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GHOST BITES (4Sight | Afrimat | Barloworld | Capitec | Emira Property Fund | Quilter)

The Finance Ghost
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GHOST BITES (4Sight | Afrimat | Barloworld | Capitec | Emira Property Fund | Quilter)

4Sight has announced an interesting acquisition (JSE: 4SI)

And perhaps most importantly, they are paying for part of it with shares

4Sight Holdings is a rather interesting small cap on the local market. For starters, check out the jump in the share price since mid-2023:

Clearly, the market is showing some interest here. With the news of an acquisition of X4, a group that focuses on payroll solutions to customers across more than 20 African countries, there’s even more to sink your teeth into. This is a solid business with recurring income, offering a number of payroll-related services like employee self-service platforms that integrate with WhatsApp. You can immediately see how a solution like that can be useful in Africa.

The total deal value is R42.4 million if the profit target is achieved. The structuring here is clever, with the amount split into two equal tranches. The first tranche of R21.2 million is 50% cash, 50% shares. The share component is calculated based on the 30-day volume weighted average price (VWAP). The second tranche (the earn-out tranche) is also on a 50-50 basis of cash and shares, calculated at the time based on the 30 day VWAP.

I certainly can’t fault that. There’s a solid mix of upfront and deferred payments, as well as that rarest of things on the JSE: a small cap actually using its shares as acquisition currency!

As for the valuation, if the net profit after tax for the year ended February 2026 is R6.06 million, then the full additional tranche of R21.2 million is payable. If that happens, the earnings multiple would’ve been 7x.

If the company achieves less than R3.03 million in net profit after tax for that year, then no amount is payable on the second tranche. For amounts between R3.03 million and R6.06 million, there’s a pro-rata payment. You can see that the multiple of 7x is relevant here once more.

Interestingly, the multiple isn’t consistent if they achieve over 110% of the target net profit after tax i.e. for any amount in excess of R6.66 million, in which case there’s a ratchet on the multiple that leads to the second tranche being 120% of the base expected payment.

And in case you’re wondering, net profit after tax was just under R5 million for the year ended February 2025. The base target for the earn-out therefore reflects growth of 21.5%, which gives you a sense of what might be possible here.

The key personnel of the seller will pledge all 4Sight shares received as purchase consideration, with the pledge lasting until 28 February 2028. This locks them in for a few years, with 4Sight having the option to repurchase shares from any key personnel leaving the group during that period.

Overall, this looks like a professionally structured deal that shows a lot of promise. It’s a Category 2 transaction, so there is no shareholder vote on the transaction. The implementation date for the deal is 30 April 2025.

I wish we saw a lot more of this type of dealmaking among small caps!

Even Afrimat’s diversification wasn’t enough for the cycle this year (JSE: AFT)

The drop in HEPS was even higher than in the interim period

The year ended February 2025 is one that Afrimat will want to forget as quickly as possible. Operating in the commodities sector means that you need to have a strong stomach for the bad years, when the cycle dishes out a gut punch despite the best efforts of management.

It was clear that this was going to be an ugly year, as interim HEPS was down by 79.9%. Things got worse rather than better, with HEPS for the full year expected to be between 85% and 90% lower.

The iron ore market did the damage, with a combination of lower prices and a reduction in volumes by ArcelorMittal South Africa in the first half of the financial year. Although volumes have recovered over the rest of the year, this doesn’t solve the iron ore pricing pressure or the ongoing frustration of Transnet running well below the allocated rail capacity.

Afrimat is also still incurring losses in cement, as it will take time for the Lafarge acquisition to reach its full potential. A further issue was found in the anthracite business, where exports were impacted by the closure of the border with Maputo.

There were some positives, like the Construction Materials segment that enjoyed a strong performance in aggregates and a better story in margins. Sadly, this was nowhere near enough to offset the iron ore pressures, hence it was a poor outcome for investors over the past 12 months.

Although it’s very difficult to predict where the cycle could go, Afrimat does sound confident that the year ahead will at least see a partial recovery.

The PIC is accepting the offer made to Barloworld shareholders (JSE: BAW)

And honestly, I’m not surprised

In my recent writing on Barloworld, I’ve pointed out that I think shareholders are being too greedy on this one. Much as we saw in the Bell Equipment offer, activist minority shareholders dug their heels in and refuse an offer that looks pretty reasonable to me on paper. At this point in the cycle, if someone offered me a reasonable price for businesses exposed to broader commodities, I would take it and run.

The PIC clearly shares that sentiment, with the decision having been made to accept the offer from the consortium. The PIC holds 21.93% of the shares in Barloworld, so this takes total acceptances to 46.93% of Barloworld’s shares.

Interestingly, if they reach the 90% acceptance threshold that would be required for a squeeze-out transaction (a mechanism to force the remaining shareholders to accept the offer), then Barloworld would be delisted and the consortium would need to implement a B-BBEE transaction. This is one of the conditions of the PIC’s acceptance of the offer. It’s highly likely that this would in any event be a condition of the Competition Commission approved the deal.

If such a transaction is needed, it will be for 13.5% of the shares in Barloworld. As part of the broader Black Ownership calculation, this would presumably be sufficient for Barloworld’s needs. If Barloworld stays listed, then no such deal will be done.

As a further nuance in this deal, the consortium has the right to walk away from the entire thing if they don’t achieve a 90% acceptance rate. Although I doubt strongly that they would walk away after all this effort, I also wouldn’t be surprised if they are looking to get an outright controlling position. At the current acceptance level of 46.93%, they aren’t far off.

Capitec just keeps winning (JSE: CPI)

Investors can’t get enough of this story

Capitec closed 7% higher after releasing results. This takes the 12-month performance to 54%. That sounds wild when you consider the global backdrop to this performance, but headline earnings increased by 30% in the year ended February 2025 and so there’s no shortage of growth to back this up.

Cash isn’t a problem either, with the dividend up by 34%. Juicy.

There are still those who believe that Capitec is focused on only the lower income segments and that they will run out of growth. If you’ve been paying attention, you’ll know that there is far more to Capitec than just its original client base. For example, they’ve achieved growth of 26.5% among high earners (over R50,000 per month) and they have a rather ridiculous 51% market share of the South African youth population (ages 16 – 35).

Bank accounts are sticky. Switching banks is a pain. To have that kind of market share among younger clients is an absolute triumph. These are the reasons why the market is happy to pay a large multiple for the Capitec growth story, as the drivers of growth are clearly visible.

There are other important drivers of growth, like value-added services and Capitec Connect, which saw a 61% jump in income. Once you’ve built a big platform, it’s possible to generate tons of additional income by winning a greater share of wallet. The scary thing is that there are no heroics here – they are simply taking sensible services to the client base.

Earnings in this period were further boosted by a significant drop in credit impairments of 15%, which took a 10% increase in net interest income and leveraged it up to a 39% jump in net interest income after impairments. Combined with 22% growth in non-interest income (which is a key driver of Return on Equity), they managed a 28% increase in headline earnings excluding AvaFin, or 30% including it.

Speaking of Return on Equity (ROE), this all-important metric increased from 26% to 29%. Most South African banks are running at around half of that level.

The results presentation includes tons of fantastic data, like this slide:

This is the benefit of reading widely in the market. Note the spend in Groceries on the far left and then consider how well Shoprite has been doing in the past few years. Also, look at Pharmacy on the far right and think about the growth drivers for Clicks and Dis-Chem. Finally, look at Home Maintenance and the absolute lack of growth over the past couple of years. DIY businesses have been struggling and this slide shows you why.

Secured home loan products are due to launch mid-2025. Additional loan products are also coming this year, across credit card and earnings-linked debt. This is by a country mile the best post-democracy business story in South Africa and there’s little sign of it slowing down.

Emira Property Fund’s CEO is leaving (JSE: EMI)

The market tends to get nervous of stuff like this

It’s pretty unusual to see a listed company and its CEO part ways suddenly. It sends a message to the market of tough conversations behind boardroom doors, which naturally creates jitters among investors.

What makes this particularly unusual is that Geoff Jennett has been the CEO of Emira since August 2015, so one has to wonder what suddenly changed after nearly 10 years in that position. The only information given in the announcement is that there were “strategic differences” that led to this decision.

Hopefully, more information will come to light when the next CEO is announced.

Even Quilter struggled to grow its assets this quarter (JSE: QLT)

But the key is that net inflows were strong

Whenever I write about businesses in the financial services space that make money from assets under management, like Quilter, I talk about how important it is to look at net flows. Total assets under management will jump around based on market movements that are outside of the control of the company in question. Net flows, on the other hand, are a direct result of the distribution strategy and how well assets are being attracted to the group.

Quilter actually reports assets under management and administration (AuMA), rather than just AUM, with that number practically flat for the three months to March 2025. The net inflows as a percentage of opening AuMA were 7% on an annualised basis, which is strong. This was unfortunately offset by market and currency movements. Still, it shows that they attracted net inflows during a difficult time.

It gets even better when you look at what Quilter describes as core net inflows, which were 16% higher than the previous record quarter. The High Net Worth segment was a strong performer and the Affluent segment did especially well, particularly driven by lower outflows.

Thanks to all the economic uncertainty around tariffs and the impact that this is having on global asset prices, 2025 could be a less lucrative year than expected at Quilter. Still, with such strong metrics in inflows, they are positioning the business for growth in years to come.

Nibbles:

  • Director dealings:
    • Oddly, the CEO of Sun International (JSE: SUI) seems to have disposed of R45k worth of shares that are linked to a share award but aren’t part of the taxable portion. It’s just strange to see such a small disposal by a CEO. Another odd part of this announcement is that the CFO sold R2.08 million worth of shares that are supposedly the taxable portion of an award, except the full award was worth R2.45 million. I know that taxes are rough in South Africa, but nobody’s tax rate is that high.
  • Europa Metals (JSE: EUZ) is still figuring out what its future holds. They either need to wind the thing up, or find a suitable acquisition. In the meantime, they’ve sold 1.5 million shares that they hold in Denarius Metals Corp, generating around £450k in the process. They will use this for various payments and for “assessing opportunities” – in other words, for professional fees. For context, Europa still holds 5.5 million shares in Denarius.
  • Wesizwe Platinum (JSE: WEZ) is still struggling to get its financials for the year ended December 2024 done. They are hoping to get the annual financial statements out by 31 July 2025, as well as the integrated annual report and notice of AGM by 31 August 2025.

GHOST BITES (Aspen | Coronation | Oasis Crescent | Standard Bank | Tharisa | Texton)

The Finance Ghost
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GHOST BITES (Aspen | Coronation | Oasis Crescent | Standard Bank | Tharisa | Texton)

Brace yourself for a terrible day in the Aspen share price (JSE: APN)

A somewhat shocking announcement came out at market close

If you’re an Aspen shareholder, prepare yourself for a rough Wednesday. At 5pm on Tuesday, the company released an announcement about “potential risks” – and we aren’t talking about small numbers here.

A material contract dispute in the Manufacturing business could impact EBITDA by R2 billion. In such a case, the EBITDA from the Manufacturing business in CER would be less than 50% of what was reported in FY24. To make it even worse, there would be impacts on subsequent years that Aspen isn’t able to quantify at this stage.

All we know at this stage is that the dispute related to a contract manufacturing customer for mRNA products. Aspen has also referenced the risks of US tariff changes and how this would encourage more production in the US vs. other countries, which would hurt Aspen’s contract manufacturing business. This overall situation is the reason for an expected R770 million impairment to technology in the 2025 financial year.

The long-term impact on Aspen is unclear at this stage, as they might be able to fill the manufacturing capacity with pharmaceutical customers who have a strategy that is more suitable to this world of trade wars. Also, they might not.

The company has scheduled a webcast on Wednesday morning. I have no idea where the bottom will be for the share price in response to this news, but I suspect it’s a long way down from current levels.

Coronation’s AUM went nowhere this quarter (JSE: CML)

And no, they still don’t disclose comparatives

Coronation has released its assets under management (AUM) as at 31 March 2025. As always, they haven’t done any favours for shareholders in terms of releasing the comparatives, so we are forced to go digging.

Will this ever change? I’m not holding my breath.

Something else that hasn’t changed is the quantum of AUM, which came in at R676 billion as at March 2025 – exactly the same amount that we saw as at December 2024. At least there’s growth on a year-on-year basis, as they were at R631 billion as at March 2024.

I’ll say it for the millionth time: in this industry, the best business model is to have a force of advisors out there who are scooping up assets. Focusing on only the asset management profit pool (rather than wealth management / advice) just isn’t lucrative enough.

Inflation-beating growth at Oasis Crescent (JSE: OAS)

As a Shari’ah-compliant fund, there is no debt in this structure

Property funds are known for using high levels of gearing, or debt. In South Africa, where the cost of debt is often equal to or even higher than the net initial yield on acquisitions, the introduction of debt is only beneficial for properties that will grow significantly in value. As time has taught us, not all properties end up doing that.

So, the lack of debt in the Oasis Crescent Property Fund isn’t as much of an impediment as you might expect from an economic perspective. Since inception, they’ve grown the NAV and dividend (i.e. total return) by 11.3% per annum, which is more than double the inflation rate of 5.5% per annum over that period.

In the year ended March 2025, they grew the distribution by 7.1% to 120 cents per share (technically, per unit). Based on the current share price of R20.50, the fund is on a trailing yield of 5.8%.

If we look deeper, we find that the net asset value per unit increased by 3.9% to R28.07, so the fund is trading at a discount to NAV – but that’s not surprising when you see how low the yield on NAV would be. In other words, if it traded at NAV, the trailing yield (based on the distribution of 120 cents) would be just 4.3%. That’s not going to happen.

In fact, the current traded yield is already very low relative to other property funds. I suspect that this is because the investor base cannot buy the usual money market and fixed income instruments due to Shari’ah rules, so this fund plugs an important gap and hence enjoys stronger demand than would otherwise be the case.

Double-digit earnings growth at Standard Bank (JSE: SBK)

The quarterly update looks promising

Although local companies are only required to report earnings on an interim (six months) and full year basis, Standard Bank needs to submit quarterly financial information to the Industrial and Commercial Bank of China (ICBC), its single largest shareholder with a significant minority stake. The good news is that this gives all of us more regular information on the performance of Standard Bank than would otherwise be the case.

The movement in shareholders’ equity for the quarter doesn’t tell us much, as the ordinary dividend was paid in this period and hence total equity actually reduced over the quarter. It’s far more valuable to look at the commentary regarding headline earnings, which increased by 10% year-on-year.

Another important nugget is that the Africa Regions contributed over 40% of headline earnings in the quarter. Despite all the macroeconomic noise at the moment, things are clearly holding up for them.

An even clearer sign of this resilience is that 2025 guidance is unchanged at the moment despite the macroeconomic risks. That’s certainly a bold call.

Is the Karo Project at Tharisa offering a sufficient return? (JSE: THA)

The PGM market is in a tough space right now

If you enjoy digging into the particularly technical elements of mining (and if you understand them), then Tharisa releasing the Competent Persons’ Report on the Karo Platinum project will be of interest. Tharisa owns 65.59% in Karo Platinum, so they control this asset and it is important to the overall story. The report is a 321 page monster that you’ll find here.

Most of the report will only make sense to mining experts. Even the executive summary is a complicated read! Luckily, there are some very important points to highlight from a financial perspective.

For example, it’s important to know that commissioning is expected in Q4 2026. Also, of the total expected capex of $475 million, there is still $338 million to be spent, so there’s a long way to go here.

But now we get to what really stuck out for me: the internal rate of return (IRR) in dollars for the project is 12.68%, which to be honest doesn’t sound like enough to be very appealing. The PGM market is in a difficult space with uncertain supply and demand dynamics going forwards and this is clearly not helping the economics.

And by the way, this is exactly how cyclical industries sort themselves out – the returns on new projects become tight enough that investment in capacity slows down, leading to a shortfall in supply when demand finally picks up. The trouble is that at the moment, the question about demand is if rather than when.

Texton is sending a big chunk of cash back to shareholders (JSE: TEX)

I have to wonder why this isn’t in the form of share buybacks

Texton Property Fund didn’t declare an interim dividend for the six months to December 2024. They didn’t do it in the interim period either, in case you’re wondering. Instead, they’ve declared a special dividend of 20.13 cents per share for the latest interim period. To give you context, the share price is currently trading at R3.50.

The even more important context is that the net asset value (NAV) per share was R6.44 as at the end of December 2024, so the current share price represents a substantial discount to NAV. With excess cash on the balance sheet, this creates the perfect opportunity for substantial share buybacks at the current price, thereby unlocking returns for the shareholders that choose to stick around.

The good news is that Texton is returning capital of 79.87 cents per share to its shareholders, which is a more disciplined decision than allocating the capital in a way that doesn’t make sense. The bad news is that this won’t do anything to improve the discount to NAV – if anything, it might make it worse, as less of the NAV than before will be attributable to cash rather than other investments.

If you want to deal with the discount to NAV, you have to reduce the number of shares in issue and do it at a price that is lucrative – effectively, this means the company is investing in itself at a discount to NAV! Simply handing back the cash to each shareholder proportionately achieves very little.

Nibbles:

  • Director dealings:
    • An associate of a non-executive director of Sun International (JSE: SUI) bought shares worth R9.8 million.
    • The CEO of Ascendis (JSE: ASC) and Calibre Investment Holdings (an associate of a director) each bought shares worth R143k i.e. the total trade was worth R286k.
    • A director of York Timber (JSE: YRK) bought shares worth almost R20k.

Satrix triumphs at SALTA 2025

Satrix
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Satrix triumphs at SALTA 2025

Satrix, South Africa’s premier provider of index-tracking investment products, maintains its leading position at the prestigious 2025 South African Listed Tracker Awards (SALTA) held at the Johannesburg Stock Exchange (JSE) in Sandton on 3 April 2025. The leading indexation house, which commands 38%^ of South Africa’s ETF market share, took home a total of 10 accolades, including awards in the Total Investment Returns, Tracking Efficiency, Capital Raising and the coveted People’s Choice awards in both local and foreign fund categories.

Now in its eighth year, the SALTA awards celebrate excellence in the Exchange Traded Funds (ETF) industry, honouring providers for delivering exceptional products to the South African market. This year’s wins speak to Satrix’s position as a trusted leader in the industry.

Satrix’s Award Highlights

SALTA recognised Satrix’s excellent performance across multiple categories with the following honours:

  1. Total Investment Returns – Five Years – SA Equity – Satrix Capped INDI ETF
  2. Total Investment Returns – Three Years – Foreign Non-Equity (Bonds and Listed Property) – Satrix Namibia Bond ETF
  3. Tracking Efficiency – Three Years – SA Equity – Satrix Capped All Share ETF
  4. Tracking Efficiency – Three Years – SA Non-Equity – Satrix TRACI ETF
  5. Capital Raising – Three Years – SA Equity – Satrix Top 40 ETF
  6. Capital Raising – Three Years – Foreign Equity – Satrix MSCI World ETF
  7. Capital Raising – Three Years – Foreign Non-Equity (Bonds, Income, Listed Property) – Global Bond ETF
  8. Capital Raising – Three Years – Total Capital Raised – Issuing House – Satrix Managers
  9. People’s Choice – Local Fund – Satrix Top 40 ETF
  10. People’s Choice – Foreign Fund – Satrix MSCI World ETF

The highlight of the day was walking away with the Tracking Efficiency award, affirming Satrix’s ability to pioneer high-performing tracking products that fulfil strong investor demand.

“This award is significant for us because the Satrix Capped All Share ETF is the first of its kind on the JSE. As an ‘All Share’ tracking fund it has the difficult task of managing around the small and illiquid shares in the index. For this fund to win this award given the complexity of what it aims to achieve, is testament to the effort we put into our processes,” says Kingsley Williams, Chief Investment Officer at Satrix**.

Satrix’s Award-Winning Offerings

At the heart of Satrix’s success is its flagship indexation fund, the Satrix Top 40 ETF. Launched in November 2000 as South Africa’s first locally-listed ETF, it remains a cornerstone of the South African investment market. The fund tracks the performance of the FTSE/JSE Top 40 Index, which represents the 40 largest companies by market cap. Its enduring popularity and stellar performance have made it a go-to choice for investors seeking simplicity and value.

On the global front, the Satrix MSCI World ETF tracks the performance of the MSCI World Index and continues to impress, offering South Africans a hassle-free way to invest in developed markets worldwide without moving their rands offshore.

Investing for All

Last year, over 12 000 Exchange Traded Funds (ETFs) were listed worldwide, with a market value of about US$13 trillion, an increase from US$10.1 trillion the year before.

This shows that the growth of ETFs remains strong, with increased investor adoption driven by ETF’s transparency, liquidity, and cost-effectiveness. This trend is expanding beyond the US to regions such as Europe, the Middle East, Africa (EMEA), and Asia-Pacific (APAC).

Fikile Mbhokota, CEO at Satrix said: “As a market leader in the South African ETF industry, Satrix is actively spearheading local adoption, ensuring that both local and offshore offerings meet the needs of investors. South African investors are responding to that, with their wallets and awards like these, making their voices consistently heard. For this recognition, through the SALTAs, we are thankful and truly honoured!”

For more details on Satrix and its award-winning products, visit www.satrix.co.za.

*Source: Satrix, 31 December 2024

^Source: etfSA.co.za – Market Capitalisation – SA Industry Report, December 2024

More information about SALTA

The South African Listed Tracker Awards (SALTA) is running for the eighth year in 2025. SALTA is an initiative by service providers to the exchange traded fund (ETF) industry in South Africa (who are not issuers themselves) to reward issuers for exceptional products provided to the South African market. The JSE, Refinitiv (an LSEG business), Profile Data and etfSA are the sponsors and organisers of these awards. They recognise the best total investment returns over the last one to five years across varying categories to reward skills in providing index-tracking ETFs for the investment industry.

Satrix’s SALTA cabinet: *

2025

  • People’s Choice, Local ETP: Satrix Top 40 ETF
  • People’s Choice, Foreign ETP: Satrix MSCI World ETF
  • Total Investment Returns, SA Equity, five years: Satrix Capped INDI ETF
  • Total Investment Returns, Foreign Non-Equity (Bonds and Listed Property), three years: Satrix Namibia Bond ETF
  • Tracking Efficiency, SA Equity, three years: Satrix Capped All Share ETF
  • Tracking Efficiency, SA Non-Equity, three years: Satrix TRACI ETF
  • Capital Raising, SA Equity, three years: Satrix Top 40 ETF
  • Capital Raising, Foreign Equity, three years: Satrix MSCI World ETF
  • Capital Raising, Foreign Non-Equity (Bonds, Income, Listed Property), three years: Global Aggregate Bond ETF
  • Capital Raising, Total Capital Raised – Issuing House, three years: Satrix Managers

2024

  • People’s Choice, Local ETP, Favourite ETF by public vote: Satrix Top 40 ETF
  • People’s Choice, Foreign ETP, Favourite ETF by public vote: Satrix MSCI World ETF
  • Trading Efficiency, SA Equity, three years: Satrix RESI ETF
  • Trading Efficiency, SA Non-Equity, three years: Satrix GOVI ETF
  • Trading Efficiency, Foreign Equity, three years: Satrix MSCI China ETF
  • Capital Raising, SA Equity, three years: Satrix Top 40 ETF
  • Capital Raising, Foreign Equity, three years: Satrix MSCI World ETF
  • Capital Raising, Total Capital Raised, three years: by Issuing House – Satrix Managers
  • Tracking Efficiency, SA Non-Equity, three years: Satrix MAPPS Protect ETF
  • Tracking Efficiency, Foreign Equity, three years: Satrix MSCI China ETF

2023

  • People’s Choice, Favourite ETF by public vote: Satrix Top 40 ETF  
  • Best Total Return Performance, SA ETPs, 10 Years: Satrix INDI ETF
  • Best Total Return Performance, SA Equity ETPs, five Years: Satrix RESI ETF
  • Best Total Return Performance, Foreign ETPs, five Years: Satrix S&P 500 ETF
  • Best Total Return Performance, SA Equity ETPs, three Years: Satrix RESI ETF
  • Best Tracking Efficiency, SA Non-Equity ETPs, three Years: Satrix Property ETF
  • Best Capital Raising, SA Equity ETPs, three Years: Satrix Top 40 ETF
  • Best Capital Raising, ETF Issuing House, three Years: Satrix Managers
  • Best Trading Efficiency, SA Equity ETPs, three Years: Satrix RESI ETF

2022  

  • People’s Choice, Favourite ETF by public vote: Satrix Top 40 ETF  
  • Best Total Return Performance, SA Equity, 10 years: Satrix INDI ETF  
  • Best Total Return Performance, SA Equity, five years: Satrix RESI ETF 
  • Best Total Return Performance, SA Equity three years: Satrix RESI ETF 
  • Best Tracking Efficiency, SA Non-Equity, three years: Satrix Property ETF 
  • Best Capital Raising, SA Equity, three years: Satrix Top 40 ETF 
  • Best Capital Raising, Foreign Equity, three years: Satrix MSCI World ETF 
  • Best Capital Raising, Foreign ETFs, one year: Satrix MSCI China ETF 
  • Best Capital Raising, ETP Issuing House, three years: Satrix Managers 
  • Best Trading Efficiency, SA Equity, three years: Satrix RESI ETF 

2021  

  • People’s Choice, Favourite ETF by public vote: Satrix Top 40 ETF  
  • Best Total Return Performance, SA Equity, 10 years: Satrix INDI ETF  
  • Best Total Return Performance, SA Equity, five years: Satrix RESI ETF 
  • Best Total Return Performance, SA Equity three years: Satrix RESI ETF 
  • Best Tracking Efficiency, SA Non-Equity, three years: Satrix Property ETF 
  • Best Capital Raising, Foreign and Commodity, three years: Satrix MSCI World ETF 
  • Best Capital Raising, ETF Issuing House, three years: Satrix Managers 
  • Best Capital Raising, Foreign ETFs, one year: Satrix MSCI China ETF 
  • Best Capital Raising, ETF Issuing House, one year: Satrix Managers 
  • Best Trading Efficiency, Foreign and Commodity, three years: Satrix S&P 500 ETF 

2020 

  • People’s Choice, Favourite ETF by public vote: Satrix Top 40 ETF  
  • Best Total Return Performance, SA Equity, 10 years: Satrix INDI ETF 
  • Best Total Return Performance, SA Equity, three years: Satrix RESI ETF 
  • Best Trading Efficiency, SA, three years: Satrix RESI ETF 
  • Best Capital Raising, SA, three years: Satrix Top 40 ETF 
  • Best Capital Raising, ETF Issuing House, three years: Satrix Managers 
  • Best Capital Raising, SA, one year: Satrix Top 40 ETF 

2019  

  • People’s Choice, Favourite ETF by public vote: Satrix Top 40 ETF  
  • Best Total Return Performance, SA Equity, three years: Satrix RESI ETF 
  • Best Capital Raising, ETF Issuing House, one year: Satrix Managers 
  • Best Trading Efficiency, Overall: Satrix RESI ETF   

2018  

  • People’s Choice, Favourite ETF by public vote: Satrix Top 40 ETF  
  • Best Trading Efficiency, Overall: Satrix RESI ETF  
  • Best Total Return Performance, SA Equity, one year: Satrix FINI ETF 

Disclaimer

**Satrix is a division of Sanlam Investment Management.

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. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. 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. The index, the applicable tracking error and the portfolio performance relative to the index can be viewed on the ETF Minimum Disclosure Document and/or on the website: https://satrix.co.za/products

* Full details and basis of the awards are available from the Manager.

UNLOCK THE STOCK: CA Sales Holdings

The Finance Ghost
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UNLOCK THE STOCK: CA Sales Holdings

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.

We are grateful to the South African team from Lumi Global, who look after the webinar technology for us, as well as EasyEquities who have partnered with us to take these insights to a wider base of shareholders.

In the 51st edition of Unlock the Stock, regular attendee CA Sales Holdings returned to the platform to talk about the recent performance and strategic focus areas for the group. The Finance Ghost co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.

Watch the recording here:

GHOST BITES (Alphamin | BHP | Merafe | Ninety One | Sasol | South32 | Zeder)

The Finance Ghost
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GHOST BITES (Alphamin | BHP | Merafe | Ninety One | Sasol | South32 | Zeder)

Security issues in the DRC ruined Alphamin’s quarter (JSE: APH)

As expected, annual guidance has been reduced

Alphamin has released its production and operational update for Q1 of 2025. As operations ceased on 13 March 2025, they basically lost over half a month of production. It’s therefore not a surprise to see an 18% drop in contained tin production vs. the immediately preceding quarter (ended December 2024).

If anything, it would’ve been worse if not for the higher tin grade of the ore that was processed this quarter. They processed 31% less ore, with the overall tin grade coming in at 3.55% vs. 3.00% in the preceding quarter. They expect the higher grade to average down over the rest of the year.

It does sound as though they’ve managed to catch up some of the lost sales after the end of the quarter in terms of sales and exports. They were sitting at 3,863 tonnes sold by the end of March, with a much better number of 4,581 tonnes by 16 April. Even then, they are way below the 4,942 tonnes in the preceding quarter (without taking into account an extra couple of weeks).

Due to the drop in production, all-in sustaining cost per tonne was up 9%. This more than offset the benefit of a 7% increase in price per tonne, so EBITDA was down 19% vs. the preceding quarter.

Will they be able to catch up by the end of the year? Not when it comes to production it seems, with guidance for the full year decreased from 20,000 tonnes to 17,500 tonnes. They are also playing it safe with the balance sheet, choosing not to declare a final FY24 dividend.

Notably, the current managing director of the operating subsidiary in the DRC has elected to retire. Perhaps the latest stress was enough for him to call it a day. A replacement with substantial experience has been announced, so at least there is someone willing to take on the challenge.

Copper and iron ore lead the way at BHP (JSE: BHG)

Record nine-month production numbers are great news

Mining groups can’t control broader commodity prices. They can however allocate capital and manage their production levels in such a way as to build the best possible business over time. This is why investors put a lot of weight on things like production numbers, as they show how well (or poorly) the business is controlling the controllables.

BHP is making a song and dance about its nine-month production numbers and with good reason, as copper and iron ore production achieved record levels. Alongside this good news, the group acknowledges the tariff risks and the broader impact they could have on economic growth, while pointing to a “flight to quality” among mining assets as a mitigating factor for the group. There’s certainly been a flight in capital – a flight away from the sector, with the share price down 22% over 12 months.

Of course, record production in and of itself isn’t always exciting. For example, copper production increased by 10% to record numbers, yet Iron ore was up just 1%. One commodity is a story of growth and the other is a story of consistency, but both are records. There are also examples of commodities in crisis, like nickel where production fell 49% and and the facility has transitioned into temporary suspension. In the coal business, they had some wet weather to deal with in this quarter, dampening growth vs. the preceding quarter – literally.

If you look across the various mining operations, then production guidance for the full year is either unchanged or indicated as being towards the upper range of production guidance.

Despite the production performance, BHP’s share price is down more than 22% in the past 12 months due to pressure in iron ore and coal prices. Copper prices are trending in the right direction at least, so they are growing in the right place.

Merafe’s production reflects a difficult market (JSE: MRF)

And this is why the share price is down so much in the past year

Merafe’s share price has lost over 18% of its value in the past 12 months. This actually isn’t too bad vs. some of the huge negative moves we’ve seen in the mining sector. For example, Glencore (with whom Merafe has a chrome joint venture) has suffered a drop in price of over 40% over the same period!

The production update for the first quarter of the financial year shows that things are still in a difficult place vs. the comparable period. Attributable ferrochrome production decreased by 7% year-on-year, with the company noting that this is “in response to market conditions” – in other words, commodity prices are still a problem.

A modest uptick in AUM at Ninety One (JSE: NY1 | JSE: N91)

In the context of the past quarter, this actually looks decent

Ninety One reports quarterly updates on its assets under management (AUM). As companies like Ninety One earn revenue based on AUM, this is literally the lifeblood of the group.

AUM is affected by two things: net flows (the difference between investments and withdrawals by clients) and market movements. Companies that have built excellent distribution networks have generally done well (e.g. PSG Financial Services / Quilter), while those who depend more on market movements and independent financial advisors have struggled to achieve meaningful growth in AUM.

Market movements have been tough this year, so one would expect to see pressure on AUM over the past quarter. It’s pretty good in my books that Ninety One ended the financial year with AUM of £130.8 billion, representing a very small increase over the £130.2 billion as at the end of December 2024. Compared to the £126.0 billion as at the end of March 2024, they are up 3.8% for the year.

Hardly exciting, but could certainly have been worse.

Coal quality challenges continue to plague Sasol (JSE: SOL)

Global recession risks are relevant here as well

As you are probably aware, Sasol has been a tough story in recent years. This share price was close to R420 at one point in early 2023. Today, it trades at R66. Many hard lessons have been learnt by people on a stock that was also responsible for creating incredible wealth during the pandemic – provided you sold and banked your gains, of course.

There are various challenges at the moment, including the US tariffs and what they could mean for the global economy. A recession wouldn’t be kind to Sasol. Even without Trump, there are other significant hurdles, like coal quality and the impact it is having on Secunda Operations. Not only are they having to invest heavily to improve this, but they are also having to buy higher quality coal elsewhere in the meantime.

In a production update for the nine months to March, Sasol noted that the Mining business (Secunda Operations) has seen a 5% drop in production quarter-on-quarter. Over nine months, the decrease is 2%, so things have deteriorated over the course of the year. With production under pressure, cost per ton is R650 – R670, significantly worse than previous guidance of R600 – R640 per ton. The mitigating factor is an improved performance by Transnet Freight Rail, leading to a 40% increase in external sales (quarter-on-quarter) and 13% on a year-to-date basis.

Coal quality also impacts the Fuels business, with a further negative impact coming from flooding and fire incidents. Although they hope to largely meet their production guidance, it will be at the lower end of the range. Sales volumes are expected to be between 1% and 3% lower than the previous year

In the Gas business, production was impacted by unrest in Mozambique and planned maintenance. Despite being below last year’s numbers at the moment, they are hoping for a strong finish to the year that takes them 0% to 5% above the previous year.

Finishing off the local business, we have Chemicals Africa and a stronger Q3 vs. Q2 as they caught up on sales. The year-to-date picture is still a 2% drop in production, with an increase in the average basket price taking revenue to just 1% higher vs. the previous year. With Secunda production impacting this business and with tariff uncertainty as a factor now as well, sales volumes for the year are expected to be 2% to 4% lower.

Moving on to the International Chemicals business, the US operation continues to be a massive headache. Despite a 12% improvement in the average sales basket price on a year-to-date basis, revenue is down 5% thanks to a substantial drop in production. Some of this is due to planned maintenance, but there were unplanned outages as well. Finally the business in Eurasia also struggled with production, but to a far lesser extent that the US. This was good enough for a revenue increase of 3%, with production down 2% and prices thankfully up 5%.

Sasol’s share price is down 25% so far this year. It’s a very brave play in this environment.

South32 is on track to achieve its full year guidance (JSE: S32)

It looks like only one of the operations will fall short

South32 has released its production report for the quarter and nine months ended March 2025. This means there’s just one quarter left of the financial year, so one would hope to see them tracking strongly against their full year guidance.

This is indeed the case, with guidance unchanged across all but one of the group’s operations. Weather and other issues in Queensland caused guidance at Cannington to be decreased by 10%. As for the rest, it’s a promising story.

All eyes in mining seem to be on copper at the moment, so it’s worth highlighting that Sierra Gorda payable copper equivalent production increased by 20% year-on-based on a nine-month view.

To add to the positive news around production, the group also swung strongly into a positive net cash position, with net cash up $299 million to $252 million.

On the capex front, the focus from a growth capital perspective is on the Hermosa project, where South32 has invested $355 million over nine months. This is the Taylor zinc-lead-silver project, with sinking of the main shaft due to commence in June 2025.

It’s important to remember that maintenance capex is a feature of mining as well, as there are many fixed assets that need to be replaced over time. For context, South32 spent $294 million on capex over nine months excluding the major development projects.

Zeder’s NAV per share is down, but you must adjust for the special dividend (JSE: ZED)

This is very important when investment holding companies are selling off assets

Investment holding companies focus on net asset value (NAV) per share in their reporting. This is essentially management’s indication of what they believe that the group is worth. When the group is selling off assets and distributing the proceeds to shareholders (rather than doing share buybacks), you can expect to see a significant drop in the NAV per share. This is because the group is literally smaller than it was before, all else held equal.

Of course, all else isn’t usually held equal. There are valuation movements in the remaining assets as well. So, when Zeder tells you that NAV per share as at February 2025 is between 66 and 75 cents lower vs. the prior year, with the special dividend only explaining 61 cents of that move, you know that the rest of the portfolio took a knock to its value.

If we strip the 61 cents out of the base (R2.48) and use the guided range of R1.73 to R1.82 for the calculation, we find that the rest of the portfolio dropped in value by between 2.7% and 7.5%.

Nibbles:

  • Director dealings:
    • Various Mpact (JSE: MPT) directors sold shares worth over R12 million in aggregate. This related to share awards and there’s no indication that this was only the taxable portion, so I assume that it wasn’t.
    • The CEO of Sun International (JSE: SUI) sold shares worth almost R6.5 million. The shares relate to share awards and the announcement isn’t explicit on whether this is only the taxable portion. As above, I therefore assume that it isn’t.
    • The CFO of Clicks (JSE: CLS) bought R743k worth of shares in the company now that the results are out in the wild. Based on the results, I don’t blame him.
    • An independent non-executive director of OUTsurance (JSE: OUT) bought R255k worth of shares in the company.
  • Absa (JSE: ABG) looks to be joining the list of companies that have repurchased their listed preference shares. The Absa ones trade under the ticker JSE: ABSP. At one point, issuing preferences shares was a popular funding mechanism for both banks and corporates. For banks, this was driven by Basel regulations that have subsequently changed. It’s also worth mentioning that liquidity turned out to be thin in many of the corporate (and even banking) instruments, as there wasn’t much investor appetite for them beyond large institutions looking to buy and hold them. As there’s limited appeal in keeping these instruments out in the wild, Absa is looking to buy the shares at R930 per share via a scheme of arrangement, with a standby offer in case the scheme doesn’t pass. The latest traded price for the preference shares was R820 per share, so there’s a buyout premium here as one would expect to see. Absa will potentially part with R4.6 billion if the scheme gets approved, so the relative lack of activity in this sector doesn’t mean that there aren’t large numbers at play.
  • Brimstone Investment Corporation (JSE: BRT | JSE: BRN) issues shares to executives under a forfeitable share plan. This isn’t unusual. What is unusual is that the group then repurchases those shares under a specific repurchase. Why not just pay cash under a phantom share scheme, I hear you ask? I have no idea. Truly, I do not see the point of issuing and then repurchasing shares as compensation for executives, unless there’s some kind of tax benefit that I’m not familiar with.
  • Acsion Limited (JSE: ACS), released an updated cautionary announcement. The first one came out in March. The update is that Acsion has entered into negotiations with an unrelated third party regarding a potential acquisition. At this stage, there’s no certainty whatsoever of a deal happening.

Colombia has a cocaine hippo problem

Dominique Olivier
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Colombia has a cocaine hippo problem

Ecosystems are like very complicated Jenga towers: one wrong move, and suddenly you’ve got starlings in New York, hippos in Colombia, and scientists frantically trying to put the pieces back together.

One of my favourite lessons from high school biology was about ecosystems. I remember being amazed to learn how neatly everything inside a particular habitat fits together, with plants, herbivores, and carnivores all playing their part to keep the whole thing ticking along. Antelope roam the savannah, munching on plants and scattering seeds as they go. Lions, in turn, keep the antelope population from getting too ambitious.

It’s a delicate system. Too few antelope get eaten, and suddenly there are far too many nibbling mouths, stripping the plants faster than they can regrow. Too many lions, and the antelope start disappearing, leaving the plants to run wild until the lions, now short on dinner, start disappearing too. This balancing act repeats itself in every corner of the natural world. It’s an ordinary miracle that we often overlook, even as it happens right under our noses.

Naturally, it didn’t take long for humans to step in and throw a few wrenches into these carefully balanced systems, sometimes by accident, and sometimes with the kind of confidence only humans can muster. One of the more famous examples is the existence of European starlings in North America.

As the name hints, European starlings are not, in fact, from the United States. They owe their American citizenship to a group of Shakespeare enthusiasts in the 1890s who decided that what New York really needed was to be populated by all the birds ever mentioned in Shakespeare’s works. About a hundred starlings were released into Central Park, and after a few false starts, the birds settled in (with gusto).

Today, there are over 200 million starlings spread from Alaska to Mexico. Their success story is mostly thanks to their aggressive feeding and nesting habits, which local birds often can’t match. While hawks and falcons do their best to keep them in check, there simply aren’t enough predators around. In fact, the biggest force managing the starling population now is humans. We introduced them into an ecosystem where they didn’t belong, and we’ve been managing the fallout ever since.

Still, each starling is only about the size of a hand, which is a manageable problem, all things considered. In another part of the world, someone introduced a much larger animal into an ecosystem, and let’s just say the consequences have been considerably harder to wrangle.

Paradiso Escobar

Back in the late 1970s, famed Colombian drug lord Pablo Escobar decided that being wildly rich wasn’t worth it if you didn’t have your own personal kingdom to rule over. So he built Hacienda Nápoles, a 20-square-kilometre playground in Puerto Triunfo, Colombia.

Now, the man they called the King of Cocaine wasn’t exactly a minimalist. His estate featured a sprawling Spanish colonial mansion, a sculpture park, a private airport, a brothel, a fleet of luxury and vintage cars and bikes, and even a Formula 1 racetrack. And because no self-respecting kingpin’s home is complete without a zoo, Escobar built one and filled it with animals from around the world: antelope, elephants, exotic birds, giraffes, ostriches, ponies and, most memorably, hippos.

Of course, no earthly paradise could last forever. When Escobar was killed during a rooftop firefight with Colombian police in 1993, his family got into a messy legal fight with the government over who would inherit the estate. The government eventually took control, only to realise they’d won themselves a massive, crumbling property full of very expensive mouths to feed. As a result, most of the animals were crated up and shipped off to various South American zoos.

The hippos, however, turned out to be a much bigger problem (quite literally). Moving several tonnes of grumpy, semi-aquatic muscle proved too costly and complicated, so officials shrugged and left them where they were. And that’s how a handful of Escobar’s hippos ended up becoming permanent (and very prolific) residents of Colombia.

The problem with the hippopotamus

In case there was any doubt in your mind before, let me clarify that hippos are absolutely not native to South America. How Escobar even managed to get his hands on them in the first place remains a bit of a mystery, but when you’re worth $80 billion and have a Rolodex full of questionable contacts, it turns out very few things are off-limits.

When Escobar died in 1993, there were just four hippos living at Hacienda Nápoles – three females and one male. By 2007, that number had grown to 16. Not long after, they decided they were done with the whole zoo life and made a break for it, settling into the nearby Magdalena River like they’d been there all along.

If you’re wondering why the Colombian government didn’t just send in a few zookeepers to round them up at that point, then you’re seriously underestimating just how much of a handful a wild hippo can be. After elephants and rhinos, hippos are the heaviest land animals on Earth, with adult males tipping the scales at around 1,500 kg, and females not far behind at 1,300 kg. And it’s not just their size that’s the issue: hippos are famously bad-tempered, wildly unpredictable, and considered some of the most dangerous animals in the world. They’ve been known to charge boats for no good reason, and can sprint at speeds of up to 30 km/h on land (which, frankly, is way too fast for something built like a wine barrel on legs).

In 2020, researchers tried to estimate how fast the Colombian hippos were multiplying, and figured there could be about 98 of them roaming along the Magdalena River and its tributaries. But a more recent study involving good old-fashioned head counts, drones, and a few other tracking tricks suggests the real number is actually somewhere between 181 and 215.

Without the usual checks of life in Africa (like predators or droughts), Escobar’s “cocaine hippos” have been thriving, building the largest hippo population outside of their native continent. Read that again: the only place in the world that has more hippos than Colombia right now is Africa. Researchers also found that about a third of the hippos they counted are juveniles, which implies that they’re breeding quickly and enthusiastically. One theory about why this is happening is that the lush Colombian environment is letting them hit sexual maturity earlier than they would back home. Another is that life is just a lot less stressful without so many territorial battles over limited food and space. More grass, less drama, more time for a roll in the proverbial hay.

So what do you do with 200 hippos?

After a few serious hippo attacks on humans in 2020 and 2021, plus a car crash that left a hippo dead on a Colombian highway, scientists are sounding the alarm: something has to be done.

The idea of culling isn’t new. Back in 2009, authorities greenlit the hunting of one adult hippo, nicknamed “Pepe.” But when a photo of Pepe’s body surfaced, it sparked outrage from animal rights groups both locally and internationally. Plans for further culling were quickly shelved, and the hippos were left to their own devices (and reproductive instincts) once more.

Since then, people have been brainstorming alternatives, but none of them are easy, cheap, or particularly foolproof. The current strategy involves firing contraceptive darts at the animals, which sounds promising on paper, but in reality it’s slow, expensive, and has never been attempted at this kind of scale. A modelling study in 2023 estimated that if everything went perfectly, the contraceptive plan could wipe out Colombia’s hippo population in about 45 years, at a minimum cost of $850,000.

Another idea is to sedate them, haul them into helicopters, fly them to facilities, castrate them there, and release them back into the wild. The price tag for this is around $50,000 per hippo, with a generous 52-year timeline. And these numbers are probably optimistic, given that they were calculated before anyone knew just how many hippos were actually out there.

Plenty of researchers are now openly advocating for culling. They argue it’s the fastest, most humane solution, and crucial to protecting Colombia’s native ecosystems. After all, Colombia is the second-most biodiverse country in the world. Losing that to a herd of misplaced hippos (each one of which consumes about 40 kg of vegetation per day) would be a pretty catastrophic twist in the story.

At the time of writing this article, there are still no actionable plans for dealing with Colombia’s cocaine hippos. Deadlines have been announced and committees have been established, but progress is maddeningly slow. And while environmentalists and politicians squabble behind closed doors, the wild hippos of Colombia are doing what they do best: making more hippos.

On the plus side, these hippos don’t seem to have seen Cocaine Bear on Netflix. Let’s hope it stays that way.

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.

Dominique can be reached on LinkedIn here.

GHOST BITES (British American Tobacco | Clicks | Copper 360 | Insimbi | Jubilee Metals | PSG Financial Services)

The Finance Ghost
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GHOST BITES (British American Tobacco | Clicks | Copper 360 | Insimbi | Jubilee Metals | PSG Financial Services)

British American Tobacco reaffirms guidance at the AGM (JSE: BTI)

This is despite all the recent noise around tariffs

If you search for the word “tariff” in the chair’s address at the British American Tobacco AGM, you won’t find it. Instead, you’ll find the usual paragraphs of gumph about the company’s commitment to the environment (and it’s remarkable Triple-A rating for its disclosures, indicating what a great corporate citizen this company is).

If you can get past the fact that you’re investing in a wildly harmful product that ESG index providers love based on the aforementioned Triple-A rating, then the guidance for the 2025 financial year will be of relevance to you. Constant currency revenue growth is expected to be just 1%. On the assumption of a 1.5% currency headwind, they indicate adjusted profit from operations up by between 1.5% and 2.5%. The currency situation is a problem though, with an expected impact of 2% on full-year numbers and 3% on half-year numbers. In other words, growth as reported could be close to zero for the year.

The focus, as always, is on delivering free cash flow. Based on the mid-term growth algorithm of 3% to 5% revenue and 4% to 6% in adjusted profit from operations, they expect to generate £50 billion in free cash flow from 2024 to 2030.

The weaker rand does wonders for the local share price, as British American Tobacco is a rand hedge. The share price is up a whopping 50% over 12 months and around 19% year-to-date.

Clicks banks another strong set of numbers (JSE: CLS)

Even UPD put in a better performance this time around

Clicks is one of the most impressive businesses on the local market. People know this, which is why you’ll typically find it trading at a huge Price/Earnings multiple of over 30x.

To support this multiple, we find growth in group turnover of 6.2% and diluted HEPS of 13.2%. As an indication of the cash quality of earnings, the interim dividend was up by 13.3%. Numbers like that are excellent, especially accompanied by return on equity being 200 basis points higher at a massive 46.2%!

Digging deeper, retail turnover growth of 6.4% was supported by solid comparable store turnover growth of 5.4%. If you adjust for Unicorn Pharmaceuticals, which was sold in the prior year, growth was actually 8.3%. That’s a strong number. This performance was further enhanced by a 50 basis points improvement in margin, driven by a greater penetration rate of private label products. Retail costs grew by 8.5% (and 6.0% on a comparable store basis), so retail trading margin was stable at 9.1%.

On the wholesale side, distribution turnover increased by 7.6% as things came right at UPD. Margins were down by 20 basis points though, impacted by modest increases in the single exit price of medicines – a regulatory minefield of note. Distribution costs were only up by 1.6% though, as the base period included major systems implementation costs. This led to trading margin improving by 20 basis points to 2.6%.

As you can see, the retail business runs at much higher margins than the wholesale business, so a relatively stronger performance in retail leads to a better margin mix at group level. Here’s the breakdown of retail sales, to give you a sense of how the different categories perform:

And no, I have no idea why they don’t include the percentage change per line item. I’ve done the maths to save you the irritation of getting the calculator out. The laggards were general merchandise (up 3.7%) and pharmacy (4.1%), while the strong performers were beauty and personal care (7.4%) and especially front shop health (9.1%).

Although general merchandise sales are most at risk in my opinion, given how easy it is to buy similar or competing products anywhere, it’s also the smallest part of retail sales with a contribution of 15.4%. The excellent Clicks rewards system is a defensive underpin here, encouraging shoppers to make general merchandise purchases at Clicks.

In support of the dividend increasing in line with HEPS, net working capital days only increased slightly from 44 days to 45 days. They generated cash from operations of R1.7 billion and had capital expenditure of R222 million. This is about as good an example as you’ll find of a cash cow.

Clicks has noted that a VAT increase will have a negative impact on consumer spending. Despite this, they expect to open 45 – 55 stores and pharmacies for the year, with a medium-term target of reaching 1,200 stores. They expect diluted HEPS to grow by between 11% and 16% for the full financial year.

This is why the share price is now roughly flat for the year, despite all the macroeconomic turmoil. Clicks is a defensive stock, provided they can continue to keep the front shop sales ticking over. For now at least, there’s no reason to believe that they can’t.

Copper 360 has restructured short-term debt into long-term debt (JSE: CPR)

This is a major step for the balance sheet

Copper 360 has restructured short-term debt obligations of R267.6 million. They’ve replaced this debt with long-term debt that has a funding rate linked to changes in the copper price. Although this isn’t great when copper prices go up, as it limits the financial leverage in the business, it does wonders for managing downside risk. In junior mining, it’s all about risk management.

It’s still a much better deal than the immense funding rate of 24.3% per annum on the current debt, which is right up there with personal loans! The restructured debt rate is 11% per annum at current prices and can go as high as 17.4% if copper prices reach $15,000 per tonne. The rate is capped there, so any further price increases would be purely for the benefit of Copper 360. In case you’re wondering, the base price per tonne that delivers the 11% funding cost is $9,652.

In addition to the funding benefit, Copper 360 has managed to extend the term of the debt considerably. The current package has R172.3 million due and payable now, with R15 million due on 31 July this year and the remaining R80.3 million due in February 2026. The new structure repackages all of this into a five-year bond that will be listed on a local exchange.

This is a perfect example of the vibrant local debt market that I discussed with Ian Norden of Intengo Market in a recent podcast.

Insimbi is in a loss-making position (JSE: ISB)

Here’s a good example of how to interpret trading statements

Insimbi previously released a trading statement in which they noted that earnings would drop by at least 20%. Now, as I often remind you, the words “at least” tend to work really hard in these situations. “At least 20%” is the minimum required disclosure under JSE rules, so the move can be a lot higher.

We now have a perfect example of this from the company, with an updated trading statement reflecting a drop in HEPS of “more than 100%” – an acknowledgement that (1) they are now loss-making and (2) they still don’t know to what extent. Clearly, the year ended February was a disaster.

Although some of this has to do with accounting technicalities related to corporate activity, the reality is that the aluminium and steel sectors are in trouble and Insimbi just isn’t sitting on a strong enough balance sheet to make up for it. Detailed results are due on 30 May.

Jubilee Metals released an operational update (JSE: JBL)

If you’re wondering why it sounds so positive, it’s because it only covers South Africa

As I read this announcement, I couldn’t understand why the overall narrative was so positive. After all, it felt like it was just a few months ago when Jubilee Metals was under pressure with disappointing production figures due to power issues in Zambia.

Therein lies the nuance: the latest operational update covers only South Africa. When they talk about being on track to exceed performance targets and all the other positive things in this announcement, be aware that this excludes the problems in Zambia.

So, based on this very flattering way to view the group, chrome production was up 10.7% for the quarter and 26.7% for the nine months year-to-date. On the PGM side, the quarter was up a substantial 34% and the nine months year-to-date view is an increase of 3.6%.

Based on this, production guidance for South Africa has been increased for FY25. Chrome guidance is up from 1.65Mt to 1.85Mt. PGM guidance has increased from 36,000oz to 38,000oz. In the case of chrome, this increase has been driven by the Thutse project. In PGMs, the recently announced joint partnership for excess PGM feed stock has driven the increase.

But as I say, no word on Zambia…

It’s hard to fault PSG Financial Services (JSE: KST)

These are excellent growth numbers

PSG Financial Services released results for the year ended February 2025. They are rather excellent, with recurring HEPS up by 25% and the total dividend up 24%. Return on equity was 26.6%. What’s not to love?

Underpinning this result were metrics like growth in assets under management of 15.7%, along with a 9.2% increase in gross written premium at PSG Insure. These are solid top-line growth drivers, which are then accompanied by cost management practices that leverage these percentage moves into much higher moves in profit. Speaking of costs, the standout spend was in technology and infrastructure (up 18.6%), with fixed remuneration up 6.1%. This isn’t any different to what we are seeing in other financial services businesses. At least PSG is actually growing after spending this kind of money on tech, whereas many others are not.

Importantly, performance fees were 3.7% of headline earnings in this period, up from 2.8% in the comparable period. We can therefore safely conclude that the vast majority of earnings are recurring in nature.

If we dig deeper into divisional performance, PSG Wealth saw recurring headline earnings increase by 14.5%. This is the power of the network of advisors that PSG has built, with an enormous R20.6 billion in positive net inflows in the year.

PSG Asset Management was up 36.9%, with growth in the mid to high teens across assets under management and assets under administration. Once again, there were positive net inflows, something that very few local asset management can point to at the moment.

PSG Insure was the best of the lot, up 41.4%. Although gross written premium growth was “only” 9.2% as mentioned earlier, the underwriting performance was fantastic with a net underwriting margin of 12.7% vs. 9.7% in the prior period. When insurance businesses do well, they do really well.

These strong performances across the board were made even better by a 1% reduction in the weighted average number of shares outstanding, helping to boost HEPS.

Clearly, this is an impressive performance.

Nibbles:

  • Director dealings:
    • Des de Beer bought yet another R19.5 million of shares in Lighthouse Properties (JSE: LTE). Sometimes I wonder what else he buys out there!
    • The CEO of AVI (JSE: AVI) received share awards and sold the whole lot worth R3.92 million.
  • Telemasters (JSE: TLM) renewed the cautionary announcement regarding the approach made by a B-BBEE investor to the two largest existing shareholders in Telemasters. The reason for the cautionary is that if a deal does go ahead here, it would trigger a change of control and mandatory offer to all shareholders.
  • At any point in time, there are various companies undertaking share repurchase program on the market. Montauk Renewables (JSE: MKR) has joined the fray, with the board authorising a program of up to $5 million in shares.
  • The Tongaat Hulett (JSE: TON) business rescue plan achieved an important milestone, with the Competition and Tariff Commission of Zimbabwe approving the transaction with the Vision Parties.
  • Interestingly, Merchantec Capital has resigned as joint sponsor of AYO Technology (JSE: AYO). This leaves Vunani as the company’s sole sponsor.
  • Primeserv (JSE: PMV) is moving its listing to the General Segment of the JSE, as we’ve seen from many other small- and medium-cap companies recently.

Who’s doing what this week in the South African M&A space?

Marylou Greig
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Who’s doing what this week in the South African M&A space?

Exchange-Listed Companies

Vukile Property Fund, through its 99.5% held subsidiary Castellana Properties, has acquired the shopping centre known as Forum Madeira, located in Funchal, Portugal. Vukile will pay DWS Grundbesitz, a German alternative investment fund manager, €72,82 million for the centre. The acquisition will be funded by a combination of existing cash resource and in-country debt of €28 million, representing a loan-to-value ratio of c.38.5%.

Delta Property Fund has disposed of 88 Field Street (88 Joe Slovo) in Durban to Jordisys for a cash consideration of R76 million. The disposal is classified as a category 1 transaction and as such requires shareholder approval.

Unlisted Companies

South African payments infrastructure startup Stitch has raised US$55 million in a Series B round led by QED Investors with participation from Flourish Ventures, Glynn Capital and Norrsken22, joining existing backers Ribbit Capital, PayPal Ventures, firstminute capital and The Raba Partnership. This latest round brings total funding secured since its launch in 2021 to $107 million. The funding will be used to expand in-person payments and further expand the online payments suite with potential acquisitions.

Mergence Investment Managers, a Cape-based, black-owned institutional fund manager and Scalar International, have announced the launch of a US$150 million private equity fund to finance clean energy and digital infrastructure in sub-Saharan Africa. The fund will invest in energy-efficient/decarbonisation projects in the private commercial and industrial (C&I) sector by supporting the emergence of first-tier, indigenous, women- and youth-led companies that are developing new technologies in clean energy solutions and digital infrastructure. At least 25% of the fund’s investment will be into underserved communities.

New GX Capital and RMB Ventures have launched Airnergize Capital Fund I having secured an initial commitment of R2,4 billion (US$120 million). The fund, which is focused on accelerating clean technology solutions in renewable energy, gas and water infrastructure across South Africa, is targeting a final close of R4 billion. Airnergize Capital will be managed by New GX Capital.

DealMakers is SA’s quarterly M&A publication.
www.dealmakerssouthafrica.com

Weekly corporate finance activity by SA exchange-listed companies

Marylou Greig
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Weekly corporate finance activity by SA exchange-listed companies

In a move to increase its exposure to SA Corporate Real Estate (SAC), Castleview Property Fund acquired a further 274,240,644 SAC shares at an average purchase price of R2.76 per share for an aggregate consideration of R765,9 million. The purchase was executed by way of on-market block trades on the JSE.

Gemfields will seek shareholder approval to issue 556,203,396 new shares to raise c.US$30 million. The rights issue is fully underwritten by Gemfields’ two largest shareholders, Assore International and Rational Expectations. If approved, the shares will be offered at an issue price of 4.22 pence and R1.0686 per new share, on a 10 new shares for every 21 existing shares held basis. Assore and Rational have also entered into pre-funding agreements with Gemfields whereby each will make loans to the company equivalent to their pro-rate entitlement in the rights issue in the amounts of $8,74 million and $4,65 million respectively. The loans will provide an immediate working capital injection pending the completion of the proposed rights issue.

Lighthouse Properties will issue 16,876,042 shares to shareholders receiving the scrip dividend option in lieu of a final cash dividend, resulting in a capitalisation of the distributable retained profits in the company of R126,74 million.

The JSE has advised Wesizwe Platinum shareholders that the company has failed to submit its financial statements within the three-month period stipulated in the JSE’s listing requirements. The company has until the 2 May 2025 to do so failing which its listing may be suspended.

The JSE has approved the transfer of the listing of Primeserv to the General Segment of Main Board with effect from 22 April 2025. The listing requirements in this segment are less onerous for the smaller and mid-cap firms.

This week the following companies repurchased shares:

Montauk Renewables has announced a share repurchase programme to buy back up to US$5 million of the Company’s issued shares, effective immediately and with no date of termination.

Over the period 3 April to 10 April 2025, Invicta repurchased 3,117,193 shares at an average price per share of R30.94. The shares, which represent 3.39% of the shares in issue, will be delisted and cancelled. The R96,43 million paid for the repurchased shares was funded from cash generated from operations. In terms of the general authority granted by shareholders, the company may repurchase a further 11,32 million shares.

On March 6, 2025, Ninety One plc announced that it would undertake a repurchase programme of up to £30 million. The shares will be purchased in the open market and cancelled to reduce the Company’s ordinary share capital. This week the company repurchased a further 680,242 ordinary shares at an average price of 128 pence for an aggregate £872,446.

In its annual financial statements released in August 2024, South32 announced that it would increase its capital management programme by US$200 million, to be returned via an on-market share buy-back. This week 1,070,748 shares were repurchased at an aggregate cost of A$2,92 million.

On 19 February 2025, Glencore plc announced the commencement of a new US$1 billion share buyback programme, with the intended completion by the time of the Group’s interim results announcement in August 2025. This week the company repurchased 14,000,000 shares at an average price per share of £2.56 for an aggregate £35,82 million.

In October 2024, Anheuser-Busch InBev announced a US$2 billion share buy-back programme to be executed within the next 12 months which will result in the repurchase of c.31,7 million shares. The shares acquired will be kept as treasury shares to fulfil future share delivery commitments under the group’s stock ownership plans. During the period 7 April up to and including 11 April 2025, the group repurchased 3,031,404 shares at an average price of €54.15 per share for a total consideration of €164,16 million.

Hammerson plc continued with its programme to purchase its ordinary shares up to a maximum consideration of £140 million. The sole purpose of the buyback programme is to reduce the company’s share capital. This week the company repurchased 222,350 shares at an average price per share of 238 pence for an aggregate £524,567.

In line with its share buyback programme announced in March 2024, British American Tobacco plc this week repurchased a further 521,925 shares at an average price of £31.43 per share for an aggregate £16,4 million.

During the period 7 to 11 April 2025, Prosus repurchased a further 9,604,234 Prosus shares for an aggregate €352,88 million and Naspers, a further 567,607 Naspers shares for a total consideration of R2,43 billion.

Two companies issued profit warnings this week: Gemfields and Insimbi Industrial.

During the week two companies issued cautionary notices: Conduit Capital and TeleMasters.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Who’s doing what in the African M&A and debt financing space?

Vanessa Aitken
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Who’s doing what in the African M&A and debt financing space?

DealMakers AFRICA

Fortuna Mining Corp, a Canadian precious metals company, has entered into an agreement to sell its interest in Roxgold Sanu SA, which owns and operates the Yaramoko Mine, together with the Company’s three other wholly-owned Burkina Faso subsidiaries which hold exploration permits in the West African country, for approximately US$130 million. Upon completion of the transaction, Fortuna will cease to have any operations in Burkina Faso.

Pan-African telecommunications company, AXIAN Telecom, has received a US$100 million financing package from The European Investment Bank. The funding will support the expansion of its mobile broadband network infrastructure across Tanzania and Madagascar – expanding the 4G mobile broadband network infrastructure across the two countries as well as continuing the introduction of 5G coverage. $60 million of the financing will benefit Tanzania and $40 million will go to Madagascar.

Nigerian renewable energy company, Arnergy Solar, has closed an US$18 million Series B investment round led by CardinalStone Capital Advisers Growth Fund. Other participants in the round include British International Investment and existing investors, Norfund, Breakthrough Energy Ventures, EDFI MC, and All On.

Nairobi-based, Purple Elephant Ventures, a venture studio dedicated to African tourism innovation, has secured an additional US$500,000 investment from Alphatron, bringing its total seed round to US$5 million. Alphatron is a Dutch single-family office under the Alphatron Group.

DealMakers AFRICA is the continent’s quarterly M&A publication
www.dealmakersafrica.com

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