continuing operations, then Earnings Per Share (EPS) from continuing operations is expected to increase by between 26% and 40%. EPS isn’t as useful a metric as HEPS because it doesn’t strip out many of the once-off distortions, but we have to work with what the company has given us in this trading update – and they haven’t given HEPS from continuing operations.
Group revenue is under pressure thanks to an 8% decline in AECI Mining’s revenue. There were lower sales volumes in both Mining Explosives and Mining Chemicals.
Despite this, AECI Mining’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation – in case you need a refresher) actually increased by more than 15%. Talk about a swing in margin!
They attribute the EBITDA move to better pricing and overall margin management, which I guess is a nice way of saying that they did their best to offset the pricing pressure. That’s a good outcome, especially in the context of operating challenges at the Modderfontein facilities.
At AECI Chemicals, we find the opposite situation. Revenue was up by 5%, yet EBITDA is expected to decline by 5% thanks to bad debts. Investors never want to see something like this. Although they collected a portion of the bad debt in the second half of the year, this is the kind of knock that the business didn’t need. In more positive news, they note a particularly strong performance in the Public Water area of the business.
In summary, the business has a much stronger balance sheet and has made plenty of progress in getting the core pieces in place. They’ve also demonstrated an ability to respond to a tough revenue period. With group HEPS expected to be between R10.22 and R11.31, the current share price of around R105 suggests a Price/Earnings multiple of around 9.8x at the midpoint of guidance. But we need to wait for HEPS from continuing operations to know for sure.
I’m curious to get your views on AECI, so please vote in the poll below:
Stefanutti Stocks has highlighted an improved order book (JSE: SSK)
Thecompany is keeping investors informed every step of the way
Occasionally, a share price performance looks more like an adrenaline sport than anything else. Over the past five years, Stefanutti Stocks has returned nearly 1,700%! And no, there isn’t an extra zero in that number. See for yourself:
This is what can happen when a company narrowly escapes death. Shareholders had to be very patient along the way, which is a reminder of the different strategy that you need to be following if you play in shares like these.
Clear market communication has been a feature of this story. They are certainly continuing that trend, with the company announcing that the current order book has increased from R13.2 billion to R15.3 billion. Only R1.4 billion is for 2026, but they’ve got R8 billion lined up for 2027 and then the rest for 2028 and beyond.
To give you an idea of how these pipelines work, they have short-term potential awards of R12.5 billion and identified prospects of R144 billion.
The Standard Bank facility is down from R850 million to R250 million, which means that the interest charge is expected to drop by 70% for the year ending February 2027.
The share price closed 3.7% higher in response to this positive update.
Telkom’s momentum continues (JSE: TKG)
Theperformance in prepaid is particularly impressive
Telkom’s share price is up 66% in the past year. This made it a better choice over the past 12 months than any of the Big Tech names – yes, even Alphabet (the owner of Google).
This is because Telkom has been focusing on executing a turnaround that the market approves of, rather than a strategy of throwing gazillions at fancy new technology.
For the quarter ended December 2025, which is the third quarter of the financial year, group revenue was up 1.3%.
Data revenue (up 9.6%) is relevant here, now contributing 61.6% of group revenue. They give a further breakdown of that number, with mobile data up 12.9% and fibre-related data revenue up 8.9%. Openserve now passes 1.5 million homes and has a connectivity rate of 52.4%.
To remind you of how deflationary the products are, mobile data subscribers increased by 29.3% to 19.3 million. That’s much higher than the growth in data revenue.
The prepaid market has been highly competitive recently, with Telkom managing to grow revenue by 11.6%. Subscribers were up 5.8%, with Telkom noting a stable average revenue per user (ARPU) of R61. And no, I’m not sure how the ARPU can be consistent if there’s such a difference in growth between revenue and subscriber numbers.
In the postpaid (or contract) market, subscriber numbers were up 1.2% and ARPU increased to R187. Aside from the revenue visibility that it brings, you can see why these companies are keen to convert prepaid subscribers to contracts – the ARPU is more than three times higher.
These growth engines are dragged down by areas like BCX (down 9.3%) and other legacy offerings in the group, leading to only a modest increase in group revenue.
The overall revenue story is not exciting, but the increase in adjusted EBITDA of 8.4% is an inflation-beating performance. Adjusted EBITDA margin improved by 190 basis points to 29.1%. This was achieved through a decrease in adjusted costs for the quarter. Again, BCX remains a pressure point here, with EBITDA margin falling sharply by 460 basis points to 10.4%.
This means that the group is running ahead of the 25% – 27% EBITDA margin guidance, something that the market will be pleased about.
Further down the income statement, the group has highlighted a better credit performance that led to improved impairments of receivables.
The company might not have the wild capex profile of the data centre enthusiasts overseas, but they still invested R1.3 billion in capex in the third quarter. The focus of the capex strategy is on supporting the mobile and fibre businesses.
This is an increase in capex of 19% year-on-year, so capex intensity (capex as a percentage of revenue) increased by 170 basis points to 11.7%. This is something for investors to keep an eye on in terms of free cash flow, with the group having guided capex intensity of 12% to 15%.
The share price increased 6% on the day in response to this update. Telkom is trading on a Price/Earnings multiple of below 9x, a level that tends to get local value investors rather excited.
Nibbles:
Director dealings:
An associate of a director of Afrimat (JSE: AFT) sold shares worth around R5.4 million.
An associate of a director of Visual International (JSE: VIS) sold shares worth R149k. And no, there’s still no working website.
With RMB Holdings (JSE: RMH) having announced the AttBid offer, we are now seeing Atterbury Property Fund increase its stake by buying shares in the open market. The purchases have all taken place at R0.47 per share. Atterbury Property Fund now has a 32.01% stake in RMB Holdings.
African Rainbow Minerals (JSE: ARI) announced that Dr Patrice Motsepe is stepping down as Executive Chairman. This is based on changes to the JSE Listings Requirements that no longer allow an executive chair. Dr Motsepe will be the non-executive Chairman going forwards, which means that he will technically no longer be an employee of the company that he founded. Along with this change, the company announced Jacques van der Bijl as the new COO of the group.
The leadership changes at Copper 360 (JSE: CPR) continue. Company secretary Phillip Venter Attorneys has resigned from that role based on a “strategic realignment of the firm’s service offerings” – this is most unfortunate timing for such a realignment, given the other major recent changes at Copper 360. A replacement hasn’t been announced yet.
In yet another example of how there’s never a dull moment at Trustco (JSE: TTO), the company’s general meeting (the one that was requisitioned at the request of Riskowitz Value Fund) didn’t go ahead after the chairman of the board ruled that the notice convening the meeting was defective. Shareholders were given a chance to condone the defective notice, but this vote failed. According to Trustco’s board, based on the proxies received and the shareholders present at the meeting, the resolutions would’ve failed anyway as there wasn’t a majority willing to vote in favour of them. And so the wheels turn.
Putprop (JSE: PPR) announced the appointment of Janys Ann Finn as an independent non-executive director. For such a small fund, it’s impressive to have attracted a director to the board who is the ex-CFO of Redefine Properties (JSE: RDF) and other smaller REITs.
Cell C releases its maiden interim results as a listed company (JSE: CCD)
The MVNO business remains a key growth engine
Cell C has released results for the six months to November 2025. The significance is that these are the first results since the company listed at the end of 2025. If you want to understand more about the group strategy, you should check out this podcast I recorded with CEO Jorge Mendes in December.
Unlike the other big names in the telco space, Cell C isn’t searching for growth in the rest of Africa – at least not at this stage. MTN (JSE: MTN) and Vodacom (JSE: VOD) have been on an exceptional run, but much of it is thanks to improved macro factors in Africa that are outside of their control. And we don’t have to go far back in the history books to see how rapidly that macro situation can deteriorate.
Cell C is therefore a much simpler group from a macro perspective, but they have also missed out on the surge in Africa. Risk vs. reward is on full display here.
The key differentiator at Cell C is the Mobile Virtual Network Operator (MVNO) business that has leading market share in this space. This is the technology through which companies like Capitec (JSE: CPI) offer cellphone-related services (e.g. Capitec Connect). There are many companies with large distribution networks that see the opportunity for value-added services as a way to boost margins and grow share of wallet from existing customers.
Growth in the Wholesale business of 22.5% is a very useful growth engine, but Cell C still derives the majority of its revenue from “traditional” services like Prepaid and Postpaid (contract) revenue. For context, Wholesale generated R840 million in revenue in this period vs. R3.9 billion across Prepaid and Postpaid combined.
Prepaid has been a competitive bloodbath recently, so 1.6% net revenue growth to R2.7 billion is pretty good. The number of subscribers increased by over 1 million. Average revenue per user (ARPU) fell by 8.4% to R71, primarily due to the 14% effective reduction in data tariffs. The deflationary nature of the service offering is one of the biggest challenges for the telco companies.
Postpaid revenue has increased by 2.3% to R1.2 billion, with that growth expected to improve as they integrate the Comm Equipment Company (CEC) business. They are deliberately focusing on higher quality Postpaid customers that offer a larger ARPU, with a 4.4% improvement in that metric to R240.
A number of other revenue streams came under pressure due to the regulated reduction in mobile termination rates. On the plus side, the Enterprise business achieved double-digit growth, albeit off a small base. Overall, the Other segment experienced a drop in revenue of 11% to R886 million.
Absolutely nobody talks about the Other segment, yet it generates more revenue than Wholesale! This won’t be the case for much longer, though.
Once you add it all together, you find revenue growth of just 1.8% to R6.7 billion, showing you how hard it is to drive meaningful growth in South Africa (and why competitors went off to Africa in search of riches).
There are plenty of once-off items in the expense base, so the company has reported adjusted EBITDA to give a better indication of the underlying performance. This important metric actually dipped by 1.1% to R917 million, with significant expense pressures on lines like personnel, IT and marketing.
Profitability will need to be on a more appealing trajectory going forwards, something that isn’t easy to do when revenue growth is in the low single digits.
The company’s growth story is being supported by a balance sheet that is much cleaner than pre-IPO when it was intertwined with Blu Label (JSE: BLU). The net debt to EBITDA ratio of 0.6x is healthy. Cell C follows a capex-light model with capex investment of R895 million in this period, so that helps with keeping the balance sheet in a healthy range.
Looking ahead to the second half of the year, they expect an acceleration in Prepaid and Postpaid revenue, while the Wholesale segment is expected to grow by more than 20%. The pressure in Other revenue streams is expected to continue, while Enterprise (within the Other bucket) is expected to have another strong period.
And in case you’re wondering why I didn’t mention Headline Earnings Per Share (HEPS), here’s why: thanks to the once-offs in the numbers that even HEPS doesn’t make allowances for, they’ve reported HEPS of R205.84. The share price is R29, so that would put Cell C on a Price/Earnings multiple of 0.07x (because you would have to annualise the interim numbers). This is clearly not “correct” at all as an indication of value.
The results will become easier to interpret and understand over time as these once-offs are worked out of the system.
Ethos Capital is repurchasing 41.5% of its shares (JSE: EPE)
This is from the proceeds of the Optasia (JSE: OPA) sell-down
Ethos Capital has been talking for ages about unlocking value and returning capital to shareholders. These things do take time, especially when the portfolio consists of multiple underlying investments.
When Optasia listed towards the end of last year (check out this podcast with Optasia CEO Salvador Anglada to learn more), it gave Ethos Capital an opportunity to monetise a chunk of its stake. These proceeds can now be used to repurchase shares from investors.
How big is this repurchase? Well, Ethos Capital is looking to repurchase 41.5% of its shares in issue. In other words, they are returning nearly half of the value of the company to shareholders!
And when I say value, what I really mean is the net asset value (NAV), not the market value. You see, the NAV per share is R8.10, whereas the current market price is R7.52. The total value of the planned repurchase is R860 million, which works out to 44.6% of the market cap due to the share price trading at a discount to NAV per share.
It’s worth noting that the NAV has increased since the last reported estimate of R7.57 that was announced in December. This is because of the positive movement in the Optasia share price.
The default election for shareholders is to accept the repurchase offer. Any shareholders who don’t want to accept it must inform their broker by Friday, 6th March.
Mustek’s profitability looks much better (JSE: MST)
HEPS has almost quadrupled
Mustek’s profits are jumping around like an excited Jack Russell at the moment. For the six months to December 2025, the IT group expects HEPS to increase by between 250% and 270%. It’s hard to process percentage movements that are this high, so it’s easier to think in absolutes: HEPS will be between 82.13 cents and 86.83 cents vs. 23.47 cents in the comparable period.
Apart from a drop in finance costs, and a helpful forex situation as the rand has strengthened, they have also attributed this performance to cost control and equity-accounted investments. We will have to wait for 25 February to get all the details.
And in case you’re wondering, the share price hasn’t had a chance to react to this yet. Although it closed 4.5% higher on the day, that move happened in the morning and this announcement came out in the late afternoon.
Could the worst finally be behind them at KAP? (JSE: KAP)
After such a long period of disappointment, there’s plenty of positive momentum here
KAP is one of those companies that just couldn’t catch a break for the longest time. But the winds of change may well be blowing, as HEPS for the six months to December 2025 is expected to be between 28% and 35% higher.
This percentage growth tells us that interim HEPS will be between 22.0 cents and 23.2 cents. Annualising the results at KAP feels extremely brave, but it’s worth noting that the share price is R2.33 and hence the Price/Earnings multiple on an annualised basis would be roughly 5x. The market still has plenty of scars from KAP, with the valuation reflecting this track record.
The best segmental stories appear to be PG Bison (thanks to higher production and sales volumes) and Feltex (domestic new vehicle assembly volumes are up). They’ve also enjoyed lower finance costs.
Safripol remains the biggest headache, with the polymers sector in a cyclical low that is so stubborn it would make the platinum sector blush.
Detailed results are expected on 26 February.
With the valuation at such modest levels, what is your expectation of the share price trajectory this year?
Nibbles:
Director dealings:
After a substantial recent sale by the founders of WeBuyCars (JSE: WBC) gave bears something to shout about, we’ve seen an encouraging purchase of shares in the company by other directors. The Chairperson has bought R10 million in shares and the CFO has bought R2.5 million in shares.
The CFO of Mantengu (JSE: MTU) has bought another R6.3k worth of shares.
Mahube Infrastructure (JSE: MHB) released a firm intention announcement on 9 December 2025 in relation to the approach by Sustent Holdings. They should’ve released a circular to shareholders within 20 business days, but this didn’t happen. Delays are not uncommon for deals announced in the festive season. An extension has been granted by the Takeover Regulation Panel (TRP) out to 9 March 2026. Let’s see if they can meet that deadline.
Labat Africa (JSE: LAB) announced that Financial Director David O’Neill has retired with immediate effect due to reasons of ill health. He is 78 years old.
How blind obedience shaped one of history’s most unsettling experiments, and why its lessons matter more than ever in the age of AI
In August of 1961, Stanley Milgram, a psychologist at Yale University, set out to test how far ordinary people would go when instructed by an authority figure to act against their own conscience. This was a particularly important experiment at the time: three months earlier, the televised trial of Nazi war criminal Adolf Eichmann had started in Jerusalem. In later writings, Milgram said that he designed his experiment because he was fascinated by Eichmann’s claim (similar to the claims made by other members of the Nazi party) that he was “simply following orders”.
There were 40 participants in the original experiment, who were all kept in the dark about its true nature. Instead, they were told that they were assisting in a study on memory and learning. Their task as the “educator” in the experiment was to teach an unseen adult “learner” a list of word pairs, and then the learner had to repeat the word pairs that they could remember. When a learner gave a wrong answer, the educator was expected to administer an electric shock to the learner. With each mistake, the voltage increased, from 15 volts all the way up to 450, levels clearly marked from “Slight Shock” to “Danger: Severe Shock.” Unbeknownst to the educator, the shocks were not real. Had they been real, however, the highest setting could have been fatal.
Before the experiment began, Milgram asked fourteen senior psychology students to predict the outcome. They estimated that perhaps one or two people out of a hundred would deliver the maximum voltage. His colleagues in the psychology department agreed with this hypothesis. The expectation was that conscience would prevail, and that participants would simply refuse to administer shocks above a certain level.
But surprisingly, that wasn’t the outcome of the experiment at all.
The lab coat and the switch
Each session involved three people: the experimenter, dressed in a lab coat; the volunteer educator, who believed they were assisting the experimenter; and the learner, who was in fact an actor working with the research team.
The learner was introduced to the educator at the beginning of the session and then strapped into what appeared to be an electric chair. Before the test began, the educator received a sample shock to make the setup believable. The educator was then moved into an adjacent room where they could not see the learner, but they could hear him. They started reading out the word pairs so that the learner could memorise them and recite them back. When answers were wrong, the educator pressed a switch and the learner “reacted” to the fake shock they received. As the voltage climbed with each wrong answer, the learner protested more and more loudly. He pleaded and cried. He mentioned a heart condition. And then, after the highest level of shock was administered, he fell ominously silent.
Most of the learner’s cries were actually prerecorded. But of course the educators didn’t know that. They were led to believe that they were inflicting real pain on a real human being. When participants hesitated to administer shocks, the experimenter (who was also in the room) responded with a pre-planned series of carefully worded, escalating prods:
“Please continue.”
“The experiment requires that you continue.”
“It is absolutely essential that you continue.”
“You have no other choice; you must go on.”
If, after all four prompts, a participant still refused to administer a shock, the session ended. Otherwise, it continued until the maximum voltage had been administered three times. Many participants showed visible distress during the process. They sweated, trembled, and stuttered as they attempted to teach the word pairs to the learner. Some dug their fingernails into their skin. 14 of the 40 laughed nervously. Every participant paused at least once to question what they were doing, but most continued after a verbal prod from the man in the lab coat.
Milgram’s hypothesis had been that very few participants would be willing to follow the command to keep administering higher voltage shocks. In reality, every participant in the experiment, despite their obvious discomfort, continued to at least 300 volts. 65% of participants made it all the way past the learner’s desperate cries about his heart condition and still went up to the “fatal” 450 volts.
Those few who refused to go further did not storm out or demand that the study be stopped. They simply stopped pressing the switch. They did not stop to check on the learner on their way out or enquire about his condition. They simply left.
Not a German problem
Before the experiment began, Milgram believed that he already knew what he was testing for. He suspected that the obedience displayed by Nazi perpetrators during the Holocaust reflected something culturally specific, perhaps a distinctly German disposition toward authority. American participants, he assumed, would serve as a kind of moral control group. Later, he planned to replicate the study in Germany, expecting far higher levels of compliance there. The results of his experiment made that second phase unnecessary.
The obedience Milgram observed wasn’t uniquely German. It turned out to be universal. When the experiment was later repeated in countries across the world, the pattern held. Different languages, cultures, and political histories, yet the same unsettling outcome.
Reflecting on his findings, Milgram wrote that the most disturbing discovery was not cruelty or hatred, but willingness: the readiness of ordinary adults to go to extreme lengths when instructed by an authority figure. He knew that these people weren’t acting out of malice – he could see that in the way that they were unsettled and upset by their actions. They were simply doing what they believed their role required of them, and in so doing, they became participants in a deeply destructive process.
To explain this, Milgram proposed what he called the agentic state. In this state, individuals no longer see themselves as autonomous moral actors. Instead, they begin to view themselves as instruments carrying out the wishes of someone else. Responsibility shifts upward and rests with the authority. Once that psychological handover occurs, obedience becomes easier, doubt becomes easier to squash, and personal conscience fades into the background.
Obedient machines
Human beings are having a lot of important conversations about artificial intelligence at the moment, and many of those conversations follow a familiar cadence: alarm, outrage, and a deep unease about where this technology is taking us. Headlines regularly spotlight the harms of AI models churning out fake or explicit content, bots trained on stolen images or copyrighted works, and automated systems amplifying misinformation with unprecedented reach. In one widely reported case, users of the AI chatbot Grok were able to generate sexually explicit deepfake images of women and children without their consent – hundreds of them in mere hours – prompting global backlash and regulatory scrutiny across Europe, Asia, and the Americas.
These incidents feel, to many, like evidence that AI has become a rogue force; something that needs to be restrained, feared, or outright banned. But beneath the surface of each controversy lies the thorny truth: AI does not choose to harm. It follows commands – the prompts we give it, the frameworks we build, the incentives we embed. In that sense, when an AI spits out harmful deepfakes or spin-doctor political content, it is not “choosing evil” any more than the educator in Milgram’s lab coat was choosing cruelty. It is responding to human input, just as Milgram’s subjects responded to his authority.
If AI misuse feels so threatening, it’s because the scale and speed at which AI operates magnify the consequences of bad orders. A malicious prompt can generate thousands of damaging images in an hour. A misleading text snippet can be amplified across social platforms before fact-checkers have a chance to blink. Governments, watchdogs, and civil society groups are scrambling to catch up, drafting laws and safety guidelines designed to curb these harms and protect individuals and communities.
But there is a deeper philosophical question here, one that echoes the lessons of Milgram’s research: is the technology itself the problem, or the human willingness to misuse it?
What if we could encode ethical constraints into the code in a way that prevents harmful obedience altogether? What if the “obedient agentic state” (the prediscussed tendency to follow orders without moral resistance) could be designed out of our machines? Some scholars argue that defining ethical AI isn’t just about regulation or supervision, but about embedding moral reasoning and accountability into the systems themselves. The field of machine ethics explores whether AI can be given frameworks that go beyond blind rule-following, allowing it to evaluate the impact of a request rather than merely executing it.
That prospect raises difficult but important questions. If we could design AI that refuses harmful instructions, such as the instruction to generate content that violates privacy, dignity, or consent, could such systems ultimately behave more ethically than the average human? In theory, yes. An AI’s actions could be governed not by expediency or obedience to authority, but by consistent ethical principles rigorously tested against edge cases humans frequently misjudge. In practice, this would require designers to prioritise ethics over profit, and legislators to enforce accountability with teeth – no small task, given how quickly the technology evolves.
In this light, the ethical promise of AI isn’t about fearing its autonomy. It’s about confronting our own. After all, we are the ones issuing the orders. And if we want AI to reflect our highest ideals – our respect for each other’s rights, dignity, and wellbeing – then the first step is to recognise that technology mirrors human intent, for better or worse.
About the author: Dominique Olivier
Dominique Olivier is the founder of human.writer, where she uses her love of storytelling and ideation to help brands solve problems.
She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting.She now also writes a regular column for Daily Maverick.
AB InBev confirms that people are drinking less beer (JSE: ANH)
The switch to non-alcoholic beer isn’t making up for it
One of the themes in the market over the past couple of years has been the difficulties facing the alcohol giants.
The Gen Zs aren’t so keen to get messy drunk and fall all over the place. The proliferation of smartphones means that this behaviour becomes a reputational legacy on the internet, rather than an isolated incident that you laugh about with your mates down the line.
And of course, there’s much more focus on health these days than in years gone by. It’s not called a “beer boep” for nothing. A 500ml beer has roughly the same energy content as a Magnum ice cream. I know this because when I figured it out, I dropped my consumption of beer substantially and switched to alternatives like gin and sugar-free tonic. And more regular Magnums.
There’s definitely still a place for beer in global culture, but the drop in consumption is clear. People are having one or perhaps two beers, instead of several in a row. This is why AB InBev’s volumes fell 2.3% in FY25. Beer volumes were down 2.6% and non-beer volumes fell 0.4%. For the fourth quarter, beer volumes were down 1.9% and non-beer volumes increased by 0.6%, so at least they finished the year with some momentum.
The only way to grow is therefore through price increases. Revenue per hl grew 4.4% in FY25 and 4.0% in the fourth quarter. Due to the offsetting impact of lower volumes, this means that total revenue was up 2.0% in FY25 and 2.5% in the fourth quarter (reported in US dollars).
This doesn’t exactly sound like a share price that should be heading to the moon, does it?
Despite this, the market is paying a P/E of 18x and has ramped the share price up by 29% over 12 months. The timing does make a difference here, as the chart is very choppy. Whichever way you cut it, the market is bullish and the stock is trading at close to 52-week highs.
Is earnings growth the source of the excitement? With normalised EBITDA margin actually contracting by 10 basis points in the fourth quarter to 35.2%, it doesn’t seem that way. For FY25, margin expanded by 101 basis points to 35.8%.
By the time we reach the bottom of the income statement, we see growth in underlying earnings per share of 6.0% in FY25, and 7.5% in the fourth quarter. HEPS was much stronger due to the various adjustments, showing growth of 19% for FY25.
Earnings are still climbing, but the underlying market is washing away from them. I’ve held the view for a while that a company like this is on the same trajectory as British American Tobacco (JSE: BTI), albeit earlier on that road. And unlike the tobacco products, only a small percentage of people are in the unfortunate position where they are addicted or even semi-addicted to AB InBev’s products. Even then, they can switch to cheaper alcohol alternatives. If the shift away from beer accelerates, I think the key difference between AB InBev and British American Tobacco is that the former doesn’t have a long tail of customers who just can’t kick the habit.
Oh yes, and there’s debt. A lot of debt. Net debt to EBITDA sits at 2.87x, only slightly better than 2.89x in December 2024.
For now, the company believes they can keep growing. EBITDA is expected to grow by between 4% and 8% in 2026. Is that really enough to justify this valuation?
What do you think the growth will be? Vote in the poll below:
And before we move off this topic, shareholders in SAB Zenzele Kabili (JSE: SZK) should take note of these AB InBev results. That B-BBEE investment structure is entirely dependent on dividends flowing through from the alcohol giant. That’s not a position I would want to be in.
Altron’s earnings have jumped (JSE: AEL)
We will have to be patient for the details though
Altron has released a trading statement for the year ending 28 February 2026. The news is positive, with continuing operations expected to enjoy at least a 30% increase in HEPS to 231 cents (or more). Total operations will be at least 50% higher, coming in at 201 cents.
The sale of Altron Nexus went through in 2025, so that’s making a difference to the continuing vs. total operations.
We will need to wait for the pre-close investor call scheduled for 24 February to get further details. In the meantime, the market was happy to get on the bid and move the share price 8% higher by the close.
The trading statement is based on HEPS, but that isn’t the metric that the market cares about
I hope that we will one day see Brimstone switching from HEPS to net asset value (NAV) per share as the basis for its trading statements. The market doesn’t really care about HEPS in investment holding companies, as the metric does a poor job of recognising the different types of investments held in the group.
There’s a big difference between how you account for subsidiaries and associates vs. portfolio investments. NAV per share captures this properly. HEPS does not.
Nevertheless, the company always uses HEPS. The trading statement doesn’t give any details on NAV per share, so we have to wait for results in March to get a view on that.
In the meantime, we know that the stronger performance at Sea Harvest (JSE: SHG) has driven stronger earnings at Brimstone. We also know that finance costs are lower, so that’s helpful. Along with tax adjustments as well, this adds up to an increase in HEPS of between 88% and 98%!
The share price is up just 3% over 12 months. If that isn’t proof that the market ignores HEPS at this company, then I don’t know what is.
It’s a game of inches at British American Tobacco (JSE: BTI)
Every small change to the growth rate is important
British American Tobacco is a company that is all about small percentage movements. For example, revenue dipped by 1% in the year ended December 2025 due to currency headwinds, but increased 2.1% on a constant currency basis. Adjusted profit from operations increased by 2.3%, while operating margin was flat vs. FY24. Dividend growth was 2%.
You get the idea. This is what happens when the core product is essentially in terminal decline, much like the unfortunate customers who can’t (or won’t) stop smoking.
But the New Categories range is designed to address this, with double-digit revenue growth in the second half of the year. The so-called “smokeless products” are now 18.2% of group revenue, up 70 basis points vs. FY24.
The most volatile number in these results is the Canadian settlement provision. Thanks to adjustments to that number, reported profit actually jumped by 265%. This is why the company gives us the adjusted profit growth of 2.3%, as the larger number is clearly not a reflection of the operating performance.
The company is essentially on a treadmill, trying to replace the cigarette revenue and profits with the more palatable New Categories that the ESG consultants have been all over for years. For investors, I’ve always felt that this is the classic case of picking up pennies in front of a steamroller. If it goes well, you get growth of a couple of percentage points. If something goes wrong from a regulatory perspective or otherwise, earnings can drop sharply. That’s not a risk/reward trade-off that I have much love for.
The share price is up 32% over 12 months though, so my approach means I’ve missed out on these gains. The current P/E is 35x, but it was pointed out to me by a reader that there are important normalisation adjustments in the trailing twelve months view that are worth taking into account. Still, British American Tobacco does face numerous business risks that can have a significant impact on earnings, so it’s an indication of what can happen.
It really is one of the most polarising stocks on the market. There are those that love it and those that hate it!
Earnings are up at South32 (JSE: S32)
The volatility in underlying commodity performance shows why many investors prefer diversified groups
In mining, I often write about how management teams can only be measured based on the performance that is within their control. After all, none of them can control international commodity prices. This should apply on the way down and on the way up, although most mining execs seem to be quite happy to become wealthy when commodity prices have been favourable. It’s only on the way down that they argue that production is the right metric…
Justifiable cynicism aside, I do like this chart from South32 in their results for the six months to December. It does a good job of separating the factors into what they can and can’t control. It also happens to be a waterfall chart, something I always enjoyed putting together in my advisory days:
Right, let me remove my finance geek hat and give you the overview of how things went in this period for South32.
Revenue from continuing operations dipped by 3%, so that’s not a fantastic start. Commodity price pressure came through in alumina and manganese. There were some positive offsets here, like aluminium, copper and zinc, but it wasn’t enough to put revenue in the green.
Despite this, underlying EBITDA increased by 9%. Aside from cost benefits, a major driver of this outcome was the restart of operations at Australia Manganese. This helped offset the considerable pain in areas like alumina, where EBITDA more than halved thanks to a 27% decrease in the average price of alumina.
Copper, the talk of the town, saw underlying EBITDA more than double. In the commodities game, the underlying volatility in each commodity can be breathtaking.
One of the challenges heading into the second half of the year is that Mozal Aluminium is scheduled to transition to care and maintenance in March. This is because they couldn’t secure an electricity supply that allows them to operate profitably. Smelters require an extraordinary amount of energy.
This was a period of heavy investment for the group, with significant capital expenditure at Hermosa, along with the usual investment requirements in the group. This is why there was a cash outflow from operations of $183 million, worse than the outflow of $116 million in the comparable period. This is only part of the story though, with the group still able to fund dividends and share buybacks.
Looking ahead, guidance for FY26 and FY27 is unchanged at all operations except for Brazil Aluminium, where the smelter’s operator has revised production guidance lower.
The share price is up 20% over 12 months. The real story is the 90-day move though, up a meaty 42%!
The show is over at Tongaat Hulett (JSE: TON)
The business rescue plan has fallen through and the company is headed for liquidation
After a mammoth effort to save Tongaat Hulett (literally a household name in South Africa), I’m afraid that it’s all come to nothing. The transaction with Robert Gumede’s Vision consortium has failed due to conditions precedent not being met in time. With the acquirer not being willing to grant an extension to the timelines, the plan is no longer capable of implementation.
This means that the business rescue practitioners have filed an application in court for the provisional liquidation of the company. This is a huge blow to stakeholders in the industry, particularly as there was hope that the business would be rescued in some form.
With thousands of jobs on the line throughout the value chain, will someone come through with a last-ditch plan to save the company?
Nibbles:
Director dealings:
Sam Sithole of Value Capital Partners (VCP) sits on the board of Tiger Brands (JSE: TBS), so any sales or purchases of shares by VCP come through as director dealings. The numbers certainly aren’t what you’ll be accustomed to seeing in this section, as VCP is an institutional-level investor. VCP has sold shares worth R748 million, or roughly 32.5% of the original number of shares they acquired. I can’t blame them for taking some profit off the table here – the share price has had an incredible run!
An associate of a director of Visual International (JSE: VIS) sold shares worth R156k. And no, the website still doesn’t work.
The Mantengu (JSE: MTU) share price has unfortunately been dropping sharply in value recently. The latest announcement is that the CFO has bought R5.9k worth of shares. For a purchase to send a strongly positive message to the market, I think it might need a couple more zeroes on the end.
As a sign of the far more positive times in the PGM sector, Valterra Platinum (JSE: VAL) has established a R10 billion Domestic Medium Term Note (DMTN) Programme. It’s always good to see this type of thing happening. The bond market has some fascinating dynamics, as expanded on by Ian Norden (CEO of Intengo Market) in this recent podcast.
Labat Africa (JSE: LAB) has announced a share repurchase programme for up to 20% of shares in issue. The words “up to” are important here, as time will tell how many shares they actually repurchase in the planned window of 16 February to 31 May. The programme has been introduced as the board believes that the shares are undervalued. With a NAV per share of 23 cents and a share price of 8 cents (up a meaty 60% in response to this news), there’s certainly a huge discount to NAV.
In case anyone was wondering about the appointment of the Life Healthcare (JSE: LHC) CEO to the board of Nedbank (JSE: NED) as a non-executive director, we now have confirmation from Life Healthcare that they fully assessed conflicts of interest and the CEO’s ability to discharge his duties. I’m not sure how a CEO has time to take on another board role (especially of a systemically important bank), but here we are.
PSG Financial Services (JSE: KST) announced that chairperson Willem Theron will be retiring at the AGM. After founding the company in 1998 and switching from CEO to chairperson in 2013, he’s certainly earned his retirement. Lizé Lambrechts, currently an independent non-executive director, has been nominated as the next chairperson. Lambrechts has extensive industry experience that includes executive roles at Sanlam (JSE: SLM) and Santam (JSE: SNT).
Aspen wants you to treat the interim period as “transitional” (JSE: APN)
There’s a ~R700 millionrestructuring cost that ruined these numbers
If you’ve been following Aspen, then you’ll know that they suffered a hideous knock to the share price last year based on a manufacturing contract dispute related to mRNA. Aspen works with global pharmaceutical giants as a drug manufacturing and distribution group, so it hurts the business severely when a large contract with one of those pharma groups goes wrong.
To make the latest interim results even tougher, Aspen had a much stronger base in the first half of last year vs. the second half. H1’25 saw EBITDA of R5.8 billion vs. R3.8 billion in H2’25 because of the timing of the dispute.
The dispute was settled with a payment to Aspen of around R0.5 billion that has been recognised in the six months to December 2025 (H1’26). But compared to the EBITDA of R1.5 billion in the base period from that contract, it’s a year-on-year comparison that was always going to look awful. This is why they want you to see it as a “transitional” period rather than an indication of how the core business is doing.
Commercial Pharmaceuticals, the segment that wasn’t hurt by this contract, grew revenue by 4% and achieved double-digit normalised EBITDA growth (in constant exchange rates). Mounjaro demand in South Africa is a highlight, with profits on the way up in China as well. Reported performance will be impacted by the strength of the rand, though.
The Manufacturing segment (the problem child) reported a “positive EBITDA” that was “aided” by the insurance proceeds. They are “reshaping” their facilities, with cost benefits coming in the second half of 2026 and fully in 2027. Read into that what you will.
Major challenges aside, Aspen generated free cash flow in excess of R1.7 billion in this period and reduced net debt from R31.2 billion as at June 2025 to R28.6 billion as at December 2025. The sale of Aspen APAC for around R26.5 billion will do wonders for the balance sheet when that deal goes through. They hope to complete it by the end of May 2026.
HEPS as reported for the period will be down by between -38% and -33%. Normalised HEPS will drop by between -24% and -19%. It’s a good reminder of just how painful that loss of contract really was.
Guidance for the full year is unchanged. Among other things, this is based on normalised EBITDA in the problematic Manufacturing segment being in line with FY25 in constant currency, so you can see the impact of a much easier base period in the second half of the year.
Capitec has achieved another strong period of growth (JSE: CPI)
There are so many levers that they can pull on this journey
One of the underappreciated elements of the Capitec story is that the road to their current market position has been paved with relatively basic services and a focused offering. They’ve executed a strategy based on doing fewer things to a high standard vs. many things to an average standard. This is key to the success of any disruptor. It’s also a lesson that I’ve tried to apply in my own business!
This isn’t to say that they aren’t introducing additional services and expanding the offering over time. For example, Business Banking is an exciting growth engine that Capitec is putting plenty of energy into. I’ve seen this myself through working with that team on The Finance Ghost plugged in with Capitec– a podcast series that has been running for several months. I have a lot of off-air discussions with the guests and I can tell you that the feelings they have towards the bank are authentic. Capitec is resonating with business clients in the same way that they’ve resonated with Personal Banking clients.
When you are the best growth story in your industry, you can afford to keep piling on the pressure and making life even harder for competitors. This is no different to what Shoprite (JSE: SHP) is doing in retail, for example. Capitec is leveraging its efficient business model to keep fees as low as possible, which means they get to enjoy economies of scale and higher volumes. And so the flywheel keeps spinning.
Once you take into account the value-added services opportunity into this vast and growing client base, you’ll see the potential to drive return on equity through offerings like Capitec Connect (which gets the Cell C (JSE: CCD) fans excited – check out this podcast I did with Cell C CEO Jorge Mendes to learn more). Another very important angle is insurance, including in key South African focus areas like funeral cover.
In case you’re wondering whether all this growth has impacted the underlying quality of the book, here’s your answer: Capitec has actually seen improvements in the loan book, and the provision for expected credit loss coverage ratio has moved in line with this improvement.
The end result? An expectation for HEPS to increase by between 20% and 25% for the year ending February 2026. This is why the market is happily paying a P/E multiple of 34x for these shares.
Forex movements have offset earnings growth at City Lodge (JSE: CLH)
The underlying hotels are performing well though
If someone stopped you in the street and asked you about the risks at City Lodge, I doubt that forex volatility would’ve been top of mind. The operations in Botswana, Namibia and Mozambique represent roughly 5% of the group, so their African exposure is minimal. If you go back and look at the financials for the year ended June 2025, you’ll see that unrealised movements on foreign exchange aren’t exactly enormous. In that period for example, the movement was just R7.9 million vs. profit before tax of R311 million.
I was therefore surprised (and not in a good way) to see that City Lodge’s HEPS for the six months to December 2025 is expected to be between -4% lower and 2% higher than the comparable period. Adjusted HEPS, which reverses out the forex, will increase by between 29% and 36%.
I know we’ve seen significant rand volatility, but this is a huge difference. It seems as though we now need to treat City Lodge as a company with significant currency exposure!
I look forward to getting the full details here when the company releases results on 19 February.
A mixed first quarter for Nampak (JSE: NPK)
It looks good overall, but there’s one segmental headache to worry about
The largest segment at Nampak is Beverage SA, which generated EBITDA of R907 million in the year ended September 2025 vs. R360 million at Beverage Angola and R310 million at Diversified SA. This is important context for the business update for the first quarter of FY26 (i.e. for the three months to December 2025) that was provided at Nampak’s AGM.
In this update, Nampak confirmed that the beverage operations are doing well. Beverage South Africa is performing in line with expectations and Beverage Angola is actually ahead of expectations on volumes, revenue and profitability.
The same cannot be said for the Diversified SA segment, which has lost business for various reasons ranging from customer changes to imported alternatives. They also flag the timing of fish canning and the “fruit crop dynamics” in the first quarter.
This is a mixed bag, but at least the business is doing well across the biggest segments. This type of update is useful to keep the market informed, even if it sometimes creates more questions than answers!
How does a six-fold increase in earnings at Pan African Resources grab you? (JSE: PAN)
This is what happens when production increases at exactly the right time
We’ve seen a number of global gold miners coming through with updates about earnings doubling or even tripling. But you won’t see too many with an increase like this…
My pick in this sector last year was Pan African Resources, as they had the lovely combination of (1) increasing production, (2) a hedge rolling off the books and (3) exposure to an increasing gold price.
I certainly wasn’t disappointed. The share price is up 245% in the past year. That’ll do.
In terms of earnings for the six months to December 2025, the percentage move is much crazier than what we’ve seen in the share price. HEPS (in US dollars) is expected to jump by between 507% and 517%. Yes, that’s a six-fold increase in HEPS, from 1.20 US cents per share to between 7.28 US cents and 7.40 US cents per share. Incredible.
This is what happens when revenue increases by 157.3% in a company that has substantial fixed costs and thus operating leverage. The combination of a 61.6% increase in the average gold price and 51.5% in the amount of gold produced was responsible for this revenue growth.
And here’s the best part: thanks to the MTR expansion project and the Tennant Mines acquisition, group production is expected to increase even further during the second half of the year ending June 2026.
I’m long and I plan to stay that way.
Trustco’s Meya Mining secures a $25 million facility with Ecobank (JSE: TTO)
The bank clearly sees a future in diamond production
At a time when Anglo American (JSE: AGL) is reporting losses in De Beers and looking for a buyer for that asset, you wouldn’t expect there to be much bullishness around mined diamonds.
Nevertheless, Trustco has announced that Meya Mining (in which Trustco has an indirect equity interest) has secured a $25 million debt facility with Ecobank. There isn’t even an equity kicker or mezzanine layer here, with the announcement making it sound like this is pure debt. With the underlying asset being a 25-year exclusive diamond mining license in Sierra Leone’s Kono District, the bank is taking a brave punt here.
Meya is already more than $100 million deep in this project, so that gives you an idea of how much it costs to get something like this from dream to reality.
Importantly, Trustco’s $46 million loan to Meya is not subordinated to this loan, so that’s another way in which the bank is taking a significant risk here. It’s unusual to see banks put in a layer of finance that isn’t at the very top of the creditor pile i.e. the most senior debt.
Nibbles:
Director dealings:
Lesaka Technologies (JSE: LSK) Executive Chairman Ali Mazanderani has bought $399k worth of shares – or roughly another R6.3 million to add to his name. It’s always encouraging when insiders are buying shares in their companies. I recorded a podcast with Ali in November last year. If you haven’t checked it out, I suggest you do so here.
Universal Partners (JSE: UPL) has limited liquidity in its stock, so I’ll just mention the latest quarterly results down here. For the period ended December 2025, the net asset value (NAV) per share (which is reported in pounds sterling) fell by 7.4% year-on-year, attributable mainly to the investment in dollar-denominated notes in SC Lowy. I’ll highlight the Workwell business here, which is growing despite all the jitters around AI, so we aren’t exactly seeing a global unemployment crisis just yet. Portman Dentex is running below expectations though, so people seem to be working instead of getting their teeth done at the European dental group. Another one to touch on is Xcede Group, a recruitment business that has been struggling with permanent placements. Employers might still be hiring, but not through traditional channels.
I’m not familiar with the dynamics of the Nu-World (JSE: NWL) shareholder register, but it’s clear from the results of the AGM that there is minimal alignment. It’s rare to see resolutions for director appointments squeaking through with 55% approval.
Sirius Real Estate (JSE: SRE) has added its name to the list of companies with interesting independent director appointments this week. Ian Watson, who has decades of experience in building, listing and selling property portfolios, has joined their board. I like it when industry experts are appointed as independent non-executive directors. If you’re keen to learn more about the company, I recorded a podcast with the CEO, CFO and CIO of Sirius in December 2025. Check it out here.
Powerfleet is closer to having a net profit (JSE: PWR)
But they aren’t there yet
Thanks to a quieter day of news, we can actually dig into the Powerfleet numbers in more detail. The company is listed in the US, so the reporting is in the 10-Q format on the SEC website. They don’t give an additional narrative on SENS to help South African investors, so you have to go digging.
One of the things you’ll find is the company referring to itself as an “Artificial Intelligence-of-Things solutions provider” – a truly remarkable example of throwing darts at the tech buzzword wall and seeing what sticks. For all the fanciness, they are essentially a fleet management and telematics business.
The focus in recent times has been bedding down acquisitions and growing to the point where the debt costs are covered. They are getting closer, with third quarter revenue up 6.6% to $113 million. Product revenue was down 9.3% and services revenue was up 11.4%. That’s a positive mix effect on gross margin, as the margin on products was 31.6% and on services was 61.0%. This is similar to what you’ll see play out at the biggest tech names in the world, like Apple.
Operating expenses have reduced from $60.0 million to $56.3 million (mainly due to non-recurring acquisition-related expenses in the base period), so they’ve now moved from an operating loss of $1.2 million to operating profit of $6.4 million. Nice!
The hurdle remains the interest expense, which decreased from $7.9 million to $6.8 million. This leaves them with a loss before tax of $0.4 million, which is much better than the net loss of $10.8 million in the comparable quarter.
There’s a large tax expense despite the loss before tax, so the net loss after tax is $3.4 million. That’s still much better than $14.3 million in the comparable period.
The group appears to be sufficiently capitalised for now at least, so they need to keep ramping up their growth and lifting their head above water from a debt-servicing cost perspective.
It’s easier to break through a Trellidor than it is to turn that business around (JSE: TRL)
And to the credit of their products, that makes it very hard indeed
Trellidor released a trading statement for the six months ended 31 December 2025. It’s never good when the first sentence of the announcement starts like this: “Addressing the erosion in shareholder value…”
It’s been a tough few years.
It feels like the problems really started with the court case that went against them in a big way a few years ago. It related to an old employee dispute and ended up being a highly expensive setback for the business (over R32 million).
Another issue is that demand in South Africa has been under pressure, which in my view is due to two things: (1) people are living in complexes and estates that don’t need security doors to nearly the same extent as standalone houses, and (2) there are cheaper security alternatives on the market.
It may surprise you that recent periods were driven mainly by the UK business, where they earned decent project revenue as businesses in that region deal with an increase in the crime rate. Project fees are lumpy though, with the latest period showing you what happens when the lumpy revenue goes away.
As the final precursor to revealing just how bad this period was, I must note that Trellidor has implemented cost saving initiatives that aren’t in these numbers. They will come through in the second half of FY26 and the full year ended June 2027.
Brace yourself for the HEPS guidance: a decrease of between 95.97% and 99.87%! Or, in a way that is easier to understand, HEPS will be between 0.01 cents and 1.19 cents vs. 29.6 cents in the comparable period. In other words, the company was barely profitable in this period.
The share price is R1.96, so I think we can agree that this is an unsustainable Price/Earnings multiple. The announcement came out after the market closed on Tuesday, so the share price action will be on Wednesday.
I think it’s hard to see how this doesn’t end in a buyout offer from a plucky operator who goes in and makes sweeping changes.
But what do you think? Vote in the poll below:
As expected, Standard Bank isn’t trying to acquire other local banks (JSE: SBK)
They’ve now clarified the position
Eyebrows were raised by recent SENS announcements that noted Standard Bank building up positions of 5% or more in other large banking groups. I strongly suspected that this related to Standard Bank’s underlying investment groups, rather than a group strategy to go and acquire minority stakes in competing banks.
Sure enough, Standard Bank has confirmed that subsidiaries Melville Douglas Investment Management, Liberty Group and Standard Bank Jersey hold equity securities in JSE-listed companies as part of the ordinary course of business. Standard Bank needs to aggregate these holdings to test if they’ve gone through a 5% ownership threshold in any locally listed companies, as this threshold triggers an announcement.
In other words, you can expect to see this coming through more often – and it doesn’t mean that Standard Bank is trying to acquire competitors, or other random companies!
Nibbles:
Director dealings:
Mark Barnes has sold R23 million worth of shares in Purple Group (JSE: PPE). The announcement notes that he intends to “start diversifying his investments” – so it seems that you can expect to see more of this.
Coronation (JSE: CML) has appointed Aimee Rhoda as the CFO of the group. This is an internal appointment, with Rhoda having joined the group all the way back in 2007. It’s always good to see this kind of institutional memory coming through.
With lots of chatter around RMB Holdings (JSE: RMH) and the offer for shares by AttBid (a consortium of Atterbury and the brothers who founded WeBuyCars (JSE: WBC)), it’s not surprising to see that Peresec Prime Brokers has a 5.04% stake in RMB Holdings. Peresec is often involved where there are corporate actions. It would be nice to know who really sits behind this stake…
I don’t normally comment on institutional investors buying and selling shares, as this happens all the time, and for many reasons. But sometimes, there’s a smaller company where a respected boutique asset manager is doing something with the shares. In such a case, that’s worth noting. So, in that spirit, I’ll point out that Orion Minerals (JSE: ORN) announced that Fairtree Asset Management sold shares worth R8 million and is therefore no longer a “substantial holder” as defined. The share price has run incredibly hard this year and I don’t blame them for taking profit.
There are a couple of notable independent director changes at Nedbank (JSE: NED). Hubert Brody is retiring as Lead Independent Director after a nine-year term on the board. Brian Dames is also retiring, having served an extended term that started in 2014. Peter Wharton-Hood, the CEO of Life Healthcare (JSE: LHC), is joining as an independent director. It’s unusual (but not unheard of) to see a current CEO of a listed company join the board of another company.
Here’s another corporate governance announcement that is worth including: British American Tobacco (JSE: BAT) has extended Luc Jobin’s tenure as Chair for up to two years. This is a deviation from the UK Corporate Governance Code’s recommendation of a nine-year term, but the company doesn’t want to introduce uncertainty into the current “transformation agenda” at the group. In other words, they want to be left in peace to execute the current strategy for at least the next two years.
Africa Bitcoin Corporation (JSE: BAC) has bought the bitcoin dip. They’ve acquired another 1.3554 bitcoin for R1.51 million at an average price of R1.11 million per bitcoin. My concern is they appear to have at least partially funded it through debt. They’ve now put R7.3 million into bitcoin at an average price of R1.6 million per bitcoin. The current price is R1.07 million per bitcoin, so that position is properly in the red thus far.
The team at Satrix has clearly been busy. They’ve launched two brand new ETFs to help South Africans tweak their exposure to offshore markets.
If you’re ready to learn more about Europe and Japan, then you’re in the right place.
Why does it matter? For most South African investors, offshore exposure is really just a proxy for US tech names. It’s hard to avoid this outcome, as Big Tech has been the driving force of most global indices, let alone US indices. The Magnificent Seven are everywhere.
Well, almost everywhere.
Diversification across both sectors and regions is important for investors. In that spirit, Satrix has launched the Satrix Stoxx Europe 600 ETFand the Satrix MSCI Japan ETF.
Siyabulela Nomoyi of Satrix joined me to unpack these offerings. This included discussions on:
The macro trends in each region and how they have such different top-of-mind items at the moment
The nature of the underlying indices tracked by these ETFs and how they vary in terms of market depth and sector exposures
The investment thesis for each regions and what the drivers of returns will likely be over time
How both products should be seen as complementary to the global picture
If your portfolio is a Lego structure, Satrix has just given you two new pieces.
Satrix Investments (Pty) Ltd & Satrix Managers (RF) (Pty) Ltd is an authorised financial services provider. The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. For more information, visit https://satrix.co.za/products
Full transcript:
The Finance Ghost: Welcome to this episode of the Ghost Stories podcast. I get to chat today to Siyabulela Nomoyi, who is no stranger to the Ghost Mail audience. Siya, you’ve done a number of these with me. Quite the broadcaster, actually, you’ve become, which is lovely. I’ve had a lot of fun with you over the past few years doing these podcasts.
We have a double-header today, so we’ll jump straight into it. There are two new ETFs being listed by Satrixat basically the same time – clearly, you guys have been busy. Congratulations on that. And I can’t wait to dig into both of them with you.
Siyabulela Nomoyi: Hi, Ghost. Always great to be on your podcast. Hi to the listeners, as well. Thanks for inviting me again.
Lots to unpack on this recording, so naturally, I’m very excited as always to be here and to speak to our new offerings right now. Lovely to be here. Thanks, man.
The Finance Ghost: Absolutely. Just so our listeners know what’s coming, we’re going to talk about two ETFs today. The Satrix Stoxx Europe 600 ETF (which, as the name suggests, is based on European stocks) and the Satrix MSCI Japan ETF (again, no prizes for guessing that that is based on stocks in Japan).
Both offshore, neither of which – drumroll please – is in the US. How interesting!
Let’s start with Europe and with the number ‘600’ in the name. I can only assume that that is the number of stocks in this thing. That’s a lot. That’s 100 more than the S&P 500, so I would imagine, especially given the European landscape, there are lots of small-caps in there, in addition to some of the big names.
And obviously, lots of interest around Europe at the moment. We’ve got Emmanuel Macron with his very cool shades – I don’t know what you thought of his sunglasses at Davos, but I thought they were pretty rad, to be super honest.
They need to become a lot more economically independent in Europe. And not just economically, but also just in terms of regional security.
There have been many, many years (decades, even) of relying a little bit too much on the United States to be the global Head Boy. Now, Europe needs to step up and do more of that kind of thing.
And that obviously creates interesting opportunities, right? Because they need to switch their industrial machines on once again. That’s the theory, at least – but no shortage of critics. I’ve heard Europe referred to as an “open-air museum with little more than a tourism industry” – probably a little bit unfair. There’s also the old joke about Europe that they “regulate rather than innovate”.
So, they’ve got some reputational stuff that they need to get past. They need to show the world what they can do. What an interesting place.
Siya, I’m keen to hear, in your own words, the European theme at the moment and, of course, the extent to which this ETF is a nice pure way to play it.
Siyabulela Nomoyi: Sure, Ghost. Just talking about those sunglasses [laughing]. I’m giggling because I saw a picture first and I thought, “Ag, it’s one of these AI-edited videos…”
The Finance Ghost: [laughing] Nope! The real deal.
Siyabulela Nomoyi: Then I saw the video, and I was like, “What is happening?” [laughing]
The Finance Ghost: For a moment, I felt cool because I thought they were Ray-Bans, and I also love a pair of Ray-Bans aviators…
Siyabulela Nomoyi: Yeah, yeah [laughing].
The Finance Ghost: …and then I googled, and they were actually some other very larney, $800 jobbies which are definitely not like mine.
Siyabulela Nomoyi: Yup! [laughing]
The Finance Ghost: And…yeah. That share price actually popped, so there we have it, you know?
Siyabulela Nomoyi: Exactly.
The Finance Ghost: Throw The Intelligent Investor in the bin, like in that meme. Just go and buy whatever shades Macron is wearing. But anyway, such is life in 2026.
Siyabulela Nomoyi: [laughing] So, I’m quite excited about these two ETFs. As you mentioned, the Satrix MSCI Japan and the Satrix Stoxx Europe 600.
I just want to quickly mention that Satrix is not just adding more global exposure for clients, but it is giving investors low-cost tools to actually make sure they can diversify their portfolios and use such ETFs to be essential building blocks for the investors’ overall investment portfolios.
So, about what you were mentioning about the US, and what I’ve seen generally as well, is that, just thinking about global exposure as a conversation or looking at what it is out there, especially for SA investors, the first thing that comes to mind is… well, it’s an index like the MSCI World, which is a core index.
But if you look at the holdings, you’ll notice that the index is largely dominated by the US – about 71% US on that index.
Don’t get me wrong, these US companies are massive multinational companies that pull their revenues across the globe, but the concentration risk there is that these indices actually are mostly skewed to the US policy exposure.
Those companies are based in the US, so they’ll have to go along with whatever the policies are in the US.
So, just going back to your question about the Euro theme, the index composition and the opportunity that comes with the Satrix Stoxx Euro 600 – yes, it’s very broad, and it’s one of the most diversified developed market indices you’ll ever see, globally. So, definitely a mix of large-, mid- and small-caps in there.
The opportunity in European (and also UK) equities today is that they offer something increasingly scarce in global portfolios: a different set of industries. Especially if you’re talking about global exposure, what it is right now, as I mentioned for SA investments.
So, they offer a different economic engine and a different return profile as well from all these US-dominated global benchmarks. Which is why I wanted to talk about the MSCI World in the beginning.
So with this ETF, investors get exposure across 17 European countries, including the UK – very important; you just mentioned that.
And then, back to your point about switching back on its industrial base. These countries have world leaders in engineering, automation, and advanced manufacturing, which can benefit from reshoring and also from infrastructure investments.
So, Ghost, at the same time, the region is at the centre of this green-energy transition, with significant investment flowing into renewables.
There’s green infrastructure, electrification and climate-related industrial policies, so this creates a long-duration opportunity beyond, for instance, the tech-heavy narratives of the US markets.
I’m not trying to diss the US markets, I’m just trying to paint a picture of what you get when you think about global exposure.
Especially for SA investors. When they think about global exposure, they think about the MSCI World, but at the same time, the MSCI World is so concentrated in this one region.
Bringing it back again to this index, the UK is about 20% of the index. So, investors also get an opportunity to actually get exposure in international banks, energy majors and many UK firms, but also earn revenues globally as well.
With this fund, you get exposure to multiple economies, different policy and business cycles, exposure to strategically important industries, as well, for the next couple of decades, and a return profile that can have a very different payoff period compared to other regions.
This is why I think it’s very, very important for clients to actually just have a look at this ETF – whether they want to be partaking in the IPO that is running right now or when the ETF is listed.
The Finance Ghost: I just want to give an example. And I know this is a single-stock example, which is obviously not super appropriate in ETF land, but just to give people an idea of what’s happening in Europe – let’s do Barclays, the bank. That share price, in the past year, is up 65%.
Now, that’s in pounds. And if you’ve been watching currencies, yes, we keep talking about how the rand is doing well against the dollar.
That’s got less to do with the rand and more to do with the dollar. Because if you go and look at it against some of the other currencies, yes, the rand has had a good time. But stuff like the pound has been a lot stronger, a lot steadier.
So, Barclays up 65% in pounds. JP Morgan, probably – not ‘probably’, it’s the best of the American broader banks – up 17% in the past year.
Now obviously we could go further back, etcetera, etcetera, but at the end of the day, you can’t roll back the clock and go and buy shares five years ago. You have to look at what’s happening in front of you, and then make decisions.
And it’s just interesting, because the banks are one of the ways to see what’s actually going on in Europe and how sentiment has actually changed. And to your point, it’s 17 countries. So, people use the word ‘Europe’, but it’s a really big place, and it’s very different.
I’ve been lucky enough to travel… I mean, I’ve essentially been to both ends, in some respects. I’ve been to the UK; I’ve been to Turkey. Both of those are essentially ‘part of Europe’, but they could not be more different if you tried.
It’s like travelling from West Africa to South Africa. They might both be ‘Africa’, but that’s really where the similarities end.
So, there is diversification there. And as you say, in the big global indices, because of what’s happened in Big Tech over the past 10 years, they have become very US-centric, so if you want to achieve true diversification, even if you have the MSCI World, you might want to seriously consider adding on other regional exposures.
And that’s, of course, the joy of ETFs. You can use them as these ‘building blocks’. It’s building a big thing out of Lego (I think we’ve said that before). You pick the blocks you want.
You can use, for example, MSCI World. Give yourself global equity exposure. But maybe it’s a bit too US-centric, so you add on some of this other stuff to get to the mix that you specifically want.
And obviously, you can do that in your tax-free savings account, which is another benefit of ETFs that I always want to remind people of, because it really is a very big benefit.
So, that gives us a nice sort of ‘lay of the land’ of why this thing is interesting, and how nice and different it is from the exposure that a lot of people have.
You did mention that, in some respects, Europe has been a leader in certain areas. Renewable energy, absolutely. Another one that comes to mind for me is luxury goods. If you think LVMH, for example, lots of others – they tend to be listed in Europe.
And then obviously, with global businesses, lots of exposure (ironically) through to China, there. So, those look-through exposures are present in the story.
Any other sectors that you want to just lift the lid on as part of being quite prominent in this ETF? I mean, the other one in Europe that everyone’s been talking about is defence. That’s another big one that’s done really well.
So, Siya, what are some of the sectors that just come through in this ETF?
Siyabulela Nomoyi: Yeah, quite right, Ghost. Europe is uniquely dominant in terms of consumer staples and luxury goods. It’s an area where the region has unmatched brand equity and pricing power.
There’s quite a lot of brand heritage and craftsmanship there. Companies with over a century in the game. So, as you mentioned, LVMH.
Think about Dior, Louis Vuitton and so on. L’Oréal. Kering (which owns Gucci), and so on. Luxury brands can raise prices without losing customers in the same way mass market retailers might.
But Europe and the UK are also historically strong in financial services (you mentioned one of the banks), banking and insurance, to be exact. So, financials are consistently one of the largest sector exposures in the Stocks Europe 600 Index, which our ETF will track.
In fact, right now, it’s about 25% of that index. I’m pretty sure anyone listening to this recording will know HSBC, BNP Paribas and so on. So, that’s quite a dominant sector in the index and, historically, those have been the biggest companies in that index.
Industrials are huge in the index as well – the next biggest sector, at about 20%, with well-known names such as Siemens and Airbus, provides exposure to electrification, automation and aerospace manufacturing. Those are big names you can find in these sectors, as well.
And then the UK, in particular, adds depth in terms of energy and also natural resources – sectors where London-listed firms are actually global leaders.
So, the Stoxx 600 index therefore really provides exposure to companies which are quite diversified in terms of where they pull revenues. You can think of Shell, BP, and diversified miners like Glencore, which are central players in global commodity and energy supply chains.
I could go on, but another globally distinct European strength is in healthcare and pharmaceuticals. Europe has produced some of the biggest drug makers and healthcare innovators in the world, and healthcare is the third-largest sector in this fund, around 14%.
And then, just going back to your point when you were mentioning the different countries and areas, what I like about this index as well is that, outside the fact that you get these different sectors, there’s also the currency diversification as well.
Because you’ll get around 60% just coming from the euro currency in the index. There’s also going to be 20% coming from the pound currency from this index, and then the rest of the currencies, like the Swiss franc.
All of these currencies are actually feeding into the different layers of diversification in the index as well, which I really think is quite beneficial for investors.
The Finance Ghost: Siya, thanks. That gives us a really good idea of what’s going on in there. And what’s particularly interesting is to look at some of those big names.
You’ve mentioned some of these sectors, so healthcare, very big in pharma, some big banks, and then technology (for all of the teasing that Europe gets). Unfortunately, they really do have only one brave soul waving the flag on top of the mountain, and that is ASML.
For those who don’t know, ASML produces the extremely sophisticated machinery that manufactures chips. So, that’s why it has done well.
If you want to go way up the value chain in AI land and you’re scared of saying, “Oh, I can’t choose between Google and Microsoft,” or, “I just don’t know how far Nvidia can go,” you can go up, up, up the value chain, to something like ASML, and say, “Well, that is literally the shovel in the gold rush.”
Literally, in this case. It’s as high up the value chain as you can really go. Just another good example of how Europe is such a hotbed of R&D, actually.
I’m not sure that they’re so great at taking risk and generating lots and lots of risk-taking companies that come through, but they’ve got some incredible R&D houses, and they’ve got some really good stuff that comes out of Europe.
So again, diversification. That’s kind of the point. And that’s the thing I wanted to really point out. That the US is so tech-heavy, right? Whereas in Europe, you’re getting ASML, you’re getting SAP, further down.
SAP is struggling. I think that’s going to drop out of the top 10. Software as a Service (SaaS), as a model, is taking serious strain. The Americans are not immune – Adobe is having a really bad time. So is Salesforce.
So, it’s good diversification from a sector perspective versus, for example, the S&P and especially the Nasdaq, right?
Siyabulela Nomoyi: Yeah, definitely. When you think ‘Europe’, you definitely don’t think ‘AI’ or ‘tech’. Well, I certainly don’t.
And, from this index, infotech is currently only about 25 companies in that index, out of 600. That only makes up 8% of the entire index, and half of that weight is actually on those two names you’ve mentioned. So, it’s not a lot, in terms of contribution to the overall index.
And this is exactly what I was mentioning at the beginning of our conversation, where investors are thinking that they are globally diversified when they are actually more tech-heavy, US-domicile heavy, in terms of their exposure in the portfolios that they have.
So, with this Stoxx Europe 600 ETF, and together with the Japan ETF as well, Satrix is really trying to complete the… I mean, that’s the ‘message’ – to actually try and complete the global exposure picture for clients, where clients can think of these ETFs as additional building blocks for creating a diversified overall portfolio.
This is exactly where the opportunity for diversification comes in, and I’m not only talking about regional exposure diversification. Remember that central banks may no longer move in lockstep. This means that clients can spread their risk to areas where there are different business cycles, different policies, different interest rate cycles and so on.
So, the return payoffs can be quite different at different times, hence bringing in diversification for clients and better portfolio resilience. So, I like the fact that you can look at the US exposure and think software, think cloud and all those companies’ AI. At the same time, there are other regions where they play a massive role in different sectors as well.
What’s important when you look at these two ETFs is that you’re not really coming in and saying, “Okay, I’m replacing this exposure with this.” You’re really just trying to complement your exposure using these ETFs.
So, when you look at the MSCI World, 71% of that index is the US, and then the next bit is Japan, which is around 5% or so. That just screams concentration to you. You need something to actually just try and complement that, to make sure that you are really diversified in terms of your global exposure. That’s where the original building blocks come in, really, for clients.
The Finance Ghost: Yeah, it’s kind of like a jigsaw puzzle, and these are the last few missing pieces, right? That’s probably the right way to think about it. Literally, as you say, completing that picture. I like that.
Another important point, before we move on to the Japan ETF, is that a lot of South African investors bought the Top 40 last year and they are smiling. Well, depending exactly when you bought, but either way you’re smiling. It’s gold, it’s PGMs, it’s all of those things.
But that’s the point – it’s all of those things. It’s very much resources. And again, you can go buy Satrix RESI ETF if you want to get a pure-play look at that, obviously.
But a lot of South Africans are now sitting with this portfolio that is basically US tech and South African resources, right? If you’ve bought the Top 40 and you’ve gone and bought the Nasdaq over the years, that’s what you now have.
So again, what’s nice with this European ETF is you’re not just getting diversification away from US tech, you’re also getting it away from South African resources.
It’s an uncertain world. No one’s quite sure what will happen. If you have a long-term view where you’re hoping to basically get rewarded by the market for taking a long-term view, then – and the fancy term for that is ‘getting paid for duration’ (if you read fancy financial writing), it basically just means that if you’re willing to hang around, the market should reward you. This is a nice way to help yourself hang around for a long time, but in different spaces, as opposed to being too concentrated.
So, that’s the last thing I wanted to ask about this. Basically, there are no resources? We won’t dive into painful pasts, but Europe is not famous for having lots of resources. That’s kind of why they went elsewhere, right?
Siyabulela Nomoyi: Absolutely, Ghost. The picture that you were trying to paint, in terms of infotech and AI. So, the infotech exposure from indices like the S&P 500 have more than doubled over the last three or four years.
And then, if you come back locally, things like the JSE index harmonisation (which is a topic we’ve spoken to clients about in the last two to three years, as well), have also upped the gold exposure in standard indices, core local indices, as inward listed stocks got reduced from the index.
Just remember, Richemont, for instance, was like 15% or so of the Top 40, back in 2021/2022, but now it’s below 3% of the index. Not just price action, but the way that the index is constructed.
And the biggest resource stocks now are gold in these local indices, because of that and also just the price action from the last couple of years. So, definitely, anyone who has been holding local indices has collected a high exposure to these sectors over the years from the JSE reform and also just the strong performance, as well, from these counters.
But in the Satrix Stoxx 600 ETF, there really isn’t much in terms of materials. There’s just about 5% or so weight, and that weight is really spread out through 50 counters. So again, you get different cycle exposure from this fund versus what you currently see on offer.
So it really works well as a complement to what is out there in our suite of products and definitely not a replacement.
The Finance Ghost: Fantastic. I think let’s call it there on Europe. And now, we can put our money on an aeroplane and fly across to a place that I really want to travel to, which is Japan.
Firmly on my list. Very hard to get all the way out there when you have young kids. You need to rely on a serious support system, because you can’t go to Japan for three days. So, maybe I’ll have to wait a long time to go to Japan, but beautiful place – everyone who’s travelled there whom I’ve spoken to absolutely loves it. They describe it as a life-changing experience.
Will your money have a life-changing experience? I’m not sure. But that’s why we’re going to talk about the Satrix MSCI Japan ETF.
And, aside from how beautiful the place is and how interesting the culture is, it’s also a pretty fascinating macroeconomic and geopolitical story.
They have their first female Prime Minister. They are, as I understand it, heading to elections soon. There’s a lot of focus on stimulus, on bond yields, on currency pressures and the weakening yen, but also what this means for the exporters in the market.
And underneath all this, my understanding is that Japan is the third-largest stock market in the world. So, that is incredibly interesting.
Siya, as I did with Europe, I’m just going to open the floor to you, here, to just give us some of the key features of the Japanese story and this market.
Siyabulela Nomoyi: Yeah. Geez, Ghost. I mean, every second person I speak to wants to travel to Japan – including me. I…
The Finance Ghost: The yen needs to get weaker and weaker, then they need to somehow bring the country closer, and then we can all do it!
Siyabulela Nomoyi: Yeah, exactly [laughing]. Yeah. It is a long flight.
The Finance Ghost: It is, sadly, very far away.
Siyabulela Nomoyi: Yeah. But it always feels like to me, if I get there, it will feel like I’m actually stepping into another realm or something totally different.
The Finance Ghost: Basically, yeah.
Siyabulela Nomoyi: Quite exciting. But, as you correctly pointed out, Japan is the third-largest equity market in the world, behind the New York Stock Exchange and the Nasdaq.
Just thinking about that for a second, in terms of global exposure – again, let me just go back to the MSCI World example. Japan is about 5% of that, but it’s the third-largest equity market in the world, and it’s the second-biggest region in that index.
And I keep repeating this when I speak about Japan to colleagues, or to media or friends, but what we’re talking about here is really the cornerstone of Asian markets. A totally different space altogether.
Very physical exposure, different from cloud or software exposures, and so on, from the US and other areas as well, and also pharmaceutics and financials from Europe and the UK. So, totally different from that.
A colleague of mine said, “With all the AI boom and developments, we still leave the office, and someone is going to hop into a Toyota and drive home – for many years.” And that’s Japan.
Globally competitive sectors with advanced robotic exposures, automation and precision engineering. Japan goes hand in hand with those sectors.
So, the opportunity in Japanese equities today is increasingly being driven by a combination of structural reforms you mentioned – so, changing corporate behaviour and a very different economic and policy cycle there. Japan now offers investors exposure to a market with unique sector leadership, improving shareholder returns, and a reform agenda that is reshaping the way companies are actually deploying capital.
So, a little less cash hoarding versus the past. Making sure that the shareholders actually participate in the growth of the companies that they are invested in.
One of the most important developments has been Japan’s new focus on stimulus and economic revitalisation, alongside efforts to actually break the country out of decades of stagnant pricing dynamics.
Inflation has returned modestly, wages are rising, and policymakers have been encouraging domestic demand and investment, which is very important for the equity cycle that we can witness there.
The shift matters because Japan’s equity market has historically been constrained by a deflationary mindset, and the move towards a more normal economic environment is supportive of corporate earnings and market confidence as well.
Also important, Ghost, is that, in the happenings in Japan, the exchange has been pushing companies back (particularly those trading below book value), to actually improve profitability and capital efficiency. As I said, less cash hoarding.
Share buybacks and dividend increases have become more common, and companies are increasingly being judged on Return on Equity (ROE) and shareholder alignment. So, those are really important.
Companies have to look at that on their reports and what they bring to shareholders. This then creates the potential for a gradual re-rating of Japanese equities as corporate Japan becomes more shareholder friendly.
And then lastly, I think you can see the potential – even from returns from last year or the last couple of years for comparison. If you look at the MSCI World, for instance. Since 1994, (almost 30 years ago), the MSCI World return, in dollars, is about 9% per year, if you’re looking at that period, while the Japanese stock market is only at 3%. Big difference.
But in the last three years, these two indices have actually been on par, not very far from each other (even though the MSCI World has outperformed). And last year, the Japanese market was up 30-odd% versus 20% from the MSCI World in dollars.
So, something is coming out of the mist, years in the making, and I think it’s quite a positive outlook for the market.
The Finance Ghost: Yeah, it’s a cautionary tale about the birth rate, something I write about pretty often, because one of the most amazing statistics about Japan is that they sell more adult diapers there than child diapers, which is incredible.
That tells you how old the population is. So, cautionary tale there, and a very interesting point.
Something else I want to raise about Japan, Siya, is that none other than Warren Buffett has had some very nice things to say about Berkshire Hathaway’s holdings in some of what he calls the ‘Japanese trading houses’.
He talks about how he plans to hold those shares essentially forever, decades on end. Which is interesting because a couple of decades ago, he called Japan ‘uninvestable’. So, things do change. That is a reality, and it’s quite fun to see this coming through.
Another really big difference to that Europe ETF that we talked about is that my understanding is that this index in Japan has around 180 constituents – nowhere near the 600 in Europe, and it’s very much focused on large- and mid-caps.
Just to give you an idea of the depth of that market, if you buy the Japan All Cap Index (and to be clear, that’s not what this is tracking), that is over 3,000 constituents. Imagine! That’s like 10 times the number of stocks we have on the JSE.
I’m very glad I’m not trying to do Ghost Mail in Japan because I struggle to write Ghost Bites every day as it is. I’m not sure that I could cope with 10 times the updates, Siya.
But 180 in this index tells you it’s large in mid-caps, actually, so quite a different risk profile to the much broader index in Europe, right?
Siyabulela Nomoyi: Yeah, of course. It’s a huge market. No wonder it’s the third-biggest in the world. So the MSCI Japan Index (which this ETF will track) is quite well spread out as well (which I like), in terms of the concentration risk that one can look at when they think about index trackers.
As you mentioned, about 180 stocks, large- and mid-cap segment of the Japanese equity market. That actually covers about 85% of the entire market with just those 180 stocks. So, you’re getting almost a full exposure of what’s happening in the Japanese equity market.
These are household brand names like Toyota, Honda, Panasonic, Nintendo, Sony, and so on – everyone knows those names. They form part of that index, with the biggest position (which is Toyota) being around 4.5%. Very low concentration in that index.
So, those 180 stocks are really spread out nicely, from Toyota and so on to the smallest holding there. The MSCI Japan Index is one of the most widely used benchmarks for exposure in the Japanese stock market.
For South African investors, the composition of the index is particularly relevant because it offers a complementary blend of sector exposures and return drivers that can actually broaden offshore portfolios beyond the traditional core global exposure that we spoke of.
And industrials, consumer discretionaries, some financials and also some tech hardware sectors are what dominate this index. It reflects Japan’s big role as a global leader in transport, high-end engineering and manufacturing.
This really gives investors exposure to the real economy side of innovation. There’s innovation and the software and all those things, but you really get the real economy exposure from this index.
So, the MSCI Japan Index is also a meaningful complement to South Africa’s local equity benchmark, such as the FTSE/JSE All Share index, offering very low correlation levels between the two over many, many years of comparative returns.
The Finance Ghost: Here are some other stats that I’ll hit you with around Japan, just because I find the place so interesting.
There are around 120 million people (roughly) in Japan. There are a few different stats that I’m finding here, but that seems to be the number. That’s about… what? That’s double…no, it’s about triple – we don’t really know how many people are in South Africa, but it’s a lot bigger than us, that’s for sure.
What is interesting, though, is that recently the population drop has been the steepest in any given year since data collection began in 1968. So, this ageing population story is actually essentially getting worse for them, not better.
And that’s why they’re trying to stimulate this economy, because it’s actually a bit of a ticking time bomb in that regard. But that stimulation can really help, from an investment perspective.
I’ll give you another interesting stat, bearing in mind this is a shrinking population.
In 2025 – I found an article that talks about new car sales in Japan, that’s a really nice barometer for consumer discretionary spending and how people are feeling (especially because Japanese cars last forever, so you don’t really need to replace your car, let’s be honest) – so, sales across all brands: up 3.3% year-on-year. That is meaningful in a country that has negative population growth and a whole lot of people who are way too old to drive. That is very interesting.
Kudos, Toyota. Good results there. Ag shamepies for Nissan. They just can’t catch a break. Down 15% in their home country, alas. But again, ETFs give you broad exposure so you don’t have to be hurt by the performance of one company like Nissan.
The point is that the stimulus (I’m starting to see it there, you know) comes through in stats like that. And that obviously makes it pretty interesting from an investment perspective. And, as you say, lots of manufacturing precision, etcetera, going on there.
For those who are thinking, “Okay, well, how does this work from an AI long-term perspective?” I guess the answer would probably be the amount of AI that is embedded in these manufacturing processes and how much slicker they can become.
Or is there more to the story than that, in terms of the technology stocks in Japan?
And before you answer that piece Siya, the other point I just want to raise is the currency.
We find ourselves in this odd situation, right? Where suddenly, the rand is strengthening. We don’t know this life, as South Africans. We only know a rand that goes down. But the rand is strengthening and the yen is struggling.
So, interestingly enough, this is almost like flipping the script a little bit. Suddenly, we get to behave like the developed market (even though we obviously aren’t, compared to Japan), because the yen weakening over time is a source of potential return – assuming it carries on. Let’s not pretend like currency situations don’t change.
But if that carries on, that’s a source of return for South African investors. And then in theory, you get all this other cool stuff you’ve talked about, like manufacturing and what you’ll tell us shortly about how AI plays in that market, etcetera.
Siyabulela Nomoyi: Yeah. So Ghost, I think you might want to check those flights, in terms of the rand strength versus the yen and the dollar. It might be a good chance to have flight tickets which have dropped quite a lot there, but…
The Finance Ghost: It’s the small humans keeping me out of Japan, not the yen, I’ve got to tell you.
Siyabulela Nomoyi: [laughing] Yeah. So, looking at the strength there, the last time I checked we were about 15% or so strength from the rand against the yen and the dollar as well. It’s been sort of the same direction. So, incredible times.
But that’s the advantage when you get a locally listed ETF which is traded in rands, there’s that currency diversification. And I spoke about that in the euro as well, where you get these different currencies from the 17 European regions vs. the UK as well.
You also have the yen which has been seen as sort of like a defensive position, in terms of the currency exposure that you get there. So, it’s a major advantage for South Africans if they move their money to a currency which has been a lot weaker when compared to the rand as well. So, if that actually turns around, that’s also adding to the return for clients.
But Ghost, what I’ve also seen (and I don’t know if anyone will agree with me here) is that, while the US has sort of led the boom on AI software and cloud ecosystems and so on, Japan has been a bit misunderstood here, because they’re very important on the physical and industrial part of this entire revolution.
It’s not like they’ve been left out or so, but they’ve played a big role in terms of the physical part. As I mentioned, this is the real economy that you get when you get exposure to this index (the MSCI Japan index).
So the precision engineering I mentioned, robotics, factory automations, advanced manufacturing and high-end electronics, they have applied AI in these industries almost better than anywhere.
A prime example would be their bullet trains. They’re the pioneers in the space, starting off in the ’60s. But that industry, because of AI… the maintenance of their reputation for extreme safety, being punctual (I mean, those guys will send out an apology to commuters just for being late by two seconds, so punctuality is very important), and a very, very efficient system, even in a very high-frequency network. That can’t be just a person sitting and maintaining that. They’ve used AI very strongly in that area and also in other areas as well, in terms of the automation and the building of factories as well.
In Japan, because of the ageing population that you’ve mentioned, labour shortages and having to actually increase productivity, AI is not just a tech train; it’s actually an economic boom in the area.
So the tech companies like FANUC and Keyence, who operate in automation systems, are already leveraging a lot of the AI and will stand to benefit from it for years to come, actually.
And semiconductor companies, as well. Advantest and SCREEN and all these electronic companies like Sony, Canon for images – all these contribute meaningfully to tech and also leverage a lot from the AI.
The Finance Ghost: Yeah, it’s a fascinating space, and it’s amazing how these technological advances filter all the way down.
Siya, I think we’ve done a great job here of just piquing people’s interest around both Europe and Japan. And as always, we’ve given it a balanced look. It’s not to say, “Oh, you know, here’s a brand-new ETF, go buy it, everyone. It’s guaranteed to go up.” You’ll never hear that on anything that comes out of Ghost Mail or Satrix.
It’s more to say, “Here are some options, here are some more building blocks for your portfolio. Think about them, do the research, consider how they fit in, as always.”
One cool thing is you can do it in your tax-free savings account. That’s a point that I’ll always drive home. And you need to go and understand the huge geopolitical forces at play behind these regions.
Because that’s the one thing: when you go and buy a regional ETF, you aren’t buying one company story. You’re kind of not even buying 10 or 20 company stories. You’re really buying a macro story.
And you need to understand that and go and do the work. And if you do understand that and you get the timing right, you can actually get incredible risk-adjusted returns in your portfolio.
So, to our listeners, go and check them out. I’ll obviously include links to stuff like the fact sheets and that kind of thing. These are fresh-out-of-the-oven ETFs available on the JSE.
And Siya, to you and the team at Satrix, congrats and well done on continuing to bring these cool innovations to the South African market. I look forward to lots more of them this year. I’m sure you’ve got more planned.
Siyabulela Nomoyi: Yes, definitely. Ghost, thank you for the invite. And for the listeners, I think it’s very important that they also understand that there are local providers who have products in the space as well in the JSE, but I think with our offering, there’s quite a huge cost benefit.
The Euro Stoxx ETF will come in at 25 basis points, and the Japanese one will come in at 35 basis points. So it’s quite…
The Finance Ghost: It’s amazing, actually.
Siyabulela Nomoyi: Yeah, it’s very, very advantageous for clients out there. So, thank you very much, and all the best.
The Finance Ghost: Yeah, it’s a pleasure. It’s amazing to think you can get that kind of offshore exposure at that sort of basis points. So, well done.
And of course, available on the SatrixNOW platform as well, for those who use that. Siya, thank you and cheers.
Siyabulela Nomoyi: Thanks, man.
Disclaimer:
Satrix Investments (Pty) Ltd & Satrix Managers (RF) (Pty) Ltd is an authorised financial services provider. The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. For more information, visit https://satrix.co.za/products
Bidvest’s disposal of Bidvest Bank has fallen through (JSE: BVT)
The Bidvest Life disposal is still in progress though (with a different counterparty)
Corporate deals are difficult things. Even when you think there’s a great deal on the table, it’s very possible that it will fall through before the conditions precedent are fulfilled.
A deal isn’t a deal until money is in the bank and all conditions have been met. That’s the golden rule. Until then, it’s just a strong promise at best and a vague idea at worst.
Sadly, Bidvest is just the latest example of this. The deal to dispose of 100% of Bidvest Bank to Access Bank has fallen through. Certain conditions were not fulfilled by Access Bank in time.
Bidvest must now go back to the drawing board in terms of this disposal, with a relaunch of the process and an invitation to new buyers. Bank acquirers don’t tend to fall out of the sky on a daily basis, so the jury is out on how long this might take. Bidvest will need to keep the bank capitalised and financially sound during this period.
At least the Bidvest Life disposal is still in play, with the buyer being a private equity-led consortium. The parties are working towards the achievement of key conditions precedent.
So, if you would like to own a bank, Bidvest is waiting for your call.
DRDGOLD joins the cool kids club as earnings approximately double (JSE: DRD)
It could’ve been so much more if production went the right way
DRDGOLD is an example of a mining house with a share price trajectory that was saved by the higher gold price, not just boosted by it. They’ve been struggling with production numbers, as the tailings facilities have been dealing with challenges like a decreasing gold yield due to depletion of higher-grade material.
In a trading statement for the six months to December 2025, DRDGOLD achieved HEPS growth of between 93% and 103%. That sounds fantastic obviously, but the underlying trend is worrying: revenue was up only 33% despite the gold price increasing 43%. The balancing number is an unfortunate 7% decrease in gold sold.
At Far West Gold Recoveries, the gold yield fell by a significant 10% as they had to process from a lower-grade area. At least throughput tonnages were consistent there, albeit of lower quality. At Ergo Mining, the gold yield fell by 4% and throughput tonnages fell by 5% due to weather-related interruptions.
Cash operating costs per kilogram increased by 13%. Group cash operating costs were up 4% overall, but remember that production was down and hence the per-unit number is unpleasant. There are some highlights here, like electricity costs decreasing at Ergo thanks to the solar plant and battery energy storage system. They managed to avoid a 12.74% increase in the Eskom tariff, so I expect that the return on investment for that renewable energy system looks good.
For the year ending June 2026, the company is trending towards the higher end of production guidance of 140,000 to 150,000 ounces (vs. 155,288 ounces in FY25). Unit costs are expected to remain within guidance.
With difficult metrics at the existing facilities, it shouldn’t come as a surprise that there’s a substantial capex bill to try and improve things. Capital reinvestment increased by 74% to R1.65 billion. They are working on Ergo’s Daggafontein TSF and Far West Gold Recoveries’ DP2 Plant expansion. Notably, the transfer of the Kloof 2 dump from majority shareholder Sibanye-Stillwater (JSE: SSW) to DRDGOLD has increased the mineral resource at Far West Gold Recoveries.
As at 31 December 2025, DRDGOLD had R1.73 billion in cash and remained free of any bank debt. They do have debt facilities in place in case they need them.
Hyprop reduces its exposure in Gauteng (JSE: HYP)
They are selling a 50% stake in Woodlands Boulevard
Hot on the heels of sector peer Growthpoint (JSE: GRT) reducing exposure to Sandton through the deal with Discovery (JSE: DSY), we now have Hyprop selling a 50% stake in Woodlands Boulevard, a retail property in Pretoria East.
The parties have prior experience with one another, with the buyers having acquired Atterbury Value Mart from Hyprop in 2021. This is important, as Hyprop is retaining the other 50% stake in the property and has no intention of selling it. They therefore need to be comfortable with getting into bed with these purchasers.
The price for the 50% stake is R790.5 million. Hyprop was carrying the property at a value of R1.747 billion (for the 100% stake) as at June 2025. Half of that number is R873 million, so they are selling this 50% stake at a discount of 9.5%. You won’t find the word “discount” anywhere in the announcement, so you have to work that out yourself to see this issue. One of the reasons for the difference might be the control premium attributable to a 100% stake vs. 50% co-ownership. But either way, it’s a disposal below book value.
Hyprop has had to provide rental guarantees to achieve that price. They’ve indemnified the purchasers against negative rent reversions and unbudgeted vacancies for two years from transfer date. Hyprop’s liability in this regard is capped at R10 million for the first 12 months and R10.6 million for the second 12 months. Along with the capped downside, Hyprop has negotiated uncapped upside – the property fund will receive any rent collected which exceeds the budgeted rent during the rent guarantee period.
Going forward, the asset management of the property will be performed jointly by Hyprop and the purchasers. The property management with onsite staff will be handled by a company related to one of the purchasers.
The Hyprop share price has had an exceptional year, up 42% over 12 months.
Metair is scrambling in a difficult environment (JSE: MTA)
This company has walked a very tough road
If Metair didn’t have bad luck, they wouldn’t have any luck at all. It’s amazing just how many things have gone wrong for them, ranging from local automotive production disasters at their customers’ plants through to huge fines from European regulators.
They still can’t catch a break, with the local OEM manufacturers reeling under the pressure of the Chinese onslaught. Metair references NAAMSA stats here: South African new car sales grew 15.7% in 2025, imported vehicles were up 30.4% and local production was up just 1.5%. Exports grew 4.4%, which suggests that local sales for OEMs were in the red.
This is why Metair has been trying to diversify through acquisitions like AutoZone, a clear step into the aftermarket sector. They acquired AutoZone out of business rescue – and companies don’t end up in that situation for no reason. They are running approximately six months behind the plan that underpinned the deal, so they need to get it back on track and quickly.
Metair is having such difficulties in the core business that they certainly can’t afford any troubles elsewhere. They’ve taken steps like closing the Industrial division of First Battery (inverters – no longer a good business at all) and Dynamic Batteries in the UK.
Despite all the challenges faced by Hesto as the subsidiary that supplies the local OEMs, that business still achieved higher revenue and better operating profit. Be careful of the base effect here, as 2024 was impacted by an engine certification issue at a major customer and an associated drop in volumes.
Let’s also not forget that Rombat, Metair’s battery manufacturer in Europe, was given a fine of around R413 million (at current exchange rates). The group is obviously considering all legal options, but it’s unlikely that they will avoid that disaster.
In terms of the financial performance, the inclusion of Hesto as a subsidiary has positively skewed the numbers, while AutoZone has given them a negative skew. Group revenue is up by between 53% and 58%, while group EBIT margin improved from 4.8% to between 6.0% and 6.2%.
The better view is to look at the segmentals, where Metair gives disclosure that adjusts for the subsidiaries. If Hesto had been accounted in the same way in both periods, OEM revenue would’ve been up by between 4% and 6%, while EBIT margins would’ve increased from 5.2% to 7.5% and 8.0%. I still wouldn’t extrapolate this growth due to the base effect of the engine certification issue.
The AFM segment (aftermarket) doesn’t have any disclosure on an ex-AutoZone basis. They note that AutoZone made an EBIT loss in this period, so that’s the main reason for the segmental EBIT margin dropping from 6.2% to between 3.9% and 4.1%.
Metair remains a high-risk story with plenty of debt, so it’s very important that they met all their covenants during the year (and continue to meet them). There’s no room for error in the debt package, with the banks holding the keys to the business at the moment.
If you include the Rombat fine, the headline loss per share for the 12 months to December 2025 is between -18 and -24 cents. If you exclude it, HEPS is between 185 and 195 cents. HEPS in 2024 was 105 cents.
Northam Platinum took full advantage of PGM prices (JSE: NPH)
Get ready for a massive increase in interim earnings
Northam Platinum certainly did their part in making sure that the six months to December 2025 was a period to remember for investors. Total metal sold increased by a substantial 13.7%. When you combine this with a 53.1% increase in the rand basket price, you get revenue growth of 60% for the period.
And as you’ve probably guessed, a fantastic jump in revenue like that can only mean even better things for profits. Still, I’m not sure you’re ready for just how crazy it gets when there are extensive fixed costs in a structure (like in mining).
The cost per 4E ounce increased by just 7.2% in the period, so operating profit increased by an incredible 439.2% to R5.8 billion. Yes, that’s more than a 5x increase. Welcome to the world of operating leverage!
We haven’t dealt with the next layer of leverage in the system yet. Northam Platinum has debt, so there’s a financial leverage effect between operating profit and HEPS. The percentage move isn’t important anymore when earnings are nearly 25x higher, coming in at between R15.185 and R15.295 per share vs. just 61.1 cents in the comparable period. Incredible.
I’ll finish with a more sobering comment: operating margin in the base period was just 7.5%, representing a time when the PGM miners were in serious trouble. In this period, the operating margin was 25.1%. Sure, we now find ourselves in a place where Northam can reverse most of the previous impairments to the Eland mine, but I’m not sure we are experiencing the super profits that the gold miners are enjoying. Things have merely improved to a level that looks more sustainable, with the year-on-year move reflecting the terrible base period.
But will things stay this way?
The share price is up by just over 200% in the past 12 months. If you annualise this interim earnings performance, you’re sitting on a forward Price/Earnings multiple of around 11.9x. It’s practically a guarantee that the full year numbers won’t be double the interim numbers, as there’s just so much volatility in this sector, but it’s still a good indication of how bullish the market is feeling.
Investors are now paying up for PGMs even though history has taught us to be careful in this sector.
Orion has locked in the prepayment deal with Glencore (JSE: ORN | JSE: GLN)
This will unlock $250 million in funding
Orion Minerals has some great news to share: they’ve signed a binding prepayment agreement with Glencore for a $250 million prepayment facility. This relates to bulk, copper and zinc concentrates from the Prieska Copper Zinc Project.
The funding will be sufficient for the Uppers development ($40 million) and part of the Deeps development (the remaining $210 million). Don’t you just love it when projects do what they say on the tin?
There’s potential for an early drawdown of $50 million for the Deeps project based on certain conditions being fulfilled.
First production from the Uppers is expected 13 months after close of the facility i.e. by the end of Q1 2027.
Losses get even worse at Pick n Pay (JSE: PIK)
The noose is getting tighter around their necks
Pick n Pay released a trading update for the 48 weeks to 1 February 2026. They’ve also included a trading statement for the 52 weeks to 1 March 2026. In the context of what we saw recently from Shoprite (JSE: SHP) and Woolworths (JSE: WHL), not to mention Pick n Pay’s own subsidiary Boxer (JSE: BOX), I’m afraid it’s not great.
For the 48 weeks, Pick n Pay South Africa’s like-for-like sales grew 2.9%. Company-owned supermarkets were up 3.5% (by far the “highlight”) and franchise stores were up just 1.5%. Total sales fell 1.4% as the group has been trying to shrink into prosperity, a very difficult strategy in retail. They note that the closures and conversions are “largely complete” – for now, at least. They will need to perform well to avoid another round of this pain.
Here’s the real surprise: Pick n Pay SA’s internal selling price inflation was 2.7%. I know this is a different period to peers, but that feels too high relative to recent numbers we saw at Shoprite group. This is the challenge of a drop in volumes as the footprint shrinks – you just can’t get the same deals from suppliers.
Online turnover increased by 31.8%, a solid outcome thanks to ASAP! and the groceries on the Mr D app.
Clothing is now a worry, with a year-on-year drop in turnover and like-for-like sales in the last 22 weeks of the period. Pick n Pay’s Clothing segment has more of a value focus, so this isn’t an acceptable outcome in the context of what we’ve seen at Pepkor (JSE: PPH) and Mr Price (JSE: MRP). They try to soften it by pointing out how well the business has been doing until this point, but you’re only as good as your latest numbers when you’re in turnaround mode unfortunately. The latest number is a 6.8% decline in like-for-like sales in standalone Pick n Pay Clothing stores in the 22 weeks to 1 February – yikes.
My worry remains that they are trying to pin this on macro factors. I quote: “The performance over the latter 22 weeks of the Period was below expectation and the result of a highly constrained market, particularly over the extended Black Friday period.”
No. The performance is because the business is still struggling after years of poor decisions, with Shoprite applying more and more pressure each year. I will never understand why management teams hope that blaming external factors will somehow distract investors from the problems. It isn’t working, with the market valuing Pick n Pay at less than zero if you apply the look-through value in Boxer, or roughly zero if you put a reasonable marketability discount on Boxer.
The headline loss per share is expected to increase in FY26 by more than 20%. This remains a turnaround that I’m staying far away from. But, I’m keen to hear your view, so please participate in the poll below:
The RMB Holdings board is supporting an offer by Attbid for all the shares in issue (JSE: RMH)
There was no shortage of debate on X around this one
Towards the end of last year, I wrote about how RMB is a good example of why you don’t want to be on the weaker end of the negotiating table. The company is sitting with a minority stake of 38.5% in a difficult property portfolio (the Atterbury portfolio), with the majority holders in that portfolio doing everything possible to make themselves the only buyers in town for that stake. When buyers are thin on the ground, prices suffer.
After much argy-bargy on this one, it became clear that the controlling shareholders in Atterbury were looking at acquiring RMH. If they can get control of RMH, then any remaining minority shareholders in RMH are coming along for the ride in a structure that is clearly controlled by Atterbury throughout.
I personally wouldn’t want to be a minority shareholder in a company that in turn is only a minority shareholder in its main asset. You may as well go ride rollercoasters all day, as you’ll have a similar amount of influence on the outcome of each ride as you’ll have on this investment.
The opportunity for Atterbury started with the acquisition of Coronation’s 28.35% stake in RMH in October 2025. It certainly wasn’t harmed by RMH then impairing the stake in the Atterbury portfolio, something that cynics say was to pave the way for this offer. I would point out that most recent offers on the market for investment holding companies have been at a discount of over 20% to NAV (net asset value) per share, so I didn’t think that the impairment for a marketability discount was unfair.
With the release of a firm intention announcement, the RMB Holdings board is supporting the general offer by AttBid for the shares. This isn’t a scheme of arrangement, although they would probably invoke squeeze-out provisions if they achieve sufficient acceptances.
The offer price is 47 cents per share, slightly below the NAV per share of 48.6 cents. I know I’m going to irritate people by pointing this out, but an offer at a small discount to NAV after an impairment isn’t any different to an offer at a steep discount to NAV before impairments. The price of 47 cents per share either is or isn’t a fair offer, regardless of the latest NAV estimate.
Here’s an interesting nuance: AttBid isn’t the same entity as Atterbury Property Fund. You see, AttBid is a consortium that includes Atterbury Property Fund and the brothers who founded WeBuyCars (JSE: WBC), Faan and Dirk van der Walt. They recently sold a huge chunk of WeBuyCars shares and raised eyebrows in the market. It seems as though their plan is to recycle that capital into this transaction and diversify their exposure. AttBid is held 49% by Atterbury Property Fund and 25.5% by each of the brothers.
The circular is expected to be released on 9 March. I expect to see plenty of arguments around this one along the way.
Vukile Property Fund’s commuter centres are doing extremely well (JSE: VKE)
To drive footfall, you must go where the people are
While premium shopping centres struggle with footfall at the moment due to increasing online adoption by consumers, centres with more of a value and commuter focus are doing really well. This is logical – you are catching people on their way to or from work, giving them an opportunity to quickly buy a few things that might otherwise have been bought from minimarts or even spaza stores (depending on which area).
Vukile Property Fund’s South African retail portfolio is focused on the areas of the market that offer strong growth prospects. In November and December 2025, their Commuter centres achieved an 11.1% increase in trading density, while Value centres were good for 8%. Township and Rural increased 3.7% and 2.7% respectively. Urban centres increased 3.7%.
In case you ever wondered why shopping centres have taxi ranks, now you know!
In terms of retail categories, there were some standout double-digit performances over the two months: women’s wear and footwear +12.7%, and fast food +12.5%. Special mention to cellphones (+9.9%), electronics (+8.7%) and gyms, health and beauty (+7.9%).
In terms of the Black Friday vs. festive split, November sales grew 2.4% off a high base (10% growth in November 2024) and December trading density increased by 4.5%. I’m not sure why they use slightly different metrics across the two months. Footfall was flat in November 2025 and up 3% year-on-year in December 2025. Commuter centres were again the pick of the litter, with footfall up 10.4%.
Moving abroad to the Castellana Properties portfolio and starting with Spain, turnover was up 7.3% in November and 3.2% in December. Segments like fashion and health and beauty led the way. Footfall fell 0.9% in November, although it increased 8.6% in Black Friday week and 13.1% on Black Friday itself. Bonaire is still recovering from the flooding, so that has impacted these numbers. If you exclude Bonaire, the Spanish portfolio’s footfall was up 4% in November.
In Portugal, November sales grew 9.5% and December sales were up just 1.5%. For whatever reason, Sports and Adventure was the standout category with 18.6% growth in November. Footfall increased 5.3% in November, although Black Friday itself was actually down 1.8%. In December, footfall fell by 0.4%, dragged down by the only asset in Portugal that isn’t managed by Vukile.
It seems like a good update overall, with the South African commuter properties offering the most exciting opportunity.
Nibbles:
Vodacom (JSE: VOD) continues to invest in the Egyptian growth story. They’ve secured spectrum under the FY26 to FY32 programme with a present value of around $350 million. They must pay an instalment of $100 million in this financial year, with the balance of the liability due in three annual instalments. The next phase of the programme is coming in FY28, so that will in all likelihood result in additional investment.
Powerfleet (JSE: PWR) released their earnings for the quarter ended December 2025. Volumes are extremely thin in this name, so I’m just mentioning it down here. Revenue came in at $113.5 million, up 7% year-on-year. Importantly, this is the first quarter where you can actually use the year-on-year numbers, as the acquired businesses are in the base. Income from operations was $6.3 million vs. an operating loss of $1.2 million in the comparable quarter. There was still a net loss per share, but that doesn’t stop Powerfleet reporting growth in adjusted EBITDA of 26% year-on-year. If there’s one thing tech companies love, it’s adjusted EBITDA!
Africa Bitcoin Corporation (JSE: BAC) announced that Altvest Credit Opportunities Fund (ACOF) – by far the best part of the group in my opinion – raised R100 million in new debt funding under the R5 billion Domestic Medium Term Note Programme. I know I sound like a stuck record, but I still wish the group would just focus on delivering the ACOF opportunity. The timing of the group rebrand to focus on bitcoin has been most unfortunate in the context of the bitcoin price, but that’s the risk you take when you hitch your trailer to a volatile vehicle.
Keen to get up to speed on Southern Palladium (JSE: SDL)? The group has been busy presenting at mining conferences, with the latest example being the 1-2-1 Mining Investment Conference in Cape Town. You can find it here.
Alexander Forbes (JSE: AFH) has released a circular related to share-based payments and a desire to issue approximately 5% of total shares in issue to share scheme participants from 2026 to 2028. If you’re a shareholder here, perhaps take a look at the circular.
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