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GHOST WRAP – The JSE Winners’ Club in 2025

The Finance Ghost
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GHOST WRAP – The JSE Winners’ Club in 2025

At the halfway mark in 2025, we’ve lived through some huge geopolitical shifts. The world’s gaze has shifted beyond just the US market. This opens up new opportunities of course, but finding those gems isn’t easy.

Many investors choose to stick with what they know in times like these. This means homegrown favourites on the JSE. But which stocks have been the big winners thus far this year, and what do they have in common?

In this episode, I explain how the key themes of gold, platinum and telcos have proven to be the rising tide that lifts all boats in those industries. There have also been rewards for stock-pickers beyond those sectors, with the examples of Naspers/Prosus, OUTsurance and WeBuyCars all being interesting. 

The Ghost Wrap podcast is proudly brought to you by Forvis Mazars, a leading international audit, tax and advisory firm with a national footprint within South Africa. Visit the Forvis Mazars website for more information.

Remember, nothing you hear on this podcast is investment advice, nor does it reflect the views of Forvis Mazars in South Africa. Always speak to your financial advisor.

Listen to the podcast here:

Transcript:

My thanks as always to Forvis Mazars in South Africa for making Ghost Wrap possible.

We are at the halfway mark of the year and what a year it’s been. US politics have been at the forefront of market movements, along with ongoing conflicts in the Middle East in particular. Gold has continued to shine and there are even strong positive movements in platinum if you can believe it. Many commodities outside of those two have had a tough time though, putting downstream pressure on other players in the value chain.

In the consumer sector in South Africa, the main trend has been an uptick in credit sales, facilitated by retailers with more advanced credit services than before and of course the ever-growing popularity of BNPL, which appears to be exploding onto the scene in South Africa. This is a serious disruptive force for banks, as providing credit at point of sale is vastly more powerful – and arguably more dangerous – than extending general credit lines. This will be an interesting trend to watch.

Our interest rates have remained frustratingly high, although this has contributed to a stronger rand vs. the US dollar. The rand has strengthened by over 5% against the US Dollar on a year-to-date basis, although we can’t say the same for currencies like the Great British Pound where we’ve gone the other way. A weaker dollar amidst inflation concerns and an overall worry around the concept of “US Exceptionalism” – and the trade war of course – have been fascinating features in the market. But if you cast the net wider to European equities, it’s genuinely difficult to find much to get excited about.

And in all this noise, there have still been some great stories on the JSE. In this Ghost Wrap, I’ll be looking at companies that have returned at least 20% year-to-date – a genuinely great performance. In several cases as I’ll highlight here, the returns are much higher.

Welcome to the winners’ club. This is not necessarily an exhaustive list, but these are some of the names that I think have been really interesting this year at the halfway mark.

The Goldies

Not much to discuss here that you haven’t heard before, other than to point out that gold has continued its fabulous run – in a world worried about inflation and conflict, along with a weakening US Dollar, gold has been your friend. This means that names like Gold Fields, Harmony Gold, AngloGold and others have all had a great time this year. If you’ve been in gold, you’ve been smiling. You’ve been firmly in the winner’s club.

The good news is that these companies are just printing cash at the moment, paying down debt where they have any and coming out with much stronger balance sheets as a result. Who knows how long this particular strength will continue for, but gold does have a very long track record of gently ticking up – and that’s good news for investors.

The Plats

We now get to the plats, where there’s a specific theme that links all of them together and explains a bunch of names being in this illustrious winners’ club. That of course is the platinum price – platinum futures have gone ballistic, with a 44% climb year-to-date in USD terms, with platinum as the obvious one to focus on in the PGM basket. I’ve seen a bunch of explanations and theories for this, but it really comes down to the same thing every time with these commodities: supply and demand dynamics. PGMs have been horrible for a long time, which means that limited additional supply comes on-stream. All you then need is some kind of demand boost and suddenly those prices jump.

There are also technical arguments being made about punters looking beyond just gold for inflation hedges, with silver and platinum as natural landing points here. There are also references being made to jewellery demand, which I think makes more sense, as gold prices have gone so high that platinum becomes an interesting alternative in that space, albeit a different colour.

Whatever the reason, names like Impala Platinum, Northam Platinum and Sibanye-Stillwater are finally doing well. If this carries on, my Sibanye position might even dig itself out of a hole. I can only dream.

The Telcos

The third category to touch on is the telcos. This is the last broad category that I want to focus on, proving once again that if you pick the right sector, you don’t always have to pick the perfect stock to get really strong returns. In telcos, which by the way has generally been a very difficult place to make sustainable returns, things are so good that the board of MTN Zakhele Futhi (the B-BBEE scheme linked to MTN shares) chose to unwind their scheme i.e. deliver returns to investors just several months after the scheme had to be restructured to avoid maturing underwater or close to underwater. That’s how significant the rally has been.

MTN is up 42% year-to-date, Vodacom has done 33% and those who picked the riskier names have done even better, with Telkom up 50% and Blue Label Telecoms as the clear winner, up a whopping 150% thanks to the market’s love affair with the Cell C strategy.

Now, the reasons for the performance in the sector vary. Telkom has been a turnaround story, as has Blue Label if we are being honest. Vodacom and MTN offer broader exposure to both South Africa and other regions in Africa, with a generally weaker US Dollar giving some breathing room to many of those economies. Again, the macroeconomics played a big role here.

A few stock picks

What you’ve hopefully taken from this thus far is that you simply cannot ignore geopolitics and macroeconomics in your portfolio. You didn’t have to make heroic picks in gold or platinum or even telcos – you could’ve done very well just owning a couple of names in one, two or, if you’re really lucky, all three sectors. I had exposure to two of them thankfully, being a Pan African Resources position that I tactically took earlier this year (exposure to gold) and a long-suffering Sibanye-Stillwater position that I’m starting to think might even get its head above water vs. my average in-price.

Among the three names I’m going to finish off with, I also hold two: Prosus and WeBuyCars. We can lump Naspers in with Prosus of course, but that doesn’t count as the third name as it’s really just the same thing. No, the third name I want to mention is OUTsurance, which has been a solid player this year that I don’t have exposure to at this time.

Let’s do Naspers/Prosus.  The company just held a capital markets day in which they set out their strategy based on building regional ecosystems that have the ability to go and use centralised AI models using data inputs from multiple apps. At an extreme, they think that user behaviour on an app in say Latin America might teach them something useful for an app in perhaps Eastern Europe. Look, the jury is out on this. I think there might be some AI benefits to come, but probably not to the extent that AI evangelists would believe. Where I am very bullish is on three other points: (1) growth ex-US in this environment, (2) adoption of eCommerce and platforms in general by consumers and (3) the leadership style and approach of Naspers/Prosus CEO Fabricio Bloisi. So far, so good – that belief is working out very well for me.

WeBuyCars is another favourite of mine, up 31% year-to-date. With so much noise and disruption in the automotive sector, this remains my favourite overall play. They don’t represent new car brands in South Africa. Instead, they focus on providing the most efficient way to churn the existing base of used cars in our country. I must say though, I saw some concerning headlines recently around how they might consider selling new cars in time to come. That would probably be the trigger for me to sell my position or at least trim it. I sincerely hope that they stick to their knitting and don’t get tempted into less lucrative business models. A big part of that share price’s success is that they have not been anywhere near new car sales.

Finally, OUTsurance. This is one of the very few South African success stories in Australia by the way, mainly because they built that business from the ground-up rather than acquired it for a silly number. OUTsurance is a company that simply just gets on with it. The interims were released in March and the next major release will be for the year-ended June, which will come out by September. Diluted HEPS was up 46.1% in the interim period, so I wouldn’t be surprised to see a trading statement soon, which would be triggered by an expected move of at least 20%. Naturally, the complete lack of a trading statement would indicate a disastrous second half of the year, but there’s no obvious reason why that would’ve been the case, so I think we will see a trading statement in the next couple of months. Short-term insurance is all about shifting risk from the customer to the underwriter though, so one must always remember the risk of major loss events – and this can sometimes be something like the weather.

That concludes this episode of Ghost Wrap. The winners’ club has delivered some strong returns for the first half of the year. Of course, the big question is whether these winners can keep on delivering in the second half of the year, and whether new winners can emerge. The markets certainly keep things interesting!

Ghost Bites (FirstRand | Primeserv)

The Finance Ghost
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Ghost Bites (FirstRand | Primeserv)

FirstRand is reminding the market why it trades at a premium valuation (JSE: FSR)

They are performing ahead of the guidance given in March this year

Of course, the first thing is do is to go and look at what FirstRand told the market in the interim results, as the flavour of the latest announcement is very much that things have improved since then.

Essentially, they guided for weaker net interest income (NII) growth in the second half of the year, but higher non-interest revenue growth, with the credit loss ratio trending lower as well. Operating expenses were expected to increase below inflation (with the motor commission provision in the base – this becomes very important later), while earnings growth should be slightly ahead of the long-term guidance of GDP +0% to 3%. Finally, return on equity (ROE) was expected to be in the target range of 18% to 22%.

So, what’s changed? In terms of the core banking business, FirstRand is telling a more bullish story around loans and advances than we’ve seen at peers, although one has to be careful in interpreting fluffy paragraphs rather than hard numbers. It’s important to remember that FirstRand operates in many more regions than just South Africa, so the comments on loans and advances at e.g. Nedbank give a far more focused view on our country than what you’ll get from FirstRand. Something I will highlight from FirstRand is that demand for home loans has been quite weak, whereas vehicle finance through Wesbank is performing well.

Despite the shift in portfolio mix towards corporate and commercial loans that are typically lower margin than retail loans, FirstRand expects NII to be better than they expected in the March guidance. On the NIR front, they are in line with guidance, thanks to great businesses in the group like RMB.

In terms of the credit loss ratio, they remain at the bottom end of their through-the-cycle range and broadly in line with guidance, although my read on the narrative is that it isn’t going quite as well as they had hoped. Retail impairments are slightly up (driven by macroeconomic volatility) and a recent focus on lending to SMEs has led to a natural increase in risk in the book.

But here’s the big win vs. guidance: operating expenses are “significantly better” than guided. With the UK motor commission provision in the base, operating expense growth has been negative. Even with adjusting for the UK motor commission provision in the base, they are keeping cost growth below inflation. It feels like the original guidance was deliberately conservative around the provision, as at no stage was anyone expecting that costs excluding the provision would be negative. The overall point here is that the provision remains uncertain, with the UK Supreme Court is expected to give judgement at the end of July 2025. Control over general operating costs has been good.

The combination of slightly better NII and much better cost control has led to a sharp increase in guidance when it comes to earnings. They now expect full-year growth of low double-digit to mid-teens, which is well above the long-term growth guidance. ROE is still expected to be in the 18% to 22% range.

This is a good reminder of why FirstRand trades at a premium valuation vs. peers. Simply, it’s a better business.

Primeserv flags higher earnings (JSE: PMV)

Perhaps the share price will see some love on Thursday

Business support services group Primeserv released an announcement after market close on Wednesday that should result in happy shareholders. A trading statement for the year ended March 2025 reveals that HEPS has increased by between 24% and 34% vs. the prior year.

This is an acceleration from the interim numbers, where HEPS was up 17% and the interim dividend increased by 20%, so cash quality of earnings was strong.

Although there isn’t much liquidity in this stock on a daily basis, there is at least some. It will be interesting to see if there’s some share price action on Thursday based on this announcement.

Nibbles:

  • Director dealings:
    • Directors of ADvTECH (JSE: ADH) have sold shares worth R4.9 million. This comes after recent sales by directors of a major subsidiary in the group. This is a bearish sign.
    • Christo Wiese has bought more shares in Brait (JSE: BAT), picking up shares worth nearly R1.2 million through Titan Premier Investments.
    • Des de Beer bought shares in Lighthouse Properties (JSE: LTE) worth R860k.
    • An associate of a director of a major subsidiary of PSG Financial Services (JSE: KST) bought shares worth R194k.
    • The CEO of Vunani (JSE: VUN) bought shares in the company worth R65.7k.
  • In a weirdly small trade, an associate of Sean Riskowitz bought shares in Finbond (JSE: FGL) worth R1.2k.
  • There’s a very interesting new director appointment at Gemfields (JSE: GML). Rational Expectations (one of the two major shareholders that acted as underwriters in the recent rights offer) has appointed Louis du Preez as a board representative. Yes, the same Louis du Preez who was CEO of Steinhoff from 2019 as part of the restructuring of that catastrophe. As a lawyer with immense expertise in restructuring, my read on this is that Rational Expectations has sent in a bulldog to make very sure that Gemfields doesn’t get itself into trouble again. Or, there’s some kind of broader plan afoot to restructure the company. Either way, it’s a director appointment worth mentioning.
  • DRDGOLD (JSE: DRD) has announced Henriette Hooijer as CFO Designate. This is an internal appointment, which is always great to see. Current CFO Riaan Davel will step down at the end of the FY2025 reporting season, but will consult to the company until January 2027. Hooijer will take office from 1 February 2026.
  • Oando (JSE: OAO) has been catching up on its financial reporting. They’ve finally released the quarterly report for March 2025, so they are now up to date. Although profit more than doubled year-on-year, they could only manage HEPS of 0.01 Nigerian Naira.
  • Alexander Forbes (JSE: AFH) obtained approval from the SARB for their special dividend, with a payment date of 21 July.

Ghost Bites (Attacq | Capital Appreciation | Grindrod | Nedbank | Sephaku | Sirius Real Estate)

The Finance Ghost
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Ghost Bites (Attacq | Capital Appreciation | Grindrod | Nedbank | Sephaku | Sirius Real Estate)

Attacq is on track to meet full-year guidance for distributable income per share (JSE: ATT)

This pre-close update comes at the perfect time for Unlock the Stock

Attacq has released a pre-close update dealing with the year ending June 2025. The timing is very helpful, as you can engage with the management team on Unlock the Stock this week. Attendance is free, but you must register here.

The key insight is that the group is on track for growth in distributable income per share (DIPS) of between 24.0% and 27.0%. There have been some major corporate actions sitting behind this number, as this is obviously not an indication of maintainable growth. The interim period saw the bulk of the increase, when DIPS was up by 49.1%.

Digging deeper into the pre-close update reveals a combination of organic growth metrics (like monthly trading density growth of between 2.2% and 7.2% in the second half of the year) and significant progress made in the development pipeline as well. Weighted average annual trading density growth of 3.8% is well below 5.8% in the prior year, so that’s something to keep a close eye on.

An encouraging sign is that occupancy in the “collaboration hubs” (what everyone else just calls office properties) has ticked higher:

They’ve had success in the leasing of the new office development The Ingress, noting that the property will achieve the required rental yield. This is another positive data point for the office sector, although this is a high quality building in a particularly sought-after area, so you have to be careful in assuming that the entire sector is doing better.

The next development that needs to do well is Aspire Waterfall City, which is a mixed-use development that has a large residential component (roughly 217 units). Given the unique nature of the property and where it is located, they will probably make a success of this.

Happily, the weighted-average cost of debt has dropped by 50 basis points from June 2024 to April 2025 and they are in the process of refinancing further facilities at lower margins. There are substantial debt maturities in the next 24 months, so this is a good time to be achieving better rates.

The market appreciates Capital Appreciation (JSE: CTA)

The Payments division is ensuring they live up to their name

In the year ended March 2025, Capital Appreciation grew revenue by 7.6%. Now, that might not sound like much, but it looks very juicy when you combine it with an 80 basis points increase in gross profit margin and then a whopping 340 basis points increase in EBITDA margin. This is enough to drive a 23.3% increase in EBITDA and then a 25.2% increase in HEPS. Lovely.

The high growth period has put strain on working capital, with cash generated from operations down by 34.8%. Despite this, the total dividend for the year came in 20% higher at 12 cents. Dividend growth has lagged HEPS growth though, so there is some caution around the balance sheet (despite the high current cash balance) and ensuring that they have cash available to support growth.

Growth is the thing they certainly aren’t short of, with an 18.8% increase in the number of terminals in the hands of customers. The base of installed devices is what drives revenue of course. Income from terminal sales increased 41.1% and from payments increased 18.6%.

The Software division is performing below expectations at the moment, although it did get better in the second half of the year relative to the first half. To give you an idea of the variance in performance across the divisions, Payments grew EBITDA by 25.4% and Software saw EBITDA fall by 31.8%!

The recent Dariel acquisition may be cause for concern, as the company achieved only 55% of the EBITDA warranty that formed the basis for the earn-out payment. Although that helps in terms of reducing the final purchase price, it would be far better to see strong performance in that business.

I think this chart is a nice way to finish off, showing how developed the South African economy is vs. some of our peers in terms of moving past cash transactions:

Can Grindrod maintain the second quarter momentum? (JSE: GND)

These numbers look weak and the CEO just left to rather go and be the CFO of Kumba

A few eyebrows were raised when news broke of Xolani Mbambo stepping down as CEO of Grindrod to go and be the CFO of Kumba Iron Ore instead. Sure, Kumba is a very large group, but you don’t often see a move from CEO to CFO. To add to this bearishness around Grindrod, the pre-close statement by the group isn’t particularly good.

The challenge is that it’s hard to know whether Grindrod will maintain their exit velocity. The second quarter was better than the first quarter, so a continuation of that trend would lead to a decent financial year overall.

The choppy Grindrod share price reflects these concerns. This isn’t a chart that I would want to have a long position in right now:

With a weak global environment for most commodities in the first few months of 2025, the dry-bulk terminal at the Port of Maputo saw a drop in exports from 5.8 million tonnes per annum to 5.2 million tonnes per annum for the five months to May. But there were record volumes in May, so again it comes down to exit velocity.

In terms of the financial performance, Grindrod’s share of earnings from the Port of Maputo fell from R178 million to R165.9 million. Although EBITDA margin in the Port and Terminals segment increased from 33% to 35%, the Logistics EBITDA margin was down from 32% to 25%.

Despite the acquisition of the remaining 35% interest in the Matola terminal for R1.4 billion in this period, Grindrod’s group net debt is steady at R0.4 billion. This is despite a sharp increase in gross debt over the five months from R2.9 billion to R3.7 billion.

I would keep a close eye on this one.

A soft five months for Nedbank (JSE: NED)

Unlike at competitor Standard Bank, not-interest revenue isn’t saving the day

We are in a very awkward environment for the banks. Interest rates have come down just enough to start hurting their net interest margins, but not enough to drive meaningful demand for loans and advances. This immediately puts net interest income (NII) – the lifeblood of banks – under pressure. Now, this pressure can be mitigated by a strong performance in non-interest revenue (NIR), which is also a major boost to return on equity (ROE). This is what we saw play out at Standard Bank in their recent update. Sadly, Nedbank hasn’t enjoyed the same trajectory in NIR, but they’ve suffered the same fate in NII.

In terms of economic expectations, Nedbank reckons that South African GDP will grow just 1.0% in 2025, down from their original expectation of 1.4%. They specifically highlight weakness in the mining and manufacturing sectors. It’s so interesting that consumer spending has been strong this year, but I can’t see the consumer trend continuing if the underlying economy is weak. Notably, they expect a 25 basis points interest rate cut in July this year, after which rates will remain steady.

The broader economic environment led to just 5% growth in corporate loans and advances in the first quarter and then 7.5% in April, albeit off a weaker base in that month. Household credit growth was just 3.0%. Dovetailed with the recent trend in results at retailers where credit sales are doing well, this tells me that South Africans are borrowing from retailers (and buy-now-pay-later providers) to buy clothes, rather than from banks to buy cars and homes.

For the five months to May 2025, headline earnings came in flat. This is thanks to the lack of growth in NII and NIR, with even an improvement in the credit loss ratio being unable to offset this impact. Essentially, the increase in income was only enough to cover the typical growth in expenses.

Important metrics to note include NII growth in the low single digits, NIR growth above mid-single digits and the credit loss ratio within the top half of the through-the-cycle target range of 60 basis points to 100 basis points.

Nedbank’s strong performance on the market on the day of these results was thanks to global geopolitical factors, not these numbers. The share price is down 8% year-to-date. It’s worth noting that Absa is down 6.6% year-to-date, so neither of them are doing well at the moment.

Sephaku shareholders had a good day (JSE: SEP)

The market responded positively to a strong trading statement

Sephaku released a trading statement for the year ended March 2025. It guides an expected increase in HEPS of between 17% and 24%, which means coming in at between 30.0 cents and 32.0 cents vs. 25.71 cents in the base period.

This outcome was driven by improved results at both Métier and Sephaku Cement. Métier is having a better time of things right now (they talk about “strong growth” in revenue and profit), while Sephaku Cement was happy to just return to the previous year’s financial performance.

The share price closed 6.3% higher, which means that it is finally in the green year-to-date after a tough run.

Sirius Real Estate further diversifies its sources of debt (JSE: SRE)

A new credit facility sees a couple of banks lending to Sirius for the first time

Property funds need constant access to capital, as the way they grow is through property acquisitions. Although they can “recycle capital” by selling properties and reinvesting the proceeds, this is harder than raising money for new deals. Of course, being able to raise capital depends on management’s track record, so only the best funds are able to successfully raise – in a healthy market cycle, that is. When you see the sub-standard funds executing oversubscribed bookbuilds, it’s time to worry.

Thankfully, Sirius Real Estate is anything but sub-standard. They have a particularly good track record when it comes to active asset management in the property space, using various techniques to improve the valuation yield on properties over the period of ownership. This means that the market is happy to support regular equity capital raises.

Of course, a big part of the appeal of property funds is their use of leverage, so it’s equally important that they can raise debt funding as required. Sirius is also having no problems with this, with the latest example being a new €150 million unsecured revolving credit facility with a three-year term. Instead of being linked to a specific property or deal, this facility is simply available for Sirius to access as and when required. This makes it a helpful source of finance.

The facility is priced at 120 basis points above short-term EURIBOR, which in current pricing means 3.2% in euros. Importantly, it brings BNP Paribas into the fold as lenders to Sirius for the first time, with ABN AMRO also lending to the group for the first time in over a decade. The final bank in the consortium is HSBC

This is the firepower that Sirius needs to keep executing deals in Germany and the UK at a debt:equity ratio that makes the returns work for investors.

Nibbles:

  • Sun International (JSE: SUI) has managed to jump through the hoops required to get a work permit for Ulrik Bengtsson, the incoming CEO. He will take up the new role on 1 July 2025.
  • If you’re interested in Naspers / Prosus (JSE: NPN | JSE: PRX), then be aware that the company is hosting a capital markets day in London on Wednesday 25th June. The presentation will be available after the event and I’ll be sure to cover some of the most interesting insights here in Ghost Bites.
  • Vukile Property Fund (JSE: VKE) has decided to wind up the share purchase plan, in which loan funding was provided to directors and key executives to buy shares. This is fairly common in the property sector. The problem is that the scheme pre-dates COVID and hence the returns were very disappointing. By letting it run this long, participants are at least mostly at break-even or slightly in the green, although a few are in the red. Vukile has avoided an approach of simply writing off the underwater portion of the loan in previous years, as they are trying to be fair to all shareholders (without punishing their key staff). They’ve reached a point where 60% of the scheme has been wound-up and the rest will be disposed of in the coming months.
  • Telemasters (JSE: TLM) has withdrawn the cautionary announcement related to an acquirer that has been sniffing around a potential offer. The acquirer has not managed to raise the required funding for a deal and there’s no point in Telemasters remaining under cautionary forever. If an approach is made down the line (backed by tangible funding), then the company will make additional announcements as required.
  • Tiger Brands (JSE: TBS) has received SARB approval for the special dividend, with the payment date (7 July) unchanged. Similarly, SAB Zenzele Kabili (JSE: SZK) received SARB approval for its dividend, with that payment date having been changed to 7 July (a complete coincidence that it’s the same day as Tiger Brands).
  • Cilo Cybin (JSE: CCC) has released a trading statement dealing with the year ended March 2025. The headline loss per share is expected to be between -0.8 cents and -0.9 cents. The loss has been driven by the costs incurred for the acquisition of Cilo Cybin Pharmaceutical as a viable asset.

Ghost Bites (AH-Vest | Assura – Primary Health | Goldrush | Harmony | Naspers – Prosus)

The Finance Ghost
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Ghost Bites (AH-Vest | Assura – Primary Health | Goldrush | Harmony | Naspers – Prosus)

AH-Vest is finally set to be taken private (JSE: AHL)

This is one of the most obscure listings on the JSE

AH-Vest is a very good example of the kind of company that should be taken private. There is no reason for such a tiny business to be in the listed space, with zero liquidity and all the regulatory costs along the way. Thankfully, this situation will soon be resolved, as Eastern Trading is swooping in to acquire all the shares that the company doesn’t already hold.

The deal is at 55 cents per share and the total acquisition price is just R2.4 million. Although this is an outrageous premium of 1,833% to the current traded price of 3 cents per share, you can see that we are talking about tiny amounts here overall. This is because Eastern Trading already owns 95.7% of the issued share capital.

This deal is long overdue.

Assura has now decided to back the Primary Health Properties offer (JSE: AHR | JSE: PHP)

You could get motion sickness from how quickly they change direction at Assura

After much to-and-fro, it looks as though Primary Health Properties managed to convince the Assura board that the revised offer is a better bet for shareholders than the KKR and Stonepeak cash bid. I am rather surprised to be honest, as the cash deal looked more compelling to me.

The latest version of this offer is 0.3865 new Primary Health Properties shares for each Assura share, along with 12.5 pence in cash. Assura shareholders would also be entitled to a special dividend of 0.84 pence per share. Based on 20 June 2025 market prices, this values Assura at 53.3 pence per share, which is 5.8% higher than the 50.42 pence per share cash offer from KKR and Stonepeak. That’s a whole lot of deal implementation and post-merger risk for just a 5.8% premium, including the raising of a vast amount of debt to get the deal done.

Notably, both offers would’ve allowed Assura shareholders to retain the April dividend entitlement, as well as the dividend due to be paid in July. These dividends have been excluded from the above numbers.

The bidding war has been lucrative for Assura shareholders, as the price including the April and July dividends (55.0 pence per share) is a 45.6% premium to the 3-month volume weighted average share price.

To give you an idea of the relative size of the two groups, Assura shareholders would have 48% in the enlarged entity. Those who want to get a higher proportion of cash vs. shares will have the ability to do so via a “mix and match” facility.

The last offer from KKR and Stonepeak was called a “best and final” offer. We will now see how serious those words actually are.

Goldrush releases its inaugural trading statement in its post-investment entity era (JSE: GRSP)

As an operating company, the focus is now on HEPS and EPS

Investment entities focus on measures like net asset value (NAV) per share, whereas operating entities use headline earnings per share (HEPS) and earnings per share (EPS) as their key performance metrics for trading statements. Goldrush has moved on from investment entity accounting, so the focus is now on HEPS and EPS.

This means that the trading statement for the year ended March 2025 isn’t comparable to the prior period at all, as HEPS was calculated completely differently across the two periods. Instead, it’s best to just look at the range in the trading statement rather than the year-on-year move. The expectation is for HEPS to be between 130 and 150 cents. For reference, the share price is currently trading at R8.80.

Harmony has met guidance for the year ending June 2025 (JSE: HAR)

With the gold price doing the things, Harmony is delivering on what it can control

Harmony’s share price is up 65% year-to-date. The gold price keeps delivering wonderful opportunities for the mining houses that can make hay while gold is shining. Harmony certainly ticks that box, with a pre-close update indicating that the company will meet production guidance for the year ending June 2025.

This means total production of between 1.4 million and 1.5 million ounces, while all-in sustaining costs will be between R1,020,000 and R1,100,000 per kg. Underground recovered grades were better than guidance. As the icing on the cake, capex was slightly below the guided R10.8 billion.

Looking ahead, the major next step is the acquisition of MAC Copper in Australia. They are looking to complete that deal in the second half of this year. There are also several extension projects at existing assets.

Results will be released in August.

Everything is looking better at Naspers / Prosus (JSE: NPN | JSE: PRX)

Even the Prosus dividend has doubled

I couldn’t be happier with my position in Prosus, as evidenced by another 3.3% rally in the share price on Monday in response to the release of results. The reason I own Prosus and not Naspers is that I want cleaner exposure to the international assets rather than South African assets like Takealot and Media24. It’s much of a muchness really, with Prosus up 33.5% year-to-date and Naspers up 31.5%.

In my opinion, the most interesting reason to look through the Naspers results is to see how Takealot is doing. Takealot.com grew revenue by 19% in dollars, with the number of orders up 15%. Mr D grew by 11%, with immense growth in groceries in particular. Adjusted EBIT at Mr D was $4 million, but Takealot ran at negative adjusted EBITDA of -$16 million. They attribute this to increased investment in response to competitive pressures from new international entrants. This probably means Amazon, but could mean the Chinese platforms as well. Either way, the expectation is for Takealot and Mr D to generate positive adjusted EBIT in FY26 on a combined basis.

Focusing on Prosus for a moment, revenue increased by 12.8% and they swung from an operating loss of -$546 million to profit of $173 million. HEPS almost doubled by 132 US cents to 256 US cents. Free cash flow more than doubled from $422 million to $1.02 billion. And finally, the divided did in fact double, from 10 Euro cents to 20 Euro cents per share. The Naspers numbers are different but the direction of travel is much the same.

As a reminder, the focus on profits doesn’t mean that the group is no longer doing deals. Quite the contrary, actually. Recent transactions include the acquisition of Despegar in Latin America, expanding the regional reach to over 100 million customers across several verticals. They also acquired Just Eat Takeaway.com, with the plan being to use AI to turn that European food delivery business into a growth story

The integration of AI into the business is the crux of the Prosus strategy. They highlight use cases ranging from efficient route generation in logistics through to automated customer support, fraud prevention and detection of “bad content” in a trust and safety context.

The best way to think about the group these days is that they are focused on building regional ecosystems that become powerhouses through offering a variety of services to a large user base. This is “superapp” thinking, although in many cases they aren’t trying to do everything through one app. It’s more about driving user engagement, feeding that data into AI models and creating a stronger ecosystem overall. This graphic of the ecosystem in India tells the story with an extreme example of how many platforms can fit into this strategy:

The difference these days at the group is that Fabricio Bloisi is a proper operator who has walked this scale journey before himself. He’s not just a desktop capital allocator. This chart on iFood in Latin America shows what is possible in these platforms:

I’m long Prosus and have absolutely no plans to change that. Onwards and upwards we go!

Nibbles:

  • Director dealings:
    • Here’s something that worries me as a shareholder in ADvTECH (JSE: ADH): the top exec in the resourcing business and his spouse sold shares worth a total of R25.2 million and a senior exec in the tertiary education business sold shares for R2.6 million.
    • An associate of two directors of Astoria (JSE: ARA) entered into a CFD trade with a value of R21 million.
    • A director of Stor-Age (JSE: SSS) has borrowed R10.7 million from Investec and has pledged shares worth R28.6 million as security for that loan. It’s not hard to see why the bank felt comfortable with extending this credit.
    • Christo Wiese is back on the bid for Brait (JSE: BAT) shares, buying shares worth nearly R1.6 million through Titan Premier Investments.
    • Des de Beer bought shares in Lighthouse Properties (JSE: LTE) to the value of R659k.
  • Equites Property Fund (JSE: EQU) announced that GCR Ratings has affirmed its credit ratings with a Stable outlook. This is important in the context of how Equites is shifting exposure from the UK market back to the South African market.
  • As I’ve noted many times, junior mining is all about consistent access to capital to support resource development activities. In this regard, Orion Minerals (JSE: ORN) has announced than an entity related to company chairman Denis Waddell has provided an unsecured loan facility of up to $0.5 million to the company. This will be used for working capital and carries a cost of 10% per annum. The amount is repayable by the end of September 2025, or upon the conclusion of a funding transaction that enables the repayment of this amount, or at a later date as agreed between the parties. This is the type of thing that you typically see in private companies rather than listed companies. It’s a show of faith by the chairman in the company’s prospects.
  • The process of extracting the value from MTN Zakhele Futhi (JSE: MTNZF) and unwinding the structure continues, with the latest update being that MTN has repurchased around 50.6 million shares from MTNZF in full settlement of the notional vendor funding balance of R6.4 billion. The latest guidance from MTNZF is that the net asset value (NAV) per share of the structure is between R20.00 and R22.50. As there is still a holding in MTN shares, its important to keep in mind that this amount can fluctuate.
  • Here’s some good news from Wesizwe Platinum (JSE: WEZ): the processing plant has completed two months of cold and hot commissioning after the rectification plan and is now operating smoothly.
  • Omnia Holdings (JSE: OMN) has received exchange control approval for the payment of the special dividend of 275 cents per share.
  • Momentum (JSE: MTM) has been busy with a share repurchase programme, repurchasing 3.02% of issued share capital since the AGM in November 2024. This is an investment of R1.32 billion in the company’s stock at an average price of R31.22 per share. The current share price is R33.30, so that’s been a successful process.

UNLOCK THE STOCK: Tharisa Plc

The Finance Ghost
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UNLOCK THE STOCK: Tharisa Plc

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 56th edition of Unlock the Stock, Tharisa Plc returned to the platform to update us on the recent numbers and the latest strategic thinking. I co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.

Watch the recording here:

The Liquidity Advantage: Why ETFs Should Play a Bigger Role in Institutional Asset Allocation

Duma Mxenge, Satrix
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The Liquidity Advantage: Why ETFs Should Play a Bigger Role in Institutional Asset Allocation

Institutional investors are increasingly incorporating Exchange Traded Funds (ETFs) into their portfolios, attracted by their cost efficiency, transparency, and liquidity. As the investment landscape becomes more complex and cost-sensitive, ETFs are proving to be a powerful tool for modern portfolio management. Duma Mxenge explores their growing role in institutional investing, advantages over traditional investment vehicles, and their impact on market liquidity and institutional strategy.

The Rise of ETFs in Institutional Investing

ETFs are gaining traction among institutional investors for several reasons. They typically have lower management fees than active funds, which helps reduce total ownership costs. With daily disclosure of holdings, they offer transparency and clarity around asset allocation. ETFs trade throughout the day, enabling real-time portfolio adjustments, and provide built-in diversification by offering exposure across asset classes, sectors, and geographies.

Here are some of the other reasons they should be a strong contender for institutional asset allocation:

Risk Management in Volatile Markets

In periods of market uncertainty, ETFs offer both defensive capabilities and agility. Institutions can use them to maintain flexibility while hedging risk, shifting allocations quickly during downturns. They also enable tactical portfolio adjustments, allowing investors to act swiftly on market opportunities without disrupting broader strategies.

Complementing Active Management

Rather than replacing active strategies, ETFs complement them across multiple functions. They provide a cost-effective vehicle for implementing long-term strategic asset allocation (SAA), while also enabling rapid tactical reallocation (TAA) without requiring new manager engagements. ETFs are useful in managing transitions and liquidity, and can support dynamic risk management through alternative exposure strategies for rebalancing or hedging.

Enhancing Liquidity for Pension Funds

For pension funds and insurers, ETFs offer practical liquidity solutions. They can act as a “liquid sleeve” – a readily accessible reserve asset that can be quickly liquidated. Institutions can stay invested while retaining liquidity, avoiding large idle cash positions. Short-duration bond ETFs, in particular, offer an alternative to cash drag by providing better yield on low-risk holdings.

Tactical Allocation Without Strategic Disruption

ETFs are also powerful tactical allocation tools. They enable institutions to quickly overweight or underweight specific market segments in response to shifts, while still preserving the integrity of their long-term strategic asset allocation. This flexibility allows for nimble decision-making without derailing broader investment mandates and strategic asset allocation.

Cost Efficiency and Performance

While cost savings are a major driver, ETFs additionally deliver on performance and diversification. They closely track indices, enabling efficient beta capture and more reliable returns. By reducing single-stock exposure, they improve overall portfolio stability. Daily disclosures and intraday trading ensure greater transparency and execution efficiency.

Regulatory Support and Market Maturity

South African regulatory changes are accelerating ETF adoption. The higher offshore investment limit of 45% has promoted ETF use for global diversification. The new two-pot retirement system aligns well with ETFs’ liquidity and transparency. As institutional ETF usage grows, so too does market liquidity and efficiency, supporting the broader financial system.

Looking Ahead: Institutional Growth and Innovation

ETF adoption is expected to rise over the next decade, mirroring trends in the US and Europe. Cost pressures and the demand for transparency will continue to drive growth. Innovations in product offerings – especially systematic strategies such as factor-based and thematic ETFs – are well suited to ETF structures, thanks to their transparent, rules-based approaches.

As this unfolds, active strategies will continue to play a role but are likely to evolve. Managers will increasingly focus on high-conviction, niche strategies to deliver unique insights. The growth of actively managed ETFs offers a blended model that combines active thinking with the benefits of ETF structures. Hybrid portfolios that combine passive and active strategies may become the norm as institutions seek to optimise performance and manage risk.

ETFs are becoming essential components of institutional portfolios. As regulatory frameworks and investor demands evolve, ETFs are well-positioned to play an even more prominent role in shaping institutional investment strategies.

This article was originally published here.

Disclaimer

Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.

Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities and an authorised financial services provider in terms of the FAIS. 

While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their 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. 

Ghost Bites (Capital Appreciation | Gemfields | MAS | Master Drilling | Vunani)

The Finance Ghost
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Ghost Bites (Capital Appreciation | Gemfields | MAS | Master Drilling | Vunani)

A much better period for Capital Appreciation (JSE: CTA)

The Payments division remains the key

Capital Appreciation released a further trading statement for the year ended March 2025. Thanks to the initial trading statement released at the end of May, we already knew that it would be a good period with HEPS up by at least 20%. The latest update just confirms to what extent.

For the year, HEPS is expected to be between 24% and 26% higher vs. the restated base. Importantly, the restatements made HEPS in the prior year 2.8% higher, so it actually created a more demanding base. This makes the growth all the more impressive.

The expected range for HEPS is 17.35 cents to 17.57 cents. The share price is R1.66, so the company is trading at a pretty modest multiple despite the recurring nature of earnings in the key Payments division.

The Software division remains a headache, although to a lesser extent than in the prior period.

Despite huge challenges in Mozambique, Gemfields’ expansion project is nearly complete (JSE: GML)

Being “materially on budget” is an achievement here

Those who have been following the Gemfields story will know that the company had to raise capital due to suffering tough financial results at the same time as undertaking extensive expansion projects. The balance sheet buckled under this weight and shareholders needed to chip in with more capital.

The good news is that the second processing plant at Montepuez Ruby Mine (MRM) in Mozambique is 95% complete and “materially on budget” – and when you read of the challenges involved, ranging from getting work permits through to transporting equipment across Mozambique and managing illegal miner incursions, you realise just how impressive this is.

In terms of the emeralds in Zambia, Gemfields is taking a cautious approach. They’ve reopened a couple of production points at Kagem and they expect to expand operations from July, but full-scale production is not expected for “some months” based on current market conditions. This is an indication that pricing remains under pressure.

The final operational update is that the group is still looking at strategic options for Fabergé, which is a fancy way of saying that the business is for sale. With such a soft market at the moment for gems (and mined diamonds for that matter), there’s much uncertainty in the luxury jewellery space and those aren’t the right conditions for trying to sell a business. We will have to wait and see if someone is willing to buy it.

In a separate announcement, Gemfields confirming the shareholdings of major shareholders and key executives after the rights issue. I’ll just mention a few of them here. CEO Sean Gilbertson has a 4.13% stake in the company, so that’s meaty alignment with other shareholders. The underwriters of the rights issue, Assore International Holdings and Rational Expectations, hold 32.85% and 15.58% respectively.

The notice for the MAS Extraordinary General Meeting is out in the wild (JSE: MSP)

These advisory votes could create a strange situation

The recent activity around MAS has been fascinating to follow. As a reminder, we have PK Investments (the joint venture partner) on one side of the equation, with what started as a cheeky bid for the company that has now become an attempt to use cash in the joint venture as leverage to drive a broader value unlock strategy. On the other side of the equation, we may see Hyprop making an offer to shareholders, although there’s absolutely no guarantee of this.

To test the waters with shareholders, PK Investments requested MAS to call an Extraordinary General Meeting (EGM). The resolutions on the table are of an advisory nature only, as they don’t actually bind the company or its directors to anything. There’s also technically no guarantee of the joint venture paying the much-needed dividend that would upstream cash to MAS. I would see these resolutions as part of a broader process around the deal as the parties feel each other out.

The first resolution is to authorise the board to implement a “structured and commercially driven realisation of the assets of MAS” with the goal being to complete it within 5 years. The second resolution is to authorise the board to distribute the net proceeds of the joint venture dividend to shareholders.

The EGM is scheduled for 11 July. Will Hypop make a move before then, or will they wait to see how shareholders vote?

Master Drilling increases its stake in A&R (JSE: MDI)

This takes their holding from 51% to 66%

Back in 2021, Master Drilling acquired a 25% interest in the A&R group. In 2022, they exercised a call option to take the stake to just over 51%, which is a typical “pathway to control” structure that listed companies often look to implement.

It’s quite unusual to see a stake move higher than 51% unless the intention is to get to a 100% holding i.e. to have no minorities in the structure. Once you control the assets at a 51% stake, the benefit of holding an additional percentage up to 75% (the special resolution threshold) in the company is limited. This isn’t stopping Master Drilling from increasing its stake though, moving up to 66% in a deal that will see them pay for the additional stake over a five-year period.

The purchase price for the additional stake is R50.3 million. It will be paid for in 60 monthly instalment that attract interest at prime less 2%. The cap on the total payments is R119 million. This deferred payment structure is allowing Master Drilling to fund the deal from existing resources.

Master Drilling notes that benefits of this deal include things like increased influence over innovation and technical development, but there’s really no practical difference between having 51% and 66%. This is purely a capital allocation decision.

Vunani swings into losses (JSE: VUN)

And yet the dividend is much higher

Vunani released results for the year ended February 2025. Although revenue was up 4%, they saw a 66% decrease in their results from operating activities. The group swung from HEPS of 7.4 cents into a headline loss per share of 2.8 cents. Despite this, the final dividend was 35 cents vs. 9 cents in the prior period!

This is the group’s first headline loss in the past five years, despite revenue being at the highest level we’ve seen over that period. They also reported negative cash from operations of R9.4 million vs. positive R27.8 million, so that makes the dividend decision look even stranger.

Hopefully the sale of 30% in administration business Fairheads to Old Mutual Corporate Ventures will inject some life into Vunani, but I wouldn’t hold my breath. It remains a scrappy story with businesses facing tough fundamentals, like the asset management business and the ongoing decrease in assets under management, as well as the losses that they keep making in the securities and capital markets business.

Nibbles:

  • Director dealings:
    • It’s a good day to be part of the Saltzman family, with Dis-Chem founder (JSE: DCP) founder Ivan Saltzman distributing shares worth R6.8 billion within the family. The question now is whether the family can avoid the trap of generational wealth. Back in March 2024, Dominique Olivier wrote about the Vanderbilt family and the “shirtsleeves curse” in her Ghost Mail column.
    • The vesting of share awards at Vukile (JSE: VKE) led to sales by numerous directors and senior execs of amounts in excess of the taxable portion. These excess sales came to around R24.5 million.
    • The business development director of British American Tobacco (JSE: BTI) sold shares worth R4.4 million.
    • An executive director at Harmony Gold (JSE: HAR) sold shares worth R261.5k.
    • The company secretary of Alexander Forbes (JSE: AFH) sold shares worth R195k.
    • The CEO of Spear REIT (JSE: SEA) bought shares for himself and his minor children worth R56.7k.
  • Crookes Brothers (JSE: CKS) released a trading statement dealing with the year ended March 2025. Thanks to better performances in the banana and property segments, HEPS is up by 27% to 425.1 cents. The share price closed 9% higher at R30.
  • OUTsurance Group (JSE: OUT) has increased its stake in OUTsurance Holdings from 92.70% to 92.75%, thanks to more employees selling shares in the unlisted holding company in exchange for shares in the listed group.
  • The CFO of Kumba Iron Ore (JSE: KIO), Bothwell Mazarura, is stepping down as CFO and Executive Director after 8 years with the company. His notice period runs until the end of December 2025. Here’s the particularly interesting news though: his replacement is Xolani Mbambo, who is stepping down as CEO of Grindrod (JSE: GND). Mbambo brings plenty of experience in logistics to Kumba, so this appointment makes a lot of sense given the current operational challenges in iron ore in South Africa.
  • With James Day set to take the CEO role at Emira Property Fund (JSE: EMI), he’s stepping down as Financial Director of Castleview (JSE: CVW). He will however remain on the board of Castleview as Emira’s representative. Lida Le Roux will take over the top finance job from at Castleview. There was also a trading statement for Castleview, reflecting that the final dividend per share for the year ended March 2025 will be 30.1% lower year-on-year. This only gets a mention down here as there is literally zero liquidity in Castleview’s stock.
  • Marshall Monteagle (JSE: MMP) is another counter that has very little liquidity in the stock. A trading statement for the year ended March 2025 reflects a drop of 62% in HEPS and 93% in EPS. They attribute this to negative fair value adjustments on the investment portfolio and the movement in value of commercial properties.
  • African Rainbow Minerals (JSE: ARM) repurchased almost R500 million worth of shares between 31 March 2025 and 25 April 2025. This is the joy of having proper liquidity in this stock, something that comes with achieving scale on the local market (the market cap is over R36 billion).

DreamWorks: when collaborators become competitors

Dominique Olivier
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DreamWorks: when collaborators become competitors

When you sideline a rainmaker, you can’t act surprised when they start making it rain somewhere else. This is the story of how one botched promotion led to the creation of a real thorn in Disney’s side – and set a whole new direction for the animation industry. 

I would be remiss if I wrote one more sentence in this article without quoting that famous adage that we’ve all heard before: if you don’t build your own dreams, someone else will pay you to build theirs.

There’s a particular kind of corporate drama that only Hollywood can deliver – the kind with billion-dollar stakes, fragile egos, and enough behind-the-scenes beef to season a thousand Succession scripts. But this story isn’t fiction. It’s the very real tale of how Jeffrey Katzenberg, Disney’s comeback conductor, helped revive a dying studio… only to be shown the door, team up with Spielberg, and build the first real threat to the House of Mouse since Walt himself wore the crown.

The Katzenberg era: the resuscitation of a mouse

In 1984, Disney was floundering. At the box office, it was dead last among major studios. Animation was clunky. The live-action offerings were tepid. The house that Mickey built was on the verge of becoming irrelevant. It was time for a change in management, and fast. Enter Michael Eisner as CEO, and alongside him, Jeffrey Katzenberg as Chairman of Walt Disney Studios.

Katzenberg had been poached from Paramount, where he’d already built up a reputation as a no-nonsense, hands-on executive with a knack for spotting hits (he’d overseen Indiana Jones and the Temple of Doom and Terms of Endearment, to name just two). At Disney, he rolled up his sleeves and got right to work, much to the chagrin of a few animators, who weren’t accustomed to the c-suite getting so closely involved in their work. Katzenberg famously cut scenes from work-in-progress The Black Cauldron himself because he thought the film was bloated. This early butting-of-heads really set the tone for the rest of Katzenberg’s career at Disney: he may not have been well-liked, but he sure got things done.

He revived Disney’s animation division like it was his own pet project. And to be fair, it sort of was. Under his watch came the so-called “Disney Renaissance”, a string of hits that would put the embattled studio back at the top of the box office: The Little Mermaid, Aladdin, Beauty and the Beast, and The Lion King. These weren’t just crowd-pleasers – they were industry-defining films. Beauty and the Beast even landed a Best Picture Oscar nod, the first time in history that an animated film was nominated. But Katzenberg didn’t stop at singing crabs and enchanted teapots. He launched Touchstone Pictures, which churned out megahits for grown-ups (think Pretty Woman, Dead Poets Society, Good Morning Vietnam). Under his steer, Disney stopped being a nostalgic relic and started being cool again. You’d think the guy would be up for a corner office and a serious pay bump.

Unfortunately, that’s not how things panned out.

Trouble in paradise

By the mid-90s, Disney had transformed from an industry afterthought to an unstoppable creative engine. Internally, though, things were starting to crack.

Success is a funny thing. It makes people rich, yes, but it also makes people nervous. And when too much credit starts flowing toward one person, the rest of the boardroom gets twitchy. Behind the scenes, Katzenberg was clashing with both Eisner and Roy E. Disney (Walt’s nephew and board member). There were whispers that he was taking too much credit. That he was too ambitious. That he had presidential aspirations, not of the political kind, but of the corporate throne. He wanted the number two job at Disney.

When Disney president Frank Wells died in a helicopter crash in 1994, Katzenberg assumed he’d get the nod. Eisner disagreed. According to Katzenberg, Eisner had promised the job. According to Eisner, there were complications – namely, Roy Disney threatening a board revolt if Katzenberg moved up the chain.

Instead of a promotion, Katzenberg got the boot. Well, technically, his contract ended and wasn’t renewed. But by all accounts, it was clear: there was no longer room for him at the table.

Fine, I’ll build my own kingdom

Most people would lick their wounds. Maybe write a memoir. Not Katzenberg.

Within months, he was on the phone with Steven Spielberg and David Geffen. The result was DreamWorks SKG, a shiny new studio built from scratch, with Katzenberg running the animation division like it was his personal revenge tour.

DreamWorks would go on to roll out box office hits The Prince of Egypt, Shark Tale, Kung Fu Panda, and How to Train Your Dragon. But the real line in the sand came in the form of a flatulent ogre named Shrek – a movie that took direct aim at Disney’s fairytale formula, cast a villain suspiciously reminiscent of Michael Eisner, and snatched the first-ever Oscar for Best Animated Feature from right under the Mouse’s nose.

Shrek wasn’t just a box office smash. It was a cultural reset. It proved there was room for a different kind of animation – funnier, messier, more meta. Less hand-drawn, more CGI. DreamWorks had officially arrived. Katzenberg looked at the success of CGI films like Shrek versus the relatively tepid response to DreamWorks’ traditional animated films like Sinbad and Spirit and deduced that it was time to leave the sketchpads behind and embrace computer animation in full. This instinct would ultimately position DreamWorks ahead of the pack by the time rival CGI-only studios like Illumination reared their heads.

Meanwhile, Disney was navigating a rocky path, with internal spats, lukewarm releases, and a growing reliance on Pixar to keep the magic alive.

Talent lost is opportunity gained (for someone else)

What can businesses learn from all this? One thing: if you don’t nurture your best people, someone else will.

Jeffrey Katzenberg transformed Disney from a dusty relic into a cultural force. But rather than reward or retain him, the company let office politics win. In doing so, they didn’t just lose an exec, they created a rival with a mouse-shaped axe to grind. Talent like Katzenberg’s doesn’t just disappear when you push it out. It gets resourceful. It finds new playgrounds. Sometimes it even builds its own castle down the road, draws a moat, and starts launching catapults.

To be clear: not every star employee should get a blank cheque. And not every risk pans out. But the cost of letting talent walk away – especially when that talent is reshaping your industry – can be far greater than the cost of keeping them engaged, empowered, and maybe even a little ambitious.

Because if there’s one thing Katzenberg proved, it’s that nothing motivates a visionary quite like being underestimated.

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 (Libstar | MAS | STADIO | Standard Bank)

The Finance Ghost
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Ghost Bites (Libstar | MAS | STADIO | Standard Bank)

Libstar is looking better, but be careful of period comparability (JSE: BAT)

There’s an extra week of trading in the latest update

The market seemed to really latch onto the Libstar update, with the share price closing a whopping 16.6% up. Although the revenue growth rate of 10.1% looks strong at first blush, it’s extremely important to take note that the update compares a 21-week period to a 20-week period.

In other words, if we assume steady sales for each week, the 21-week period should be 5% higher purely due to the extra week. Now add in some inflation and hopefully improved trading conditions and the difference is even bigger. To make it even less comparable, the latest period is for the 21 weeks to 31 May and the comparable period was the 20 weeks to 24 May, so the additional week is a payday week of trading. In practice, I am confident that the extra week makes a difference of more than 5%.

Although Libstar does adjust for the disposal of Chet Chemicals in the update in an effort to get to like-for-like sales, there’s no adjustment for the extra week. So, when you see revenue growth of 10.1%, be very careful. The group’s volume growth of 5.2% was in all likelihood due to the extra week, leaving investors with little more than price and mix effects of 4.9% to hang their hats on.

If we look deeper into the numbers, Ambient Products saw revenue up by 11.5%, with volumes up 5.4% and price/mix changes of 6.1%. In Perishable Products, revenue was up 8.9% thanks to growth in volumes of 4.9% and price/mix changes of 4.0%. In both cases, I would ignore the growth in volumes.

In terms of outlook, Libstar just provides a generic comment around how they expect “positive trading momentum” for the rest of the year. This is despite an expectation for beef sales to remain weak in the winter months after the foot-and-mouth disease outbreak in May.

The games continue at MAS, with PK Investments calling a shareholder meeting (JSE: MSP)

Perhaps the message is landing that nobody wants a weird, inward-listed preference share

The MAS story has been an interesting one to follow. Essentially, PK Investments (MAS’ joint venture partner) has been trying to execute a cheeky offer for the company, structured as an offer by the joint venture entity itself (if that sounds strange, that’s because it is strange). To add to the weirdness, they hoped that shareholders would accept a modest share payment along with a new preference share that would be inward listed in South Africa. The initial offer was at a weak price relative to where MAS was trading, just to take this deal into the stratosphere of weirdness.

It didn’t take long for a white knight to appear in the form of Hyprop, using the MAS situation as an excuse to raise equity capital in the market in preparation for a potential bid for MAS. Incredibly, there’s no firm offer on the table from either Hyprop or PK Investments, so this is all posturing at present.

Hyprop seems to be able to sit back and let PK Investments blink first, as PK has now taken two additional steps. I must point out that Hyprop is now sitting with a cash drag problem on the balance sheet, so they can’t just hang back forever. But the strategy is working for now, as PK Investments keeps playing its hand.

The first step was to try and improve the offer and simplify it, although the structure was still far too fussy. The second and latest step is a request to convene a shareholders meeting, which the various PK Investments entities are able to do as the company holds more than 15% of MAS’ shares in aggregate. The meeting is to consider advisory resolutions that are not binding on the company. In other words, PK Investments is looking to get the opinion of shareholders.

PK Investments claims that engagements with shareholders have yielded generally positive views on the plan to unlock value from MAS through asset sales over a five-year period. This shouldn’t be a shock to anyone, as most property counters trade at a discount to NAV and hence a liquidation strategy would technically create value. Shareholders have indicated to PK Investments that there’s no need for PK to obtain control of MAS for this strategy to be followed though, which is a nice way of telling them to go away with their cheeky potential bid.

A few fluffy paragraphs later in the announcement and we get to the crux: PK Investments will refrain from proceeding with its bid and will distribute the cash in the joint venture if shareholders support a strategy to realise assets. This reads to me as PK essentially holding a gun to the head of MAS’ board and shareholders, saying that the funds in the joint venture won’t find their way to shareholders in any other manner. They literally say: “the Enhanced Value Unlock Strategy is expected to unlock significant value currently inaccessible to Shareholders and to return that value to them.”

This whole thing feels pretty weird. If MAS has no ability to extract cash from the joint venture without PK agreeing to do the same, then it was a horribly structured agreement from the start that gave all the power to PK. This power is now being used to dangle a carrot of €72.5 million in front of MAS, being the company’s share of the cash in the joint venture.

There are still many moving parts here. The question now is whether either MAS or Hyprop can find a way to put a better proposal in front of shareholders.

STADIO’s business update looks solid (JSE: SDO)

Student numbers continue to grow

STADIO is doing the right stuff. I’m a big fan of the business model and the results speak for themselves.

At the AGM, the company delivered a presentation giving an update on their performance. The most interesting part of the update related to student numbers as at June 2025, which is obviously new information. Distance learning numbers grew 8% to 43,837 and contact learning grew 11% to 7,041. Total student numbers increased 8% to 50,878, as the contact learning piece is so much smaller than distance learning and hence the total growth rate was similar to the growth in distance learning.

Another important point is that the Durbanville Campus is on track for opening in January 2026, housing 7 faculties. This is a big step for the group as they move towards being a full-suite university vs. having a collection of specialist tertiary facilities. This will also drive an increase in contact learning students relative to distance learning students. They must be happy with the initial signs of interest, as the board has already approved phase 2 of the development, due to open in August 2026.

If you’re keen to learn more about the company, the podcast that I did in April with the CEO and CFO is still highly relevant. You’ll find it here.

Standard Bank is still managing double-digit earnings growth (JSE: SBK)

The flurry of selling by company execs in recent months remains a mystery to me

It’s unusual to see several executives selling shares at roughly the same time, unless they specifically relate to a share award. But at Standard Bank, the theme in recent months has been considerable selling by company insiders, including the CEO. This is typically a red flag. Although Standard Bank’s growth is telling a different story at the moment, there are some underlying concerns that are worth looking at in the context of the director dealings.

The company is keeping investors well informed regarding performance. After an update for the first quarter, they’ve followed up with an announcement dealing with the performance for the five months to May. They’ve carried on where they left off in the first quarter, with headline earnings growing at roughly 10% in rand. In constant currency, the growth rate is in the mid-teens. Return on Equity remains in the target range of 17% to 20%.

This performance has been achieved despite sluggish demand for credit in South Africa and a decline in the net interest margin as rates have slowly decreased. Net interest income was thus flat, with rate decreases that are big enough to impact margins and too small to really drive economic growth. All the growth is coming from non-interest revenue sources that grew by mid-teens for the period. Market volatility is helpful for trading revenue, but the challenge is that this is a non-recurring source of revenue in comparison to a steady uptick in net interest income (which is what is lacking at the moment).

The group’s credit loss ratio is just above the targeted range of 70 to 100 basis points, but has improved vs. the comparable period. South African retailers have really turned on the taps for credit sales, so it will be interesting to see how the credit environment evolves this year.

The outlook for the year ending December 2025 still reflects banking revenue growth of mid-to-high single digits (in rand), improvement in the cost-to-income ratio and a group return on equity in the 17% to 20% range. Having said that, Standard Bank has warned that June 2024 is a demanding base and that headline earnings growth for the six months to June 2025 is likely to be lower than for the five months to May 2025.

The reasons may not be obvious yet in the numbers, but I would continue to be nervous of this story after all the recent insider selling.

Nibbles:

  • Director dealings:
    • Dealings really do come in all shapes and sizes. The latest example at Super Group (JSE: SPG) is especially interesting, as the disposal of SG Fleet and the subsequent special dividend left the CEO and CFO in a position where they no longer met the minimum shareholding requirement of holding shares equal to at least three times their historical annual base pay. This is because the special dividend naturally led to a large drop in the share price, as the company literally became smaller. To rectify this, the CEO and CFO bought shares worth R7.9 million and R4.3 million respectively.
    • A couple of MultiChoice (JSE: MCG) directors and the company secretary aren’t waiting for the Canal+ deal to go through, with sales of shares worth close to R1.4 million in relation to the vesting of share awards.
    • A director of a major subsidiary of Vodacom (JSE: VOD) sold shares worth R980k.
    • An associate of a director of Trematon (JSE: TMT) sold shares worth R43.4k.
    • A person closely associated with a director of Hammerson (JSE: HMN) bought shares worth around R29k through a dividend reinvestment plan.
  • Brikor (JSE: BIK) has released results for the year ended February 2025. The market cap is just R142 million and there is very little liquidity in the stock, so it only gets a passing mention down here. Brikor’s revenue increased by 8.6%, but HEPS fell by 61.5% to just 0.5 cents per share. The major negative contributors were the coal segment (a loss of R21.3 million) and the income from associate which fell from R23.8 million to R5.3 million.
  • Southern Palladium (JSE: SDL) has finalised the issuance of shares to raise A$8 million to fund the definitive feasibility study and near-term mine development activities at the Bengwenyama project. As I frequently remind you, ongoing capital raising activities are simply part of the game when it comes to junior mining houses.
  • Coronation (JSE: CML) has confirmed that Mary-Anne Musekiwa’s last day as Finance Director will be 30 June 2025. There will then be a structured handover period. As for who she is handing over to though, we still don’t know – the company hasn’t named a replacement.
  • HomeChoice (JSE: HIL) achieved 100% approval at its general meeting to change its name to Weaver Fintech Ltd. I think this is a good move as it indicates exactly where the growth opportunity lies.

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

Delta Property Fund has entered into a sale agreement with Vivid Yellow Investments, to dispose of 101 De Korte Street in Braamfontein for a cash consideration of R25 million. The disposal is a category 2 transaction and as such does not require shareholder approval.

Astoria Investments has concluded the sale of its 49% interest in ISA Carstens, announced in January 2025. There was no adjustment to the purchase consideration of R66,8 million.

Unlisted Companies

Cape Town-based startup Open Access Energy (OAE) has raised US$1,8 million in a seed funding round backed by E3 Capital, Equator and Factor E. OAE is focused on using AI to enable digital infrastructure for electricity trading – its flagship product, EnergyPro, is a cloud-based software platform that enables energy wheeling, a process of delivering electricity from decentralised renewable producers, to consumers via existing transmission infrastructure. The investment will enable AOE to scale its platform and support the growing demand for flexible decentralised energy infrastructure in South Africa.

Wetility, a South African solar-as-a-service provider, has closed a R500 million structured capital agreement with Jaltech, a funder of solar energy projects in South Africa. The funding structure comprises a tailored blend of senior and equity capital, which will enable Wetility to provide clean, reliable and cost-effective energy to homes and businesses. In a statement, the parties believe the deal will serve as a blueprint for future funding rounds to support a national scale-up strategy and so enable the deployment of solar energy to ‘hundreds of thousands more homes and businesses over the coming year.’

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

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