Unlock the Stock is a platform designed to let retail investors experience life as a sell-side analyst. Corporate management teams give a presentation and then we open the floor to an interactive Q&A session, facilitated by the hosts.
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In the 60th edition of Unlock the Stock, Orion Minerals joined us for the first time to talk about the projects that they are in the process of raising money for and developing in South Africa. I co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.
DRDGOLD is loving the higher gold price (JSE: DRD)
But watch those costs
DRDGOLD is a tailings business. This means that they take previously mined material and process it again using modern technology, extracting the last bit of gold that can be economically obtained at this time.
This is a little bit like the old “picking up pennies in front of a steamroller” joke, unless the gold price is doing extremely well and thus the steamroller is taking a break from trying to squash the management team.
This was certainly the case in the year ended June, with group revenue up 26% despite a 3% decrease in gold sales. The gold price clearly did the heavy lifting here, up 31% in rand. This was good for an increase in HEPS of between 64% and 74%.
Far West Gold Recoveries contributed revenue of R2.2 billion and enjoyed a 0.5% improvement in the gold yield, which speaks to operational efficiencies and the quality of the material being processed. Over at Ergo Mining, which is significantly larger with revenue of R5.7 billion, the gold yield fell by 21% and throughput was up 21%, so they have to work much harder there to extract the gold.
Or do they? Costs at Ergo were only up 4%, so the substantial increase in throughput isn’t driving a similar increase in costs due to having fewer, hydraulically mined sites. At Far West Gold Recoveries, costs were up 8% despite the stronger yields, as the recovery process seems to be less efficient there. Thanks to the technology involved in processing the materials, the level of throughput isn’t necessarily the best predictor of costs.
Free cash flow was given a boost by capital expenditure coming in R731 million lower vs. the prior year, a drop of 24%. This was thanks to the completion of major projects. The overall swing in free cash flow was rather breathtaking, from an outflow of R1.2 billion to an inflow of R1.2 billion!
The share price is up 56% this year.
Growthpoint has fully exited NewRiver REIT (JSE: GRT)
The strategy to have a more focused group continues
You may recall that Growthpoint sold its shares in Capital & Regional in a deal announced back in 2024, with shares in NewRiver REIT as part of the settlement for that transaction.
Growthpoint has now sold off all of those shares for gross proceeds of £50.5 million. Most of the shares were acquired by NewRiver in a share buyback and the rest were placed in the market through an accelerated bookbuild.
Growthpoint gives only generic guidance around the use of the cash proceeds, but the recent narrative from the company is one of following a more focused strategy right here at home. In a country where the macro picture remains tough, having broad property exposure all over the show isn’t the right approach. Although NewRiver was offshore exposure rather than South African, there’s a push at Growthpoint to have fewer distractions for management. It will be interesting to see what Growthpoint’s next move is.
Master Drilling’s earnings might be up – and they also might be down (JSE: MDI)
Welcome to the frustrating world of wide earnings guidance
Master Drilling released a trading statement for the 6 months to June 2025. The company gives earnings guidance in both ZAR and USD, as they operate a global business where my understanding is that many of the contracts are denominated in USD.
For the period, HEPS reported in ZAR will be between 5.4% lower and 14.6% higher than the comparable period. Although the midpoint of that is in the green, it’s still a wide range that could include flat or even negative earnings. And in USD, earnings will be between 3.5% lower and 16.5% higher.
Although it doesn’t affect HEPS, there’s happy news about the Mobile Tunnel Boring Machine that was previously impaired. The group managed to finalise a contract to operate this machine, so they’ve partially reversed the impairment to the tune of $4.7 million (the total impairment in the prior year was $7.8 million).
Although you would expect the market to be happy with this, the share price fell 4.9% on the day – admittedly on thin volumes.
MTN Rwanda’s margin moved much higher (JSE: MTN)
The performance in Africa is looking better for MTN across the board
MTN Rwanda can now add its name to the list of African telecoms companies that are doing well. This is a further boost to the MTN story, one which has enjoyed considerable support on the market this year.
During a period in which the inflation rate was 5.7% in the country, total revenue grew by 11.4% – this means that they grew at double the rate of inflation. To add to that happy news, EBITDA grew by an excellent 43.7%. This boosted EBITDA margin by 9.1 percentage points to 40.4%.
As the icing on this cake, capital expenditure excluding leases fell by 61.7%, which means that free cash flow increased by a rather daft 1,804%. It’s better to just look at the numbers than the percentage in a case like that, with free cash flow of 18,913 million RWF vs. just 993 million RWF in the prior period!
Rwanda is an appealing growth market, with projected GDP growth of 7.1% for the full year. MTN shareholders certainly aren’t complaining about being exposed to it.
Things look bleak for Mozam Aluminium at South32 (JSE: S32)
Electricity is a pretty important ingredient in this recipe
In mid-July, South32 alerted the market to a significant issue at Mozal Aluminium in Mozambique. It’s pretty simple, really: no electricity means no operations. The current agreement for the supply of electricity ends in March 2026 and things aren’t looking good in the negotiations.
The counterparties are Eskom and Hidroeléctrica de Cahora Bassa (HCB). I’m not close to the details of this, but I assume that both those parties (certainly the former) could sell their electricity elsewhere, so they don’t need South32. But South32 certainly needs them, creating a clear imbalance of power in the negotiation. I can also only assume that the deal South32 was hoping to get doesn’t provide a sufficient economic return to the electricity companies, otherwise there wouldn’t be an issue in getting this deal done.
For now, South32 will start to wind down Mozal Aluminium with the expectation of it being placed on care and maintenance from March 2026. They are recognising a massive $372 million impairment in the FY25 financials, reducing the carrying value to $68 million.
South32’s share price fell 6.3% on the day, which means it is down 17% year-to-date.
Resilient shareholders are being rewarded this year (JSE: RES)
The focus on retail properties is working
Resilient released results for the six months to June. They are a good reminder of why I far prefer listed property exposure to having any buy-to-let headaches, as Resilient is a highly liquid stock that just achieved growth in the dividend of 12.2%. I would much rather deal with a stockbroker than tenant, personally.
Aside from the benefit of a dip in interest rates in South Africa that does wonders for the profits of property funds, the South African portfolio managed net property income growth of 8.6% on a like-for-like basis. This talks directly to Resilient’s energy investments that have helped reduce exposure to ongoing increases from Eskom. When combined with a decent period of growth for retail tenants, the net result is strong.
The potential for positive reversions when there’s a change in tenant is incredible, with Resilient bringing in 79 new tenants at an average rental that was 19.5% higher than the outgoing tenants. The total base of lease renewals (including existing tenants) was for 287 renewals at rentals on average 2.2% higher than the expired leases.
Resilient’s stake in Lighthouse enjoyed a 7.9% increase in the dividend. Resilient also has direct property investments in Spain and France, in both cases in partnership with Lighthouse. Resilient now owns 27.6% of Lighthouse, having recently sold off some shares to fund other direct property opportunities.
The net asset value per share is R69.83 and the current share price is R65.38, so that’s a modest discount to NAV by REIT standards.
Double-digit growth at Standard Bank (JSE: SBK)
As a reminder, South Africa contributes roughly half of group earnings
If you’re bullish on Africa as a whole, then Standard Bank is the name among local banks that you would probably want to consider. For context, South Africa contributed earnings of R11.6 billion in the latest period and the rest of Africa was good for R9.7 billion. Offshore contributed R1.6 billion and the 40% stake in ICBC Standard Bank generated R0.8 billion. In other words, South Africa was only 49% of group earnings.
Despite a flurry of selling by directors earlier this year for whatever reason, the bank has continued to put in a solid performance. Director sales aren’t always a sign of trouble, but you should always consider them as part of your risk factors – especially when the sales are by more than one director. Some of those execs might be kicking themselves this year, depending on what they did with the money!
The strength of the recovery in Africa this year (MTN’s subsidiaries are another great example) has driven double-digit growth in both HEPS and the interim dividend for the six months to June 2025, both up 10%. Return on Equity (ROE), a key metric for banks, increased from 18.5% to 19.1%.
It all looks strong, boosted by elements like a favourable impairment environment for credit that we’ve seen across the banks. When combined with demand for credit (which is what is lacking in South Africa vs. other regions), banks make money. Standard Bank can also boast a record period for investment banking origination, with Energy and Infrastructure opportunities as the major driver.
It’s just as well that Standard Bank has such extensive operations beyond South Africa, as their macro outlook for real GDP growth in South Africa has dipped for 2025 and 2026 vs. the expectations back in March. Despite this, Standard Bank has reaffirmed its medium-term targets that reflect HEPS growth of 8% to 12%, along with ROE in the range of 18% to 22%.
The media headlines were filled with reports of Standard Bank’s CEO and CFO both planning to retire by 2027. The succession plan will be interesting to keep an eye on.
A chart of the banking Big 5 reveals that Standard Bank is second only to Capitec this year, with Nedbank as the clear laggard thanks to its SA focus. Notably, a Satrix Top 40 ETF would’ve returned 24% year-to-date, beating all of these banks:
Nibbles:
Director dealings:
Astonishingly, the day before Nedbank (JSE: NED) announced the acquisition of iKhokha, the managing executive of that division (Ciko Thomas) sold shares worth R1.6 million. In my opinion, this sails very close to the wind from a governance perspective. But more than that, it’s a poor signal around their belief in the SME strategy. Nedbank is pretty light on pockets of growth right now and it doesn’t look good when the executive in charge of an area where Nedbank is allocating capital is out there selling shares.
Despite the Renergen (JSE: REN) and ASP Isotopes (JSE: ISO – coming later this month) deal still needing to meet some conditions, the approval from the Competition Commission means that the companies can already start planning their integration. They expect to achieve the fulfulment of outstanding conditions soon.
Not that there are exactly many Deutsche Konsum (JSE: DKR) shareholders running around, but in case you somehow fall into that category, be aware that the third quarter report has been released. The loan-to-value improved slightly but is still very high at 55.8%. The portfolio valuation suffered a negative move once again.
Nedbank is to acquire 100% of fintech innovator iKhokha for a cash consideration of c.R1,65 billion in a deal that aligns with Nedbank’s strategy to deepen its support for SMEs through digital innovation and inclusive financial services. The transaction also marks a successful exit for the fintech’s long-standing investors – Apis Partners, Crossfin and the International Finance Corporation. iKhokha provides card machines, digital payment solutions and business tools to SMEs. The acquisition includes a comprehensive management lock-in to ensure managerial continuity and alignment with long-term growth objectives. The company will continue to operate under its own brand.
Gemfields has sold its entire interest in Fabergé to SMG Capital for US$50 million. Of this $45 million is due on completion of the sale with the remaining $5 million payable by way of quarterly royalty payments at a rate of 8% of Fabergé’s earnings. The sale concludes Gemfields strategic review and together with the discontinuance of other non-core projects, the group reflects a more streamlined and focused investment proposition with a strengthened balance sheet. The sale proceeds will provide additional working capital.
As first announced in early June, Jubilee Metals is to dispose of its chrome and PGM operations in South Africa for up to US$90 million to One Chrome, a newly incorporated SA company. The transaction has an enterprise value of $146 million which represents a 6x multiple on the FY2024 EBITDA of the assets being sold. Jubilee has received support of shareholders holding 30.42% of the issued share capital of the Group. Proceeds from the payment consideration will be employed to reduce existing bank facilities of up to $8.3 million.
The latest in a string of acquisitions by Sirius Real Estate is the Hartlebury Trading Estate in Worcestershire acquired for £101,1 million (c.R2,4 billion). The deal is transformational for the UK business which operates as BizSpace where it will increase the size of the portfolio by 18% to 8.3 million square feet, while growing the gross asset value by c.20% and immediately boosting revenues by 10%. The effective date of the acquisition is 8 August 2025.
As at 12 August 2025, 62.93% of Assura’s shareholders accepted the Primary Health Properties (PHP) revised offer, bringing to an end the battle between PHP and Kohlberg Kravis Roberts|Stonepeak Partners for control of the UK-based real estate investment trust. With the deal unconditional shareholders will receive a gross special dividend of 0.84 pence (R20.03224), payable on 26 August 2025. The revised offer remains open for acceptances until further notice.
Cilo Cybin has released the circular to shareholders of the related party acquisition of Cilo Cybin Pharmaceutical, first announced in December 2024. The deal, a SPAC requirement in terms of the JSE Listing Requirements, constitutes a reverse takeover. Shareholders will vote on 10 September 2025 on the deal with the longstop date extended to 31 October 2025.
The category 2 disposal by Deneb Investments of 195 Leicester Road to Earth Instyle for R48 million has been terminated due to the failure to pay the required deposit – a condition precedent.
The scheme conditions for the acquisition by ASP Isotopes of Renergen have been fulfilled and the company is expected to delist from the JSE on 8 September 2025. ASP Isotopes secondary inward listing on the JSE will commence on 27 August 2025.
AH-Vest shareholders have voted in favour of the scheme – Eastern Trading offered minorities 55 cents per share, a substantial premium on the 3 cents the share traded at prior to the offer. The listing of AH-Vest shares will terminate on 26 August 2025.
Unlisted Companies
Creation Capital, a specialist private credit asset manager, has successfully closed a R75 million private debt investment into Quest Capital Solutions (QCS). Founded in 2012, QCS offers a suite of financing solutions/asset management, service and maintenance solutions, together with insurance for rent-to-own trucks and trailers within the SME sector. Approximately 48% of QCS’s client base comprises black-owned enterprises. Funds will be used to expand operations, reach new markets and serve a broader range of clients within the transport sector.
Kogae Rainbow Investment, a South African investment management firm, has acquired a 65% stake in Boomgate, a local provider of high-security access solutions. The acquisition includes both Boomgate Systems and Boomgate International. The investment will accelerate Boomgate’s growth, expand its international footprint, particularly across Africa. Financial details were undisclosed.
Growthpoint Properties has successfully placed 67,4 million NewRiver REIT shares which it acquired as part consideration for selling its stake in Capital & Regional, raising gross proceeds of £50,5 million. 47,7 million shares were acquired by NewRiver REIT at a price of 75 pence per share in terms of a share buyback by the company and the remaining 19,7 million shares were placed in the market by means of an accelerated bookbuild programme at 75 pence per share. The cash proceeds of the placement will be used by Growthpoint to strengthen its current balance sheet position and to pursue select investment opportunities.
In terms of the revised offer from Primary Health Properties (PHP), Assura shareholders will be paid a special dividend in lieu of and representing an acceleration of the quarterly dividend due during October. Following the announcement that the revised offer had become unconditional, shareholders will now receive a gross special dividend of 0.84 pence (R20.03224), payable on 26 August 2025. In addition, in terms of the mix and match election offer to Assura shareholders by PHP, 792,655,708 new PHP shares were issued and listed this week with a value of c.R17,5 billion. The revised offer remains open for acceptances until further notice.
The JSE has notified shareholders that the listings of Kibo Energy and Sable Exploration Mining have been suspended with immediate effect for failing to publish financial statements within the prescribed period as stipulated in the JSE Listing Requirements.
This week the following companies announced the repurchase of shares:
Glencore’s current share buy-back programme plans to acquire shares of an aggregate value of up to US$1 billion. The shares will be repurchased on the LSE, BATS, Chi-X and Aquis exchanges and is expected to be completed in February 2026. This week 2,9 million shares were repurchased at an average price of £2.83 per share for an aggregate £8,17 million.
In May 2025 Tharisa announced it would undertake a repurchase programme of up to US$5 million. Shares have been trading at a significant discount, having been negatively impacted by the global commodity pricing environment, geo-political events and market volatility. Over the period 4 to 8 August 2025, the company repurchased 22,136 shares at an average price of R20.44 on the JSE and 341,126 shares at 86.14 pence per share on the LSE.
In May 2025, British American Tobacco extended its share buyback programme by a further £200 million, taking the total amount to be repurchased by 31 December 2025 to £1,1 billion. The extended programme is being funded using the net proceeds of the block trade of shares in ITC to institutional investors. This week the company repurchased a further 588,198 shares at an average price of £42.51 per share for an aggregate £24,99 million.
During the period 4 to 8 August 2025, Prosus repurchased a further 1,914,429 Prosus shares for an aggregate €96,33 million and Naspers, a further 177,668 Naspers shares for a total consideration of R996,15 million.
Five companies issued profit warnings this week: Thungela Resources, Impala Platinum, KAP, Truworths International and Master Drilling.
During the week two companies issued or withdrew cautionary notices: ArcelorMittal and Blue Label Telecoms.
Rwanda and Kenya-based EV energy tech company, Ampersand, has announced the successful close of a funding round to scale up its operations across East Africa. The round included new working capital investment from British International Investment, new equity investments from Seedstars Africa Ventures, Gaia Impact, the Rwanda Green Fund and Raspberry Syndicate, as well as increased investments from existing partners including Ecosystem Integrity Fund, AHL Ventures, Acumen, HEHF, and TotalEnergies.
HoneyCoin, a Kenyan fintech startup, has raised US$4,9 million in seed equity funding from Flourish Ventures, TLcom Capital, Stellar Development Foundation, Lava, Musha Ventures, 4DX Ventures, Antler, and Visa Ventures. HoneyCoin has built a complete solution that operates as a multi-product one-stop-shop infrastructure platform offering services that span local payouts and collections, cross-border FX settlement, and treasury management.
Nulla Group, a Cameroon-based maize aggregator and processor has received a US$1,5 million working capital loan from Sahel Capital through its Social Enterprise Fund for Agriculture in Africa (SEFAA). Nulla Group, a women-led enterprise that is building resilient supply chains and transforming the maize value chain in Cameroon will utilise the funding to scale operations and improve service delivery to farmers and clients.
Lagos-based food delivery startup, Chowdeck, has raised US$9 million in Series A funding to launch a quick commerce strategy and expand into more cities in Nigeria and Ghana. The equity round was led by Novastar Ventures, with participation from Y Combinator, AAIC Investment, Rebel Fund, GFR Fund, Kaleo, HoaQ, and others. Founded in October 2021 by Aluko, Olumide Ojo, and Lanre Yusuf, Chowdeck now operates in 11 cities across Nigeria and Ghana, serving 1,5 million customers with a network of more than 20,000 riders.
Ethiopian Investment Holdings, the nation’s sovereign fund has acquired a 7.4% stake in Scandinavian-based gold producer Akobo Minerals AB through the subscription of 15,000,000 new shares in a private placement, at a subscription price of US$0.20 per share, raising total gross proceeds of US$3 million. The funds will be used to enable the construction of a new vertical shaft that is expected to significantly increase monthly production from 5–10 kilograms to 50–80 kg.
Subject to board approval, the African Development Bank will provide US$500 million in financing to build a new international airport in Ethiopia. The bank has also been appointed as the initial mandated lead arranger, global coordinator and book runner to mobilise nearly US$8 billion of the US$10 billion needed for the mega project launched with Ethiopian Airlines. Located 40 km’s south of Addis Ababa, the new greenfield Bishoftu International Airport will have an initial capacity of 60 million passengers, eventually expanding to 110 million, and transport 3.73 million tons of cargo annually.
Thelatest earnings give support to the share price performance this year
Death, taxes and an increase in the Capitec share price – these seem to be the certainties in life in South Africa. Capitec is up more than 15% year-to-date, despite the South African economy continuing to dish up tepid growth. This is because Capitec is less of a macro play and more of a market share play, with a strategy that continues to take economic value from the traditional names in the sector.
In case you needed further evidence of this, Capitec’s HEPS for the six months to August 2025 reflects growth of between 22% and 27%. They achieved this not just through growth in the loan book (something that other banks are struggling to get right in South Africa), but also through a stable credit loss ratio despite the growth in the book. This makes sense, as we’ve seen a positive story around credit quality at competing banks.
To add to the growth in net interest income, they’ve enjoyed a positive move in non-interest revenue as well. This has come from sources like Capitec Connect (which always gets the Blue Label Telecoms (JSE: BLU) enthusiasts excited), as well as overall growth in client numbers. Due to a structural change in funeral insurance policies sold since 1 November 2024, there’s also a higher contribution from that source of revenue.
Although this interim period includes a full 6 months of income from Avafin vs. just 4 months in the comparable period, I don’t think that is making much difference here. The growth is coming from maintainable sources, like ongoing market share growth across an ever-expanding range of products.
Grindrod’s HEPS has moved sharply higher (JSE: GND)
HEPS from core operations isn’t nearly as exciting though
Grindrod has released a trading statement dealing with the six months to June. As usual when a company has been going through a process of significant corporate activity as part of a turnaround strategy, Earnings Per Share (EPS) bounces around like crazy. This is why the market always focuses on Headline Earnings Per Share (HEPS) instead, as it adjusts for many of the once-off items.
Speaking of HEPS, Grindrod expects growth of between 18% and 28%, which is a chunky improvement. Before you get too excited though, HEPS from core operations is expected to be flat. This includes Port and Terminals, Logistics and the various group segments that are cost centres.
The share price rallied over 3% in response to the update, so it seems like it may have been better than the market was expecting.
KAP somehow manages to disappoint even those with low expectations (JSE: KAP)
HEPS is even worse than they initially guided
KAP is one of the very few shares out there that is down over 5 years – yes, vs. a COVID base! The share price has shed almost 30% over that period. It’s lost nearly 70% of its value since the peak in early 2022. And on a year-to-date basis, KAP is down 45%.
The TL;DR is that if you like your money, it’s probably best to invest it somewhere else.
The really unfortunate thing about KAP is that nothing ever seems to improve. There’s always something in the underlying portfolio that is dragging the place down. For the year ended June 2025, KAP released a SENS announcement in early June noting an expected drop in HEPS of more than 30% for the period. It’s significantly worse than that, with an updated trading statement reflecting a decrease of between 42% and 52%.
It looks as though the fourth quarter was the worst part of the year, so that’s especially worrying in terms of momentum.
Aside from the automotive parts business that struggled with lower vehicle production by two local OEMs, the biggest issue was PG Bison’s new MDF line. They are now expensing rather than capitalising the finance costs and it’s taking them a while to really extract value from this substantial capital investment.
This would explain the vast decrease in HEPS vs. a far more modest decline in EBITDA of less than 10%. But it’s also cold comfort for investors when they see an uptick in revenue accompanied by a halving of profits – that makes it really hard to believe in a turnaround.
The bull case for KAP would make reference to the fact that the MDF project is a long-life project and that current performance isn’t an indication of its full potential. The bear case would simply point to a share price chart as an example of just how many times KAP has tried and failed to get the market to believe in a better future.
Lighthouse looks solid at the halfway mark for the year (JSE: LTE)
The interim distribution has been boosted by the Iberian deals
In 2024, Lighthouse lost its patience with Hammerson (JSE: HMN) and sold the shares it held in that fund. Although there are signs of life at Hammerson in their latest update, I think this was the right call for Lighthouse when viewed through a long-term lens. Investors are far more interested in seeing companies that have direct ownership of assets that they otherwise can’t get exposure to, rather than large stakes in other listed companies. With Lighthouse recycling the Hammerson proceeds into properties in Iberia, the overall story becomes far more interesting.
Having said that, Lighthouse’s share price is up 1.6% over the past 12 months and Hammerson is up 9.5%, so the appeal of Lighthouse’s portfolio needs to come through for that performance gap to be addressed.
This lack of growth in the Lighthouse share price is despite a 7.9% increase in the distribution per share, driven by the performance of the Iberian portfolio that was expanded over the past 18 months. They’ve made good progress in the cost ratios in the fund, which has helped them offset the impact of refinancing major borrowings in December 2024.
There were two additional acquisitions in this period, both of which are malls in Spain. The acquisition yield was 7.2% for the two properties combined. This takes the fund to a position where 58% of the directly held portfolio’s fair value is in Spain. 27.6% can be found in Portugal and the remaining 14.4% in France.
As at the end of June, Lighthouse held €14 million worth of shares in listed funds Klepierre and a far more familiar name: NEPI Rockcastle (JSE: NRP). Lighthouse sold some shares in both those companies during this period to fund the direct portfolio expansion, so that shows you where the priorities lie.
The loan-to-value ratio has moved substantially higher from 21.1% in June 2024 to 35.0% in June 2025.
Distribution guidance for the full year of €2.70 per share has been affirmed based on the interim performance of €1.3122 per share.
Nedbank is acquiring iKhokha for R1.65 billion (JSE: NED)
Here’s an interesting growth play in South Africa
Nedbank must be pretty tired of being among the banks that is watching Capitec (JSE: CPI) eat its lunch here at home. Although the other banks are certainly also feeling the Capitec pinch, they have extensive operations in other countries to help make up for it. Nedbank is primarily exposed to South Africa and therefore needs to find a way to grow here.
Nedbank has identified SMEs as a desirable target market, with their offering set to be boosted by the acquisition of 100% in fintech iKhokha for R1.65 billion. iKhokha offers a variety of POS and ecommerce payment solutions, along with access to finance.
Nedbank has ensured that a management lock-in package has been agreed. Before you wonder about how close this lock-in comes to modern day slavery, I must point out that these packages inevitably include substantial incentives that are designed to encourage ongoing growth and innovation. It’s very important that the existing entrepreneurial culture at iKhokha will be preserved, as big corporates are famous for acquiring and then destroying startups by filling them with processes instead of ideas. Making sure that the existing management team will stick around is an important buffer against this issue.
Having said that, iKhokha isn’t exactly wet behind the ears either. Established in 2012 and having distributed over R3 billion in working capital to SMEs to date, they’ve been around for long enough to be ready for corporate ownership. Importantly, they’ve already been through a round of private equity ownership, having been part of the Adumo stable and subsequently unbundled to shareholders including Apis. Going through private equity ownership before landing up in a big corporate machine is generally a good sign.
If the Adumo name is familiar to you, that’s because it is owned by Lesaka Technologies (JSE: LSK). For clarity, Lesaka is not involved in this deal at all, as iKhokha was split out from Adumo some time ago. In fact, Lesaka is a major competitor to iKhokha in this space based on my understanding!
With a market cap of R115 billion, this iKhokha deal is 1.4% of Nedbank’s market cap. They aren’t betting the farm here, but it’s big enough to be a meaningful contributor to growth if they get it right. The announcement unfortunately doesn’t give any further details on the revenue or profitability of iKhokha.
Truworths Africa drags the group into the red (JSE: TRU)
Bucking the trend, it’s the UK business that is helping them right now
Truworths released a trading update for the 52-week period ended 29 June 2025. They did it after market close, so the market will only be able to react to it on Thursday morning. I don’t think you’ll see anyone popping champagne for these numbers.
After several paragraphs painting a terrible macro picture (always a convenient excuse for poor performance – but why then is Mr Price (JSE: MRP) doing well?), they get to the bad news: sales in Truworths Africa fell 0.4% for the full year. The second half was a gain of 0.5% vs. a decrease of 1.1% in the first half, so there’s some positive momentum at least. This shape is because of higher markdowns in the first half after a poor winter trading experience in 2024, which they attribute to the late onset of winter and stock delays at the ports. Those sound more like naturally offsetting factors to me, but anyway.
Other important stats in the SA business include 0.1% growth in account sales (which contribute 70% of sales) vs. a decline in cash sales of 1.5%. As a silver lining, the online business is growing well, up 33.7% and contributing 6.5% to total retail sales. Product inflation was 1.2% for the period, way down from 6.4% in 2024. Trading space increased by 0.5%, so they aren’t shy to keep increasing the number of stores.
Office UK is the saving grace here – well, almost. Unlike other South African-owned retailers that struggle overseas, Office UK is actually doing quite well at the moment with its niche focus on fashion footwear. Sales were up 9.7% in local currency, with 11.3% growth in the first half and 7.7% growth in the second half. Interestingly, the contribution of online sales actually dipped from 46.2% to 44.9%, with Office growing trading space by 6.4%. Given the importance to many people of trying on shoes, I can understand that there’s a saturation point for online sales in that model.
Truworths Africa is over 65% of group sales, so the UK performance isn’t enough to keep the overall story moving forwards. Group sales increased by just 2.7%, which is insufficient to deal with the combination of pressure on gross margin and inflationary increases in expenses. HEPS is therefore expected to decrease by between -7% and -11%, or by between -3% and -7% if you accept the company’s use of “pro forma” HEPS with further adjustments.
Either way, it sucks. It’s also a lovely reminder of why I’m long Mr Price, which is increasingly looking like the best of the bunch locally. The Truworths share price has lost a third of its value this year and I suspect it’s about to get worse.
Nibbles:
Director dealings:
There’s a complicated legal context to this trade that included a cession and pledge agreement and then legal proceedings that seemed to reverse the pledge. But the net result of this mess is that an associate of Pieter Erasmus has acquired R1.6 billion worth of shares in Pepkor (JSE: PPH) in an off-market trade.
Blue Label Telecoms (JSE: BLU) renewed its cautionary announcement related to a potential restructure of the group and value unlock activity around Cell C. They are still finalising the terms of a proposed restructure and would need to get various approvals in place before announcing anything concrete.
If you participated in the mix and match facility in the offer for Assura (JSE: AHR) by Primary Health Properties (JSE: PHP), then you’ll want to check out the announcement indicating the results of the “More Shares” and “More Cash” election – both of which do what they say on the tin in terms of the mix of how you’ll be settled for your Assura shares. The offer remains open for acceptance at the moment.
Eastern Platinum (JSE: EPS) has very little liquidity in its stock, so the quarterly results get only a passing mention down here. Revenue fell by a nasty 43.1% and mine operating income tanked by over 90%. This put them in an overall operating loss position for the quarter, which has also contributed to an even larger working capital deficit than before. Nonetheless, Investec has increased the credit facility to the company that is secured by the PGM production delivered from the Zandfontein underground section to Impala Platinum. In banking, it’s about making sure the security package is as tight as possible, with equity investors then left to fight over the net profits – or net losses, for that matter.
Due to its failure to publish financial statements for the year ended December 2024 within the stipulated time, Kibo Energy’s (JSE: KBO) listing has been suspended by the JSE. Ditto for Sable Exploration and Energy (JSE: SXM), although Sable has at least made more effort to keep the market informed about the details of its financials. Conversely, Kibo’s last SENS announcement was in May!
As a reminder of how complicated a business rescue process can be, the latest at Tongaat Hulett (JSE: TON) is that yet another notice as been filed in court. I’m only mentioning this in case you ever make the mistake of thinking that business rescue is a guarantee of something being resolved quickly.
Double-digit growth in earnings at ADvTECH (JSE: ADH)
The businessmodel continues to work
ADvTECH is an interesting local company to follow. They have a mix of primary, secondary and tertiary education offerings in South Africa and elsewhere in Africa, generally catering to higher income families. This means they are targeting people who can afford to have more kids – the way middle-income people used to do! When it comes to filling up their schools, that’s a critical element of the story.
There’s also a resourcing business, although it remains an odd strategic fit with the rest of the group in my opinion.
Still, for the six months to June 2025, HEPS is expected to be between 13% and 18% higher. That’s a solid outcome, with detailed results due for release on 25 August.
Jubilee Metals has released the circular for the PGM and chrome disposal (JSE: JBL)
The deal would unlock substantial capital for the copper strategy
If you had tried to hunt down a PGM enthusiast a year ago, you would’ve been lucky to find one cowering in a cave somewhere, fighting off the last of the predators. The sector went through an absolutely terrible time, as evidenced by recent results from major players that reflect a sharp drop in earnings. The recent rally in the share prices has been driven by an improved outlook for PGMs, rather than historical earnings that have already been banked.
The problem for Jubilee Metals is that they have an ambitious copper strategy in Zambia that they need to deliver. Copper is in vogue at the moment and if Jubilee gets this right, they might become an attractive acquisition target. Even if a potential suitor doesn’t knock on the door, they should become a cash generative company with commodity exposure that is less erratic than PGMs. That’s the theory, at least.
But to get there, they need to be brave enough to cut their PGM and chrome businesses loose – at exactly the time when people actually want those assets again. This has raised few eyebrows, with some questioning why they don’t keep those assets instead. The point is that you always want to sell an asset when the market is strong, not weak.
I will never forget one of my early bosses in my career selling a truly magnificent home in Hout Bay. It had even been featured on Top Billing. I remember asking him why on earth he was selling, as everything was booming in Cape Town property at the time and foreigners were buying like crazy. I pointed out how idyllic and perfect it all seemed, with nobody able to understand the reason for the sale. “Exactly!” he said, teaching me a lifelong lesson about selling high and buying low, not the other way around. Had he not sold at the peak at that time, it would’ve been years until that price was available again – if ever.
So, with that anecdote out of the way, we return to Jubilee Metals and their disposal of the chrome and PGM operations for up to $90 million. This is based on an enterprise value (which isn’t the same as equity as it considers the underlying debt in the operations) of $148 million, which is a 6x EBITDA multiple based on FY24 EBITDA.
We’ve now reached the more valid criticism than the timing: the pricing of the deal. The FY24 earnings base is a highly depressed period, as evidenced by broader sector performance. A 6x forward EBITDA multiple would be a great outcome, based on expected earnings in the next financial year. A 6x trailing EBITDA multiple doesn’t seem very appealing. The timing of selling this house is probably right, but the asking price is much too low as the owner is arguably desperate to buy somewhere else – in this case, copper in Zambia.
Jubilee first announced this potential disposal on 5 June 2025, with the share price trading at R1.00. It is now trading 31% lower at 69 cents per share. That’s a pretty strong message from the market, but is there a further nuance worth consideration?
Well, maybe. You see, it would be incorrect to see Jubilee as a PGM player with a modest chrome add-on. In the first half of FY25, they generated 86% of their revenue from chrome, with earnings being far more sensitive to a change in the chrome price than the PGM basket price. Although PGM basket prices have climbed sharply recently, chrome prices have fallen.
There’s no easy answer here. EBITDA for FY24 was $24.6 million. At the halfway point in FY25, they were already on EBITDA of $16.5 million. If we just take the simplistic approach of doubling the interim number, this deal is a forward EBITDA multiple of 4.5x.
As a final comment, I must point out that Jubilee’s approach to this deal would consider not just the expected cash flow from the PGM and chrome operations, but the total potential return from reallocating the sales proceeds into the copper operations and giving themselves the real option of capital structure flexibility.
Holders of 30.42% of shares in Jubilee have given a letter of support to vote in favour of the transaction. There’s a long way to go to get the deal done.
Merafe’s earnings more than halve (JSE: MRF)
And the interim dividend has dropped by 80%
Merafe released results for the six months to June 2025 and they don’t make for pleasant reading. Revenue has fallen by 47%, driven by a 55% decrease in ferrochrome sales volumes, a 14% drop in chrome ore sales volumes and only the slight mitigating factor of a 9% uptick in PGM sales volumes.
Naturally, with revenue down to that extent, things don’t improve further down the income statement. Merafe took steps to suspend operations in response to weak market demand, so they managed to stem the bleeding at a 56% drop in EBITDA and a 55% decrease in HEPS.
Although they still have R1.14 billion in cash on the balance sheet, that number is down by 36%. Along with the overall pressure on earnings, it’s therefore no surprise that the dividend has fallen by 80% to 4 cents per share.
The outlook statement has a more bullish undertone than you might expect from numbers like these, but there are many risks here from demand factors through to energy costs.
Primary Health Properties managed to secure control of Assura (JSE: PHP | JSE: AHR)
Talk about a last-minute outcome!
Shareholders in Assura certainly took their sweet time in deciding whether or not to accept the offer from Primary Health Properties. This is because they would’ve wanted to retain maximum flexibility in case either a new competing offer arrived, or perhaps KKR and Stonepeak improved their offer. Neither thing happened in the end, so we have now reached the point where we have the final results of the Primary Health Properties offer.
Holders of 62.93% of shares in Assura accepted the offer, which means that Primary Health Properties will now have a controlling stake in Assura and the minimum acceptance condition has been met, as the offer was only going ahead if holders of more than 50% in Assura accepted it.
Shareholders who gave irrevocable undertakings to the KKR / Stonepeak special purpose entity will be pleased that those undertakings have now lapsed, as that offer is dead. As the Primary Health Properties offer is still open for acceptance, those shareholders will have the opportunity to accept the Primary Health offer if they so choose.
Some love from the market for Sasol – but you can’t just look at a chart for one day (JSE: SOL)
Everyone’s favourite pain trade closed 11% higher after a trading statement
Sasol has truly been one of the wildest stories on the local market in recent years, with many retail investors climbing in and being taken on a rollercoaster ride. Just look at this chart over 5 years:
As you can see, Tuesday’s 11% rally is literally a blip on this chart. It will nevertheless fuel a new wave of people talking about Sasol in a positive light, so brace yourself accordingly.
The reason for the rally was a trading statement reflecting growth in HEPS for the year ended June 2025 of between 85% and 100%. Yes, that means that HEPS almost doubled!
As always, there are a lot of messy factors at play here. For example, the Transnet settlement of R4.3 billion pre-tax has been recognised in these numbers. In fact, among the positive factors in these numbers, the only one that gives an indication of maintainable earnings is a comment that average chemicals basket prices moved higher and that there was strict cost control. As Sasol explained to the market earlier this year, their medium-term plans depend on getting earnings much higher in the chemicals business, so that’s good to see.
Unfortunately, that story is blunted by a 15% drop in the average rand price per barrel of Brent Crude, along with a 3% decrease in sales volumes as Sasol disclosed in their recent production and sales update.
There are also huge movements in impairments, but this doesn’t impact HEPS.
I have no position here, as the Sasol turnaround still feels too hard for me. Good luck to those who do! If you are interested in why I feel that way, you can refer to this Supernatural Stocks podcast that I did for Moneyweb back in May, based on Sasol’s Capital Markets Day.
With a substantial deal in the UK, Sirius Real Estate has now fully allocated the recently raise capital (JSE: SRE)
The latest transaction grows the UK gross asset value by 20%!
Sirius Real Estate raised equity capital at the end of 2023 and in mid-2024. They also raised further debt capital on the bond market in May 2024 and January 2025. It takes time to deploy this level of capital into acquisitions, with a balance needing to be struck between going too slowly (cash drag for investors) and going too quickly (potentially into poor quality deals with long-term negative impacts).
If there’s one property fund out there that knows how to do deals, it’s Sirius. Their track record in the UK and Germany is impressive. To add to the flurry of deals needed to deploy capital, they’ve now added a particularly large transaction in the form of the acquisition of the Hartlebury Trading Estate in Worcestershire for £101.1 million.
That’s a big number – and big enough to grow Sirius’ BizSpace portfolio in the UK by 20% in terms of gross asset value and 18% in terms of floor size – but only by 10% in terms of revenue. Sirius will obviously aim to improve the property over time from its current occupancy rate of 84%.
The net initial yield is 6.45%, so they’ve paid quite a lofty price for this property vs. some of the other deals we’ve seen. This is because of the future potential of this property rather than what it currently generates. There’s obviously room for improvement in the occupancy rate, as well as opportunities to increase rental revenue through positive reversions when leases are due for renewal, along with other strategies to actively manage the asset. This could include further development on the property, as building coverage is very light at the moment.
Interestingly, as the business park was originally built as an RAF maintenance base, Sirius reckons that it could be appealing to tenants in the defence sector. From an investment perspective, that’s probably the single most appealing sector in Europe at the moment.
Sirius will now need to focus on extracting the best it can from the newly acquired assets, as doing so will then give support to the next round of capital raising activities when they eventually come.
Weaver is doing lovely things for my portfolio (JSE: WVR)
I firmly believe in the BNPL growth story
As I’ve mentioned before, attending an Unlock the Stock event is a great opportunity for you to do your company research alongside not just me, but also my co-host Mark Tobin and everyone else who is on the call with great questions. I use the platform to make decisions with my own money, like my investment in Weaver Fintech (when it was still called HomeChoice) shortly after they presented on Unlock the Stock.
This has proven to be the right decision, with my position now up by a rather delightful 40%. An 11.3% increase in the share price after the release of results certainly helped with that.
Weaver is a growth stock, which is rare in South Africa. In the results for the six months to June 2025, revenue grew by 29% and the Fintech segment saw its profit before tax climb by 46.2%, now contributing 98% of Weaver’s profits.
This doesn’t mean that the retail business is a waste of time – it’s an important distribution channel for the fintech products, plus I think the HomeChoice brand has a clear understanding of their target market and what they do, something that is rare in retail in South Africa.
Importantly, with HEPS up by 45%, the interim dividend has also increased by 47%. This points to the cash quality of earnings.
Although the slight uptick in capex is one way to see the expansion in the group with 10 new retail showrooms, the better measure is net interest expense. In order to grow the fintech business, they need access to capital. Capital comes at a cost, which is why the net interest expense increased by 40.6%. You can expect more of this to come, with a new R1.25 billion bullet loan concluded in August 2025.
With growth like this in the underlying business, the next obvious thing to solve would be liquidity in the shares. Weaver is far too tightly held for institutional investors to get involved. Also, my 40% gain on paper would be very hard to realise due to the wide bid-offer spread. Luckily, I have no plans of selling anytime soon. This is a long-term thematic play for me.
TeleMasters (JSE: TLM) announced an extension to a related party consulting arrangement that carries a cost of R155k per month. The counterparty is an entity owned by a related party to the CEO of the company. It relates to two subsidiaries of TeleMasters and the arrangement was already in place when those companies were acquired. The correct governance procedures seem to have been followed, with “disinterested” directors considering the contract and the CEO reclusing himself from the discussion. To give further comfort to shareholders, the extension of the arrangement is for two years with no increase to the amount.
Gemfields has found a buyer for Fabergé (JSE: GML)
Given how challenging the core mining operations are, this is the right move
I often write about the importance of focus for corporates. Investors hate seeing a tough core story, but they especially hate seeing such a story accompanied by non-core distractions that are sucking up management’s time – and the company’s capital.
Gemfields has taken an important step towards rectifying this situation, with an agreement to sell Fabergé for $50 million to SMG Capital LLC. $45 million is payable on completion of the sale and $5 million is payable in the form of quarterly royalty payments at a rate of 8% of Fabergé’s revenue. Deferred payment structures are not uncommon. In fact, with 90% of the price payable upfront, Gemfields is in a decent position here. It also helps that there are no regulatory approvals required, so they should be able to get this done quickly.
The proceeds from sale will give the group additional working capital, something that is sorely needed in the group as it deals with a difficult global market for its gemstones, not to mention the ongoing risks of operating in countries like Zambia and Mozambique.
Fabergé’s net assets as at 31 December 2024 were valued at $50.3 million. The operating loss was $5.7 million and the loss after tax was $11.3 million. In other words, Gemfields shareholders will be happy to see the back of those fancy eggs that Fabergé is famous for.
Impala Platinum is another example of how commodity rallies are forward-looking (JSE: IMP)
HEPS has fallen sharply, yet the share price has had a great year
If you looked at the share price of the various platinum miners and compared them to recent HEPS guidance in the sector, you would be forgiven for feeling incredibly confused. Share prices have rallied sharply, yet HEPS has headed firmly in the other direction.
The reason is that the share prices move in anticipation of the next period’s earnings, not the period that already happened. Whilst this is technically true for all companies, not just the mines, the difference is that the market can forecast earnings more accurately in this sector based on observable commodity prices.
As a sign of how bad things have been, Impala Platinum’s trading statement notes that HEPS for the year ended June 2025 will be down by between 63% and 79%. This has been driven by lower sales volumes and flat revenue per 6E ounce at a time when mining costs are facing inflationary pressures.
The share price is up 80% year-to-date after falling 3% on the date of release of these earnings.
This sector is a tough way to make money in South Africa
Italtile has released a voluntary trading statement for the year ended June 2025. The word “voluntary” immediately tells you that the move is less than 20%, as a move in excess of 20% would trigger a mandatory trading statement.
Italtile has been telling us for a while now that things are particularly difficult for its manufacturing division, as there is excess manufacturing capacity in the South African market. Demand just hasn’t come through the way that many hoped in this country, as interest rates have taken their sweet time to come down. This has a significant negative impact on the building and construction sector, where the cost of debt is a key driver of the level of activity.
Italtile’s first half was better than the second half, with the company attributing this performance to the liquidity in the market from the two-pot pension fund withdrawals at the end of calendar year 2024. Turnover in the second half fell as underlying demand in the market faltered.
For the full year, the retail division’s results were up 2% and market share was maintained. Like-for-like sales increased 1% and average selling price inflation was just 0.2%, so it’s concerning that volumes were so light despite almost no inflation.
In the manufacturing division, sales fell 5% and price inflation was -1.6% i.e. they found themselves in a deflationary environment thanks to the excess capacity. And in the import businesses, sales value fell 3% and inflation was -0.9%, so that’s another set of deflationary pressures.
Gross margin was flat, as the company couldn’t put meaningful price increases through to consumers in such a weak demand environment. It’s actually pretty impressive that they came in flat when you consider the overall pressures!
For the year, HEPS will be between 0.1% and 5.2% higher. Under the circumstances, it’s a resilient result.
Italtile is down 32% year-to-date and Cashbuild has dropped 35.8%. Looking over 12 months is more interesting, with Italtile down 15.5% and Cashbuild down 4%. In other words, they’ve both given up all their gains in late 2024 – and then some.
MTN Uganda’s growth remains well ahead of inflation (JSE: MTN)
When you see growth rates in frontier markets, it’s important to compare them to inflation
If a company grows revenue by 20% in a market that has a 20% inflation rate, then real growth is zero. In all likelihood, that country’s currency would’ve declined in value over the period under review, which means that growth expressed in “hard currency” terms would probably also be minimal. This is why when you look at businesses in frontier markets (like most of Africa), you have to compare the growth rate to the inflation rate.
MTN Uganda is a standout in this regard, as Uganda’s inflation rate is remarkably low by frontier market standards. Headline inflation was just 3.6% in the six months to June 2025, so revenue growth of 13.1% at MTN Uganda is incredibly impressive. EBITDA is even better, with a 220 basis points increase in EBITDA margin, driving growth of 17.8%.
Net finance costs were stable, so profit before tax jumped by 28.1% as the benefits of both operating leverage and financial leverage filtered through the income statement.
Unfortunately, due to a once-off tax settlement, the tax expense more than doubled and thus profit after tax fell by 9.7%. As this is a highly unusual situation, it’s clear that adjusted profit after tax growth of 27.8% is a much better measure of the true performance.
Powerfleet’s numbers need a careful read because of the timing of the Fleet Complete deal (JSE: PWR)
Large acquisitions can skew growth rates
Whenever you are looking at company results, you need to be alert to whether there were any major transactions that might skew the numbers. For example, if there was a significant acquisition that is in this period’s numbers and not in the comparable period, that will naturally make the current numbers look better than they really are.
At Powerfleet, revenue for the three months to June increased by $29.8 million year-on-year, a 52.5% increase. But the acquisition of Fleet Complete contributed $26.2 million, which is most of that increase. Although there was some underlying growth in the rest of the business, there are also steps underway to reduce non-core businesses, which is impacting the overall numbers.
Here’s some good news: cost of sales increased $11.9 million, with Fleet Complete contributing $12.1 million. This means that cost of sales actually fell in the rest of the business, which helps greatly when the revenue increase was modest.
The net loss attributable to shareholders in this quarter was $10.2 million, with notable expenses being $5.8 million in the amortisation of intangibles related to the MiX Telematics and Fleet Complete acquisitions, as well as $4.2 million in acquisition and restructuring expenses.
The Powerfleet numbers therefore remain very messy due to all the corporate activity. The share price is down 43% year-to-date, a situation that isn’t helped by the complicated financials.
A pot of gold at the end of Rainbow Chicken (JSE: RBO)
The volatility in poultry sector earnings is truly breathtaking
Rainbow Chicken has released a trading statement for the year ended 29 June 2025. The percentage moves are a little crazy, with HEPS expected to increase by between 214% and 234%. This means a range for HEPS of 63.55 cents to 67.60 cents. For context, the share price is currently R4.37, so the company is trading on a Price/Earnings (P/E) multiple of almost 7x.
It feels like a lot of things went right for them this period, with higher sales volumes, lower input costs and an overall improvement in operational efficiencies. They also had lower expenses from Avian Influenza. The magical improvement in Eskom also made a huge difference here. Even finance costs were lower!
Due to the incredibly thin margins in poultry, even a modest improvement in operations can lead to higher earnings. When several things go the right way at the same time, you see outcomes like these.
The spouse of a director of Afine Investments (JSE: ANI) bought shares in the company worth R31k.
The CEO of Vunani (JSE: VUN) bought shares in the company worth R14k.
Prime Kapital announced that its offer for MAS (JSE: MSP) is now unconditional, as Prime Kapital has decided to waive the condition related minimum cash acceptances. They say that this is based on positive feedback from the market around the level of acceptances.
Prosus (JSE: PRX) / Naspers (JSE: NPN) announced that Prosus has received clearance from the European Commission (the competition regulator) for the Just Eat Takeaway.com offer. This means that the deal is now unconditional, with the acceptance period open until 1 October. Interestingly, to get the deal across the line, Prosus offered to reduce its stake in Delivery Hero over a 12-month period, such that it will no longer be the largest shareholder.
Cilo Cybin (JSE: CCC) has released the circular for the acquisition of Cilo Cybin as its viable asset. This was set up as a special purpose acquisition company, hence why it sounds like it is acquiring itself. To my great surprise, BDO Corporate Finance as independent expert reckons that sustainable gross margin and EBITDA are 75% and 55% respectively, which means that this business is right up there with Apple Services. You’ll have to forgive me for my immense skepticism. The company made a profit after tax of R20 million in 2025 and the purchase price for the deal is R845 million, a price that BDO believes is fair. Good luck.
Frustratingly for Deneb (JSE: DNB) shareholders who may have been pleased to see the company disposing of property, the planned sale of 195 Leicester Road in Durban for R48.5 million has fallen through. The purchaser failed to pay the required deposit within the time stipulated in the agreement.
The acceptance level in the Assura (JSE: AHR) – Primary Health Properties (JSE: PHP) is finally starting to tick higher. They are now at 8.8%, although it obviously needs to get a whole lot higher – especially as the offer closes this Tuesday (12th August)!
Shareholders in AH-Vest (JSE: AHL) have given a resounding approval to the scheme of arrangement that will lead to the delisting of the company. The listing will be terminated on 26th August after the scheme consideration is paid on 25th August.
Sable Exploration and Mining (JSE: SXM) has noted that the expected date of release for the financials for the period ended February 2025 is 31 August 2025. The announcement also noted that the company’s Lapon Plant is currently operating at 10% of production capacity, but they expect this to ramp up over the next two months.
Accelerate Property Fund: Azrapart is a massive overhang once more (JSE: APF)
They cannot afford any further nasty surprises
Accelerate Property Fund is a great example of a highly speculative play in the market that could go one of two ways based on not just economic considerations, but also legal battles. The net asset value (NAV) has dropped considerably to 203 cents per share as at March 2025, but this is still way above the current share price of 43 cents. Hence, the opportunity for those who are brave.
Why the large discount? Well, the market knows that if the keys to the castle end up in the hands of the banks, then shareholders can easily watch their disappear into the hands of debt providers rather than shareholders. Property funds do give a better chance of dishing out net proceeds from a business rescue process than operating companies, as there are at least clearly identifiable underlying assets that have proper values, but it’s still not fun.
Speaking of the assets, the total portfolio as at March 2025 was R7.75 billion, which is well ahead of interest-bearing borrowings of R3.75 billion. It’s also worth highlighting that although the interest coverage ratio of 1.2x and loan-to-value ratio of 47.6% aren’t exactly on the right side of debt covenants by much (1.1x and 50% respectively), Accelerate is in compliance with the requirements of its bankers. Well – mostly, that is.
My understanding is that one of the terms for ongoing support by lenders is a resolution to the related party issues. Despite much hope that a settlement agreement with Michael Georgiou’s Azrapart (the holder of the other 50% in Fourways Mall) would be signed on materially the same terms as the agreement that lapsed last year, this hasn’t happened. With Azrapart now in a business rescue process, I suspect the issue is that the decision-makers have changed on that side.
Having spent considerable time combing through the latest announcement and the related party settlement plan that was announced in 2024, it looks like Accelerate’s obvious risk is a payable to Azrapart of R300 million related to a claim regarding Fourways Mall. In turn, Azrapart owes Accelerate far more than that, like R540.6 million for the headlease and R430 million across various other amounts. The idea was that these amounts would all be set-off, along with Accelerate acquiring further assets (bulk worth R75 million and parking worth R241.5 million) from Azrapart. There was also an amount that would be set off in relation to the internalisation of the property management company.
This is an extremely technical issue and the devil will undoubtedly be in the details of the legal agreements. From what I can see, aside from the immense irritation around the bulk, parking and management agreement issues, Accelerate’s cashflow risk is needing to pay R300 million to Azrapart in a claim that perhaps won’t be capable of set-off against the other claims.
Accelerate’s balance sheet is tighter than a duck’s you-know-what, so they can’t afford this – or at least, not yet. They have R1.3 billion in property recognised as being held-for-sale, as well as agreements in place to sell properties worth R688.5 million, with Portside as the largest at R580 million. Sure, there must be debt settlements tied to such properties, but that would at least generate some liquidity to deal with Azrapart in a worst-case scenario. Hopefully, the legal wrangling will lead to a situation where Accelerate isn’t forced to part with R300 million in cash to receive nothing in return.
The good news is that the R300 million is recognised on the balance sheet as a liability and they’ve fully written-off the receivables from Azrapart, so the NAV per share of 203 cents per share has some conservatism baked into it. The risk is really around cash and liquidity rather than whether there is decent net value in this thing.
Let’s look to the future. The group is aiming to get to a loan-to-value ratio below 40%, along with an interest coverage ratio of 1.6x. The R100 million rights offer that was concluded after year-end is helpful here, but they will only get there if asset disposals go well and if the performance at Fourways Mall improves.
In terms of earnings, rental income for the year ended March 2025 was down R37.3 million, with the headlease benefit at Fourways Mall more than offsetting disposals. The rest of the decline was due to negative reversions at Fourways Mall, presumably as part of improving the vacancy rate at the mall. Fourways Mall’s vacancy rate has improved from 19.0% to 13.7%. It makes sense to me that it’s better to create a vibey mall that is full of tenants than to be stubborn on price and have loads of empty shops.
Property expenses were only down R4.6 million despite the disposals, so there’s clearly pressure on net property income, which fell by 8.3% to R495 million.
Net finance costs were down 42.3% vs. the prior year, coming in at R272 million vs. R472 million. This means that the company is able to cover its finance costs with its net property income.
To add to this pain, there’s a negative fair value adjustment of R274.3 million in the portfolio. At least that’s better than R354.8 million in the prior year, but what is obviously really needed is some stability in valuations. The total fair value adjustment on the income statement is larger due to movements in other financial items.
Accelerate is as speculative as they get, with the situation having worsened thanks to the Azrapart issue. They simply cannot afford any further negative surprises, with the transaction circular for Portside expected to be posted before 31 August 2025 (the JSE has already granted an extension here).
As a final comment, the current share price of 43 cents is slightly above the recent rights offer price of 40 cents per share.
ASP Isotopes will list on the JSE later this month (JSE: ISO)
Although not conditional on the Renergen (JSE: REN) deal, that’s an important part of the plan
As things currently stand, the scheme of arrangement that will see ASP Isotopes acquire Renergen has met almost all its conditions for implementation. We are at the point where a standby offer won’t be triggered, so we know for sure that the scheme is the way forward.
This is important, as the Renergen deal is key to ASP Isotopes achieving a reasonable spread of shareholders in its JSE listing. The listing isn’t conditional upon the Renergen deal, but is certainly boosted by it. ASP Isotopes will be listed on the JSE from 27 August 2025.
The abridged pre-listing statement is now available, giving plenty of additional detail around this cutting edge company that takes advantage of an area in which South Africa can compete with the very best in the world. But if you really want to get to grips with their core business, I can wholeheartedly recommend watching the Unlock the Stock event that featured the CEO of ASP Isotopes. At the time, the Renergen deal hadn’t been announced (and we had no idea it was coming), so the entire session was based entirely on ASP Isotopes’ core business.
Here’s the link to the recording:
Assura reaffirms its support for the Primary Health Properties deal (JSE: AHR | JSE: PHP)
KKR and Stonepeak tried to sow seeds of doubt before the offer closes
I tried to find some kind of press release or public statement by KKR and Stonepeak, the competing bidders for Assura, that would’ve triggered the activity on SENS on Friday from both Assura as the target and Primary Health Properties as the favoured bid. Alas, I had no luck in locating it.
Whatever it was, it seems as though KKR and Stonepeak took note of the low acceptance rate by Assura shareholders and used it as an invitation to remind shareholders that its cash offer is still on the table. A share-for-share merger (whether there’s a cash portion or not) opens itself up to these kind of attacks, as the implied price for the target company changes every time that the share price of the acquiring firm moves. In contrast, a cash bid is set in stone, so shareholders know exactly what the value of the bid is.
The Assura board came out with a statement reminding the market that they support the bid by Primary Health Properties. Later in the day, Primary Health Properties reminded Assura shareholders of the benefits of the deal and that the offer period will close on 12 August.
As things stood on Friday, acceptances had only been received from holders of 3.68% of Assura shares. There’s a long way to go…
Despite a lot of noise in the market, the MAS board reckons that the Prime Kapital offer is legally valid (JSE: MSP)
I’m personally not surprised, given the level of the people involved
My DMs have been busy the past couple of weeks. Based on the podcasts that I’ve done with Martin Slabbert of Prime Kapital (including the most recent one that also featured Johan Holtshausen, Chairman of PSG Capital and advisor to Prime Kapital), there have been a number of asset and wealth managers who have shared their concerns with me about the Prime Kapital bid for MAS.
This is good. Debate is healthy for a market – but I must point out that concerns around timing etc. fall rather flat when the competing Hyprop bid, which was meant to be a “white knight” for the asset management community, had a far more aggressive timeline than the Prime Kapital bid. Many of the other concerns raised with me were on technical legal points, particularly related to whether Prime Kapital is even legally entitled to make an offer.
I found this interesting, as the Prime Kapital team definitely did not strike me as people who act without sound legal advice. Getting legal advice and being legally correct are of course two different things, but on something as obvious as whether a bid is a reserved matter in the joint venture relationship (i.e. needs the approval of MAS for the bid to be made), I would’ve been extremely surprised if they had gotten it wrong.
Sure enough, the MAS board has now released an announcement dealing with a number of these issues. I’m going to repeat the paragraph about legal validity verbatim:
“Having carefully considered the largely unregulated nature of the PKI Voluntary Bid and the contractual relationships which underpin the DJV, and having obtained comprehensive South African, English and Maltese law advice, the Independent Board is of the view that there are no legal grounds or formal procedures available that would enable MAS to delay or amend the PKI Voluntary Bid timeline in any way, nor is it able to challenge the implementation thereof by PKI.”
That’s a pretty strong statement.
The announcement by MAS is incredibly detailed and I won’t go into everything here. The TL;DR is that the investment mandate that was revised in 2020 gives the joint venture the power to invest in listed securities, which of course includes MAS, provided that the securities will “optimise returns” – and for further clarity, investment in securities issued by MAS is expressly permitted in the mandate. Then, in terms of the restricted matter, MAS notes that because the preference shares would be issued by a subsidiary of the joint venture and not the joint venture itself, it falls outside of the ambit of restricted matters.
That may sound too cute or even unfair to you, but there’s no concept of fairness in commercial stuff like this. The agreement says what it says. Nothing would ever get done in corporate finance if everyone argued about fairness, as (1) that means different things to different people and (2) parties with commercial incentives will argue for fairness based on their subjective position, not an objective view. Where fairness is required in corporate law, it is expressly provided for e.g. in takeover law regarding treatment of minority shareholders. Two large corporate parties negotiating with each other can (and will) work towards getting the best possible positions for themselves, with the important thing being that there are no directors sitting on both sides of the table who are conflicted at the time of the agreement. This is where the legal concept of “disinterested” directors comes in – and no, it’s not a reference to how much they are looking forward to the next coffee break on the day of board meetings.
Speaking of what is fair to shareholders, one of the most interesting nuances of this deal is that MAS is effectively in a regulatory black hole. The company’s legal jurisdiction is Malta, where there is no such thing as takeover law in their companies act. The only takeover law application would be for companies listed in Malta or supervised by the Malta Financial Services Authority, of which MAS is neither. And even though MAS is listed on the JSE, it isn’t a South African company, hence the South African takeover regulations also don’t apply.
They’ve also noted that they can’t get an independent expert to opine on the transaction in time, given the tight offer timeline. This is the same situation that we unfortunately saw in the Hyprop offer that was subsequently withdrawn.
This means that shareholders are on their own here and won’t be able to rely on the opinion of an independent expert. But given that the underlying portfolio consists of properties that are in any event revalued at every reporting date, there’s enough information in the net asset value of the fund for shareholders to work on. In other words, this isn’t an operating company where the market would benefit tremendously from an independent expert digging through the numbers and performing a detailed valuation.
For all the irritation in the market around this matter, I must point out that the cash offer on the table, as well as the implied price under the preference shares, is a substantial premium to the share price calculated over just about any reasonable period this year. It might be at an implied discount to tangible net asset value per share, but trading at a discount is a feature of property companies on the JSE.
The full announcement by MAS goes into tons of detail on these and many other underlying points, including the risks of the deal with elements like irrevocable undertakings and the unusual timeline (the offer closes on 14 August). They correctly highlight the uncertainty regarding the liquidity of the preference shares (a point I’ve been constantly writing about) and the uncertain nature of the total cash element of the bid.
Again, I would encourage you to consider all the facts at hand when forming your own view. There is no such thing as altruism when it comes to corporate dealmaking – with billions at stake, the parties on either side of the table are incentivised to get the best deal for themselves. The Hyprop offer was the best deal in town for the asset management community, as they are already deeply invested in Hyprop. Hence, I didn’t see too many complaints from asset managers about the timeline of that offer, conditional nature of that deal or the requirement for irrevocable undertakings when there are still major conditions at play, but I’ve seen plenty of noise about the Prime Kapital offer. I understand the incentives at play here and you should make an effort to do the same.
We haven’t heard the last of this matter. In fact, I doubt we are even close. Regardless of what happens in the offer this coming week, there’s still the extraordinary general meeting to get through with a potential change to the board.
The sharp end of M&A is an exciting thing!
Thungela’s HEPS has plummeted (JSE: TGA)
The coal market hasn’t been kind to them
When you’re investing in mining groups that have exposure to just one commodity, you’re really rolling the dice. The cyclicality of commodity prices is no joke, which is why investors often turn to the more diversified mining groups for their resources exposure. At Thungela, you get a pure-play on coal – for better or worse.
In the six months to June 2025, it was definitely for the worse. HEPS has fallen by between 78% and 85%, a hideous outcome that reflects not only the tough conditions in the coal market, but also the restructuring costs of R285 million that Thungela has recognised in relation to Goedehoop and Isibonelo.
Detailed results are due for release on 18 August. With the share price down 30% year-to-date, the market will pay close attention to them.
Nibbles:
Director dealings:
The CEO of Invicta (JSE: IVT) certainly isn’t playing around, buying shares in the company worth R17 million.
An associate of the CEO of Acsion (JSE: ACS) bought shares worth R1.05 million.
The CEO of Spear REIT (JSE: SEA) bought more shares for his kids, this time to the value of R24.4k.
The CEO of Vunani (JSE: VUN) remains on the bid, buying shares worth R2.4k.
Hulamin (JSE: HLM) has reached an important milestone linked to its R500 million capital investment that was announced back in 2022. This investment was designed to increase local manufacturing of cans, thereby reducing reliance on imports. The first two phases of the investment were completed in 2024 and the final phase was completed in July this year. The testing was successful, with the mill now processing trial wide-width canbody coils. The focus for the rest of the year is to complete product qualification, with commercial readiness targeted for the end of Q1 2026.
Alphamin (JSE: APH) releases such detailed quarterly production updates that the actual filing of financials is practically a non-event, such is the level of information already digested by the market. But what is interesting, apart from the declaration of a dividend, is that the new controlling shareholder (International Resources Holding) has appointed two directors to the board of the company.
Delta Property Fund (JSE: DLT) shareholders gave strong approval to the disposal of 88 Field Street, a deal that is now unconditional.
UK property fund Hammerson (JSE: HMN) has finalised the acquisition of the other 50% stake in Bullring and Grand Central, taking their ownership to 100%. This deal was announced recently along with a more encouraging outlook on regional property valuations.
Due to ill health, the CEO of Wesizwe Platinum (JSE: WEZ) has stepped down from his role. It’s almost sad seeing something like that, where somebody’s career has been cut short by a factor outside of their control.
In an age dominated by AI innovations that blur the lines between reality and generative fiction, autonomous investing seems like the logical next frontier. Here, Nico Katzke, Head of Portfolio Solutions at Satrix* explores which parts of investing are likely to be impacted by AI – and (spoiler alert), the impact may not be what you expect. He unpacks this by looking at the main tools investors use to manage their funds.
Advisory Space
Investing is – and should be – a highly subjective exercise. Risk and return preferences are linked to one’s investment horizon, risk appetite and liquidity needs. If you’re investing for 12 months with a high chance you’ll need the money sooner, advice is simple: keep it safe and liquid. If you’re investing for 10+ years with little likelihood of needing the funds, your biggest risk is not taking enough risk.
Tax considerations matter too, as does the emotional challenge of staying invested – this is where advisers can be worth their weight in gold.
AI can, in theory, offer helpful generic investment advice – but only if prompted precisely and fed the right context. Robo-advisers haven’t seen the uptake many expected, and for good reason: advice is a deeply personal, human process. It often requires empathy, flexibility, and nuance; things AI doesn’t yet do well.
Investment Management
AI will certainly influence investment management but perhaps not in the ways we expect. Index investing (rules-based by nature) is a good example. Vanilla index rules are fixed. Stock weights in, say, the S&P 500 or JSE Top 40 are based on market cap. Since no discretionary decisions are made, vanilla indexation won’t be directly impacted by AI.
Instead, the impact will be indirect. As AI and machine learning make traded prices more efficient, index weights better reflect available information – which in turn makes it harder for active managers to find price inefficiencies. Opportunities will exist, but consistent outperformance will become scarcer.
Where AI might have more direct impact is in non-vanilla indexation – where rule design is more flexible. In the US, we’ve seen a proliferation of strategies with active design features. Locally, the Satrix Global Factor Enhanced Index uses machine learning to adapt weights based on stock and sector sentiment, risk regimes and other dynamic factors. This allows for unemotional, data-driven weighting using up-to-date information.
Criticisms like overfitting (great on paper, weak in future performance) and data integrity (garbage in, garbage out) apply to automated strategies – but humans aren’t immune to these either. If anything, AI and humans may end up managing side by side: machines offering efficiency and consistency, humans providing insight and emotional intelligence.
We believe vanilla passive (broad, low-cost exposure), non-vanilla indexation (intelligent rule-based exposure), and active management will all have roles in a more complex investment landscape. But more complexity doesn’t always mean better outcomes – and cost still matters. Ironically, the simplest low-cost passive strategy – where weights reflect an increasingly efficient market – may remain one of the most effective over time.
Discretionary Investing
AI is already a useful tool for managing discretionary portfolios. It’s great at summarising company info and aggregating macro views, helping novice investors make better decisions. DIY investing can be a great way to learn about markets, and some investors find it keeps them from fiddling with their long-term portfolios, which often benefit most from being left alone.
Having both a long-term strategy (with advice and cost-effective vehicles in place) and a DIY discretionary portfolio can be rewarding – both financially and educationally.
Final Thoughts
Given the rise of generative AI, it seems natural to believe the future of investing lies in automation. While data and tech will shape all areas of asset management, fully autonomous investing won’t be viable for most. AI should improve investor outcomes indirectly by reducing overall costs and making the industry more efficient; but hoping that it may disintermediate advisers or make managers redundant is likely to be a bridge too far.
*Satrix is a division of Sanlam Investment Management
Disclaimer
Satrix Managers (RF) (Pty) Ltd is an approved financial service provider in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). The information above does not constitute financial advice in terms of FAIS. 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, 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 disclaim 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.
Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. With Unit Trusts and ETFs, the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index-tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document. International investments or investments in foreign securities could be accompanied by additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information.
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