Wednesday, June 11, 2025
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Ghost Bites (Accelerate Property Fund | Assura – Primary Health | AYO Technology | Finbond | ISA Holdings | Nampak | Powerfleet | Quantum Foods | Sasol)

The Finance Ghost
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Ghost Bites (Accelerate Property Fund | Assura – Primary Health | AYO Technology | Finbond | ISA Holdings | Nampak | Powerfleet | Quantum Foods | Sasol)

Accelerate Property Fund is still fighting the good fight with its balance sheet (JSE: APF)

Turnarounds don’t happen in a straight line

If you’ve been following the Accelerate Property Fund story, you’ll know that they have all to play for when it comes to the turnaround of Fourways Mall. They are making progress in that regard, having brought in external experts to breathe some life into the mall.

The group’s fortunes were also boosted by the recent agreement to sell the Portside asset in Cape Town at only a modest discount to its valuation.

Unfortunately, the recovery journey is neither smooth nor linear. The group’s balance sheet is still a significant risk. Although GCR Ratings improved the outlook on the Secured Notes from Negative to Evolving, the overall issuer ratings have been downgraded to SD due to historic non-payment of interest under SPV facilities. Accelerate had notified the funder in this regard and is working with its bankers to emerge with a sustainable balance sheet.

In the meantime of course, the ratings agencies must do their jobs and make notes of these things. Speaking of doing their jobs, Accelerate’s management managed to get the funding partners to extend the term loan facilities out to March 2027, so they’ve bought themselves time to get this sorted.

Accelerate remains a speculative play, which means that chunky risk/reward numbers are a feature of this story.

Primary Health Properties has done enough to get Assura’s attention (JSE: AHR | JSE: PHP)

The board has decided to give the revised proposal a chance

The independent board at Assura is being kept nice and busy, as is the case when a bidding war kicks off. There’s always the chance of a competing bid coming through for a listed company, as each step of the way is publicly announced and thus anyone can decide to swoop in with a more compelling offer.

Just when it looked as though the private equity consortium of KKR and Stonepeak had it in the bag, Primary Health Properties came in with an improved proposal. Their initial proposal was oddly weak and had been thrown back at them by the Assura board. Version 2.0 is a lot better. Although I’m not convinced that it’s high enough, as it offers only a modest premium to the private equity deal and required shareholders in Assura to be willing to accept part of the price in shares, it’s at least high enough to have gotten the Assura board to take it seriously.

Assura has commenced a due diligence process with Primary Health Properties to figure out whether to recommend this offer to shareholders. In order to give this a fair chance, they have adjourned the upcoming meetings that were scheduled to deal with the cash offer from KKR and Stonepeak.

Sekunjalo plans to take AYO Technology private (JSE: AYO)

I somehow doubt that many tears will be shed when this one goes

AYO Technology reckons that the decline in its share price over the past few years (and the mounting losses) are due to negative media coverage. The company is dealing with tons of litigation, including against the media as well as South African banks. It’s just a messy thing that is very difficult for anyone to build a credible bull case around, which is why is makes zero sense for them to be listed.

Sekunjalo Investment Holdings (which already holds 45.92% in the company before you even consider concert parties) will therefore look to take AYO Technology private at 52 cents per share.

The deal structure is an all-cash deal that also gives shareholders the opportunity to remain invested if they so desire, provided that they are comfortable being in an unlisted environment as AYO will delist as part of the deal. The price is a 30% premium to where the share price was trading before this announcement, so that’s a pretty reasonable offer price under the current circumstances.

It will be interesting to see what the fair and reasonable opinion says when the circular is released.

There’s progress at Finbond, but HEPS is what matters (JSE: FGL)

In fact, this is a perfect example of the value of HEPS

I write about HEPS all the time in Ghost Mail. It stands for Headline Earnings Per Share, which is the South African industry standard in assessing the profits attributable to shareholders. There are specific rules that govern what gets adjusted to get from earnings to headline earnings, with the idea being to catch as many once-offs and non-recurring items as possible.

Finbond has released results for the year ended February 2025 and on paper they look great, with turnover up 7.9% and profit attributable to shareholders jumping from R0.6 million to R31.8 million. The fact that the highlights section in the SENS announcement is devoid of any mention of HEPS is the first clue that you need to go digging.

Sure enough, there’s a headline loss of R8.7 million for the period vs. a headline loss of R3.3 million in the comparable period. In other words, things actually got worse despite the results telling a very different story.

The big jump in profits is because of a gain on bargain purchase, which means they bought assets for a price below their identifiable fair value. Once you strip out that gain (R48.8 million) and the other fair value moves, you get to the negative view of headline earnings:

Once you dig deeper, you find that net interest income (the key metric for profitability as Finbond is a lending institution) fell by 5%. Some of this is because of deliberate action taken in the North American business to be stricter on new loans and to close underperforming branches. The book churns very quickly, with an average loan term of 3.5 months in South Africa and 1.95 months in North America.

A lot happens below the net interest income line, like a 6% increase in fee income and a 9% increase in other operating income. Operating expenses were contained at just a 5% increase.

Finbond isn’t a straightforward business to understand. They have certainly made a ton of progress since the worst of COVID, evidenced by an 83% increase in the share price over 12 months. Liquidity remains thin though and the market cap is only R387 million, so this is a speculative play. It would certainly help if they were reporting positive headline earnings instead!

ISA Holdings impacted by DataProof (JSE: ISA)

The frustration comes through in the SENS announcement

ISA Holdings is a technology company with a market cap of just R315 million. They have the liquidity in their stock to match unfortunately, with thin trade on an average day.

The year ended February 2025 is an unfortunate story, as the core business did well and an investment in an associate did not. Revenue was up 17% and gross margins were only slightly down. Combined with operating expenses growth of 10% (which is well below revenue growth), you would think that the net profit story is great.

Alas, equity-accounted investment Dataproof saw the share of profits drop by 51% to R6.1 million. These aren’t exactly huge numbers, but they matter for a small cap. The drop at Dataproof was due to a large cybersecurity deal in the base period, as well as poor performance in the record management division at the company.

With all said and done, HEPS fell by 12%. If you exclude Dataproof, earnings would’ve been up 17%. Sadly, you can’t just ignore one part of the business, no matter how well the other part is doing.

The turnaround continues at Nampak (JSE: NPK)

Double-digit revenue growth from continuing operations is impressive

Nampak has released results for the six months to March 2025. The top of the income statement boasts an 11% increase in revenue from continuing operations, so that sets the scene for a strong set of numbers.

The highlights were Diversified South Africa and Beverage Angola, with Beverage South Africa performing reasonably but not as well as the others. Beverage South Africa is unfortunately the largest contributor, with EBITDA of R512 million and an increase of 6%. Next up is Diversified South Africa, with EBITDA of R233 million and an increase of 53%. Beverage Anglo contributed EBITDA of R146 million, up 36%.

The operating cash flow situation is interesting. Before taking into account working capital changes, it increased by 38%. After taking those changes into account, it fell by 42%. Although some of this is due to the timing of a COVID insurance claim, most of it relates to disposal activities and how working capital is impacted when a business is about to be sold. There’s also an element of growth capital, as you can’t grow revenue at a high rate without putting working capital into a business. Still, this is a key focus area for them.

The good news on the balance sheet can be found in the net debt disclosure, where net debt is down 33% (excluding lease liabilities). Net finance costs thus fell 38%, giving a strong boost to profitability.

There’s been a big swing on the tax line though, as Nampak has moved from a tax credit to paying taxes at the normal effective tax rate. This is one of the reasons why HEPS from continuing operations only increased by 5% in this period. Notably, HEPS from total operations (i.e. including discontinued operations) more than doubled!

Although there’s some messiness in these numbers thanks to elements like discontinued operations and certain adjustments in both the prior and current periods that impacted HEPS, the direction of travel for Nampak does appear to be up. There’s still no dividend though, indicating that there’s a long way to go.

Powerfleet is performing in line with guidance (JSE: PWR)

They’ve also given guidance for FY26

Powerfleet is participating in an investor conference in the coming week, so they’ve updated the market on FY25 performance vs. guidance and what their expectations are for FY26. This is obviously so that they can give more details than would otherwise be possible at the conference.

For FY25, revenue was up 25% and adjusted EBITDA increased by 65%. Net adjusted debt is expected to be $230 million. This performance was in line with previous guidance for revenue and slightly better than guidance for adjusted EBITDA and net adjusted debt.

The FY26 guidance is for revenue growth of 20% to 25%, along with adjusted EBITDA growth of 45% to 55%. This is firmly a growth company. The share price certainly hasn’t been enjoying the same growth, down 7% over 12 months.

Quantum Foods: a huge jump in the right direction (JSE: QFH)

Welcome to the best example of operating leverage

Quantum Foods released results for the six months to March and they paint a picture that is typical in the poultry game: when revenue goes the right way, growth in profits can be immense. In this case, a 20% increase in revenue was good for a 244% jump in HEPS!

The year-on-year story was one of no load shedding (vs. plenty in the base period) and also no avian flu outbreaks (once again vs. a rough base). It also helped that soya meal prices came down enough to largely offset the impact of higher yellow maize prices. Poultry groups can be quite flexible in how they structure their feed costs.

Quantum Foods has a strong eggs business and although egg prices fell by 14.1%, there was a 78% increase in supply that strongly offset this impact. They even resumed operations at the Pinetown egg packing station thanks to higher availability of eggs. On the farming side, the layer flock was rebuilt in this period, leading to better margins. The broiler farming business also saw an increase in production. And finally, the animal feeds business saw a 15.1% increase in volumes that managed to offset the impact of higher raw materials costs.

In the rest of Africa, Zambia had a difficult period due to drought conditions. Uganda was strong though, with that economy punching above its weight as usual. As for Mozambique, looting in December 2024 significantly impacted the business.

With the first six months of the year behind them, a strong second half will depend on whether avian flu stays away. There are obviously many other factors, like feed costs, but nothing comes close to the risk of avian flu. And in good news for Eggs Benedict enthusiasts like me, egg prices are expected to keep dropping!

A boost for Sasol (JSE: SOL)

And they need all the help that they can get

Sasol’s capital markets day made it pretty clear that there’s going to be nothing easy about the next few years at the company. Although the market seemed to appreciate what it saw from the management team, what I see is a story that is strongly dependent on the chemicals business tripling its EBITDA and the oil price not falling over.

Any bit of extra help they can get will be most welcome by shareholders. In June 2024, the High Court ruled that Transnet owes Sasol Oil R3.9 billion plus interest. Transnet sought leave to appeal and put in a claim of R855 million against Sasol Oil for a different matter. The parties have agreed to settle, with Transnet paying Sasol R4.3 billion in full and final settlement (this shows how significant the interest burden may have become).

That’s good news for Sasol. As for Transnet, this is hopefully a reminder of how critical it is that they sort the place out.

Nibbles:

  • Director dealings:
    • The company secretary of a major subsidiary of MTN (JSE: MTN) sold shares worth R1.6 million.
  • Super Group (JSE: SPG) has declared a special dividend to shareholders of R16.30 per share, which is more than half of the current share price of R30.00 per share. This is from the proceeds of the disposal of SG Fleet in Australia. Super Group has hard work to do in its remaining businesses, as they are dealing with the disruption to the auto industry from the Chinese manufacturers.
  • Vodacom (JSE: VOD) and Remgro (JSE: REM) have extended the long stop date for the Maziv fibre deal to 13 June 2025. They keep doing these small extensions to give both parties flexibility in case something else comes along. In the background, the hearing dates at the Competition Appeal Court have been set for 22 to 24 July 2025.
  • If you are a shareholder in MTN Zakhele Futhi (JSE: MTNZF), then you’ll be interested in the update that indicates the latest debt levels in the structure. This comes after the extension of the structure to November 2027, as well as the recent payment of a dividend by MTN. I remain surprised by the relative lack of action in this share price relative to the recent rally in MTN’s shares.

The court of public opinion: does it matter?

Dominique Olivier
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The court of public opinion: does it matter?

Public backlash may be loud, but it appears as though capitalism has noise-cancelling headphones.

A few years ago, I watched a documentary film that left an indelible impression on me. Titled Blackfish, the film focuses on the story of Tillikum, the captive orca whale responsible for the deaths of three people (two of which were trainers) at SeaWorld Orlando. At the time (somewhere in 2013), it felt like a cultural reckoning. Public backlash was swift: celebrities tweeted, public opinion nosedived, and SeaWorld’s stock price did a painful bellyflop. Surely, I thought, this would mean that the days of synchronised hoop jumps were numbered. SeaWorld would have to cut their losses on the whales and pivot into a less risky mode of entertainment if they wanted to stay in business, right? 

Imagine my surprise when I saw a headline last week: SeaWorld Orlando has been ordered to pay a fine of $16,550 by OSHA (Occupational Safety and Health Administration) after a trainer was injured by an orca in September 2024. That’s 11 years after the release of Blackfish. Tilikum himself may have died in 2016, but the show is apparently still going on.

To me, this begs a difficult question: what exactly is the half-life of public outrage these days? Is the “court of public opinion” just a sternly-worded press release with no follow-through? If a company can take the reputational hit, pay a fine and get right back to business as usual, did it ever really matter that people got upset?

A word from the bird

If you want a more recent example of public outrage directed at a business, you don’t have to look much further than the debacle that Duolingo is creating. 

The language-learning app with the cheeky green owl mascot has gotten itself on the wrong side of the public after sharing that it was going to replace contractors with AI and become an “AI-first” company. It’s not hard to see why users don’t love this idea. For years, Duolingo’s lessons were crafted by real people: linguists, translators, and educators, all of whom helped to bring cultural nuance and personality to the content. In a recent press release, the company’s co-founder and CEO Luis von Ahn wrote: “Developing our first 100 courses took about 12 years, and now, in about a year, we’re able to create and launch nearly 150 new courses. This is a great example of how generative AI can directly benefit our learners. This launch reflects the incredible impact of our AI and automation investments, which have allowed us to scale at unprecedented speed and quality.”

Scale may be accelerating, but goodwill is definitely lagging behind. Users have taken to social media to voice their frustration, with many claiming to have deleted the app and urging others to do the same. The backlash reached such a pitch that Duolingo quietly wiped its TikTok and Instagram accounts, despite their combined 10 million+ followers. Both platforms had become less about language memes and more about AI-driven outrage.

Scroll through the comment sections of any recent Duolingo post, and you’ll find that the conversation has veered sharply off-script. A light-hearted video hopping on the “Mama, may I have a cookie” trend was quickly derailed by replies like: “Mama, may I have real people running the company” and “How about NO AI, keep your employees”. Another video, featuring How to Train Your Dragon’s Hiccup, got the brutal comeback: “Was firing all your employees and replacing them with AI also a hiccup?”.

But not all the comments were tongue-in-cheek. Some were pointedly serious. “Using AI is disgusting,” wrote one user. “Language learning should be pioneered by PEOPLE. By making this decision, Duolingo is actively harming the environment, their customers, and employees when it hurts the most”. Another chimed in with: “What kind of audience do you think you’ve built that it’s okay to go ‘AI first’? We don’t want AI, we want real people doing good work. Goodbye, Duo. If this is the way you’re going, you won’t be missed”.

Then there were the heartbreakers: “Deleted Duolingo last week. A 650+ day streak never felt so meaningless once I saw the news”. It’s one thing to lose a customer. It’s another to make them feel like their dedication was pointless.

None of this backlash seems to be hurting where it counts though. Duolingo’s latest earnings report shows 130 million monthly active users, up 33% from last year. Paid subscribers jumped 40%. Revenue is up. Profit is up. Recent conference presentations make no mention of waves of cancellations. And the stock nearly tripled in the past year. The owl may have been roasted in the comments, but on Wall Street, it’s soaring.

Apparently, you can fire your staff, upset your users, mute your social channels and still make a decent profit. 

SeaWorld: still fishy

It’s no surprise that SeaWorld has plenty of feelings about Blackfish, and none of them are positive. In the wake of the film’s release, SeaWorld Entertainment’s second-quarter net income plummeted 84%, from $37.4 million in 2014 to just $5.8 million in 2015. Revenue slid by 3%, and attendance dropped by 100,000 visitors, a 2% decline compared to the previous year.

SeaWorld initially tried to brush off the hit, blaming the dip on an uncooperative Easter calendar, bad weather in Texas, and a vague category it called “brand challenges” in California. Notably absent in its reporting was any mention of Tilikum (who seemed quite determined to live up to the “killer whale” moniker) or the film that had by then become a cultural flashpoint. 

Still, the company spent $15 million on an ad campaign to do some narrative damage control, spotlighting their marine research and conservation efforts while quietly sidestepping the more uncomfortable parts of the story. None of this fooled stockholders though, and by 2020, SeaWorld settled a $65 million lawsuit brought by investors who alleged they’d been misled about the documentary’s real impact on attendance. That legal chapter closed, but the public scrutiny didn’t.

Under pressure, SeaWorld announced it would end its orca breeding program in 2016, declaring that the current generation of whales would be the last under its care. A symbolic shift, though not an immediate one, since Takara, one of the orcas, was pregnant when the announcement was made.

SeaWorld’s theatrical orca shows officially ended in San Diego in 2017, and in Orlando and San Antonio by 2019. If you’re confused by those dates, you’re not alone – I was also wondering how a trainer could have been injured by an orca at a show in 2024 if the shows supposedly ended five years prior. Turns out it’s a matter of semantics: the “theatrics” may be gone, but the orcas are still performing in what SeaWorld now calls “educational presentations”. Fewer flips, perhaps. Same tanks, and same paying audience though. 

As for the whales themselves, SeaWorld says they can’t be released, and that’s likely true. Many were born in captivity, and the ones that weren’t have long since lost any realistic chance at survival in the wild. Still, with lifespans reaching up to 30 years, we’re likely to see these so-called educational encounters continue for quite some time.

Outrage is noble, but tiring

In the end, Blackfish didn’t sink SeaWorld, in the same way that Duolingo’s AI-pivot (probably) won’t kill the owl. Both were just forced to rebrand. In the case of SeaWorld, the company adapted, the outrage faded, and the system absorbed the shock. That’s the rhythm of modern scandal: loud outcry, a dip in profits, a flurry of statements and settlements, and then… business as usual. It’s not that people stopped caring – it’s that caring competes with everything else demanding our attention. 

As for markets, they care even less. They don’t hold grudges. They reward resilience, reinvention, and just enough change to keep the wheels turning. If there’s a lesson here, it’s that public accountability has a short shelf life, but corporate survival tactics are built to last.

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 (Investec | Life Healthcare | Pick n Pay | Shaftesbury | Shuka Minerals | Spear REIT | Tharisa)

The Finance Ghost
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Ghost Bites (Investec | Life Healthcare | Pick n Pay | Shaftesbury | Shuka Minerals | Spear REIT | Tharisa)

Positive jaws at Investec (JSE: INP | JSE: INL)

And no, this has nothing to do with sharks in a good mood

The banking industry uses the term “jaws” quite frequently. It’s a measure of the difference between growth in income and the increase in expenses. If income is growing ahead of expenses, you have positive jaws and margins are increasing. If expenses are growing faster than income, you have negative jaws and margins are shrinking. The ominous nature of the term becomes very real in a negative jaws scenario.

Thankfully, there is no such issue at Investec. In the year ended March 2025, they grew revenue by 5% vs. an increase in operating costs of 2.8%. This drove growth of 7.8% in pre-provision adjusted operating profit, taking it above the £1 billion milestone for the first time in the group’s history. The contribution to income growth was from a broad range of sources in the group, which is encouraging.

The credit loss ratio increased from 28 basis points to 38 basis points. Although that’s well within the through-the-cycle range of 25 to 45 basis points, it did take the shine off the growth in pre-provision profit. Translating the numbers into rand also impacts growth, which isn’t something that South Africans are able to say very often!

Adjusted operating profit was up just 2.8% in ZAR. HEPS was down 1.6% in ZAR. The dividend per share tells a more pleasant story, up 5.8% (that’s in GBP as they declare it in pence) vs. a HEPS decline of 0.4% (also in GBP), so the payout ratio has moved higher.

Return on equity dipped by 70 basis points to 13.9%, with a gain recognised on the combination of Investec’s UK wealth business with Rathbones contributing to a higher equity base (the denominator).

Another metric worth noting is tangible net asset value per share, which grew by 6% in GBP or 5.1% in ZAR. Over time, this is a key driver of the share price.

Here’s a fun fact to finish off: Investec is targeting mid-sized corporates, with the goal being to take the Investec private client experience (which is objectively excellent) to these companies. They plan to triple the current client base and achieve market share of 8% by 2030. Companies like Investec grow by finding specific verticals where they can win share.

Amazingly, despite plenty of volatility over the past year, the share price is now perfectly flat over 12 months! And I mean perfectly, to the cent.

Double-digit growth in Life Healthcare’s dividend (JSE: LHC)

Operating leverage is in their favour at the moment

Hospital groups are well known for earning returns that are below their cost of capital. It’s very much a game of inches, as a modest improvement in the revenue growth rate can tip the scales in the direction of positive operating leverage, which means that margins improve and investors are healed along with the patients. And vice versa, of course.

For the six months to March 2025, Life Healthcare grew revenue from continuing operations by 8.1%. This was achieved through a combination of pricing increases and a 2.0% increase in paid patient days. The interim cash dividend increased by 10.5%, so we have a rare example of double-digit growth. Having said that, normalised earnings per share was up by 9.1%, so a more aggressive payout ratio helped dividend growth sneak into the teens.

If you look at HEPS though, you’re in for a big surprise. It came in wildly negative for the period. This is because although HEPS is designed to capture as many non-recurring items as possible, there will always be stuff that falls outside of its defined exclusions. In this case, HEPS was impacted by a large negative fair value adjustment on contingent consideration liabilities.

What on earth does that mean? Well, because of the price achieved on the sale of Life Molecular Imaging (LMI) on its disposal, Life needed to pay an “agterskot” of sorts to the previous owners of the business. This is a payment that happens down the line on an old deal, depending on how the asset performed and exactly what the terms of the original deal were.

This has led to a situation where current liabilities exceed current assets at Life, which makes it look as though the company is at risk of not funding its operations. The good news is that the payment on the contingent consideration is going to be paid from the proceeds related to the disposal. Accounting rules are forcing Life to account for the provision now and the proceeds on disposal only when the LMI deal closes. The balance sheet is actually in decent shape, with net debt to normalised EBITDA of 0.65x.

The LMI transaction is expected to close in the second half of the financial year, which will then lead to a much simpler balance sheet in the full-year numbers. From an operational perspective, Life expects paid patient days to grow by 1.5%, which does imply a slight slowdown in the second half vs. the first half.

Pick n Pay is still making losses (JSE: PIK)

Retail turnarounds are no joke

I’ve been pretty bearish on the overall turnaround at Pick n Pay, as regular readers will know. It’s an extremely difficult thing to get right, particularly when up against a competitive juggernaut like Shoprite (and others in the sector).

Although there have been some helpful changes to local operating conditions, like the near-disappearance of load shedding, Pick n Pay’s business still has major structural challenges. I don’t know about you, but I still see far more turquoise motorbikes on the road than anything else.

In a trading statement for the 53 weeks to 2 March, they’ve confirmed that the core Pick n Pay segment is still making losses after deducting lease costs. Thanks to how utterly daft the modern accounting standard for leases is, you actually have to specify whether lease costs are in or out of operating profit, as those costs are recognised as part of net finance costs. Sigh.

At group level, they’ve certainly made progress in reducing the losses. The headline loss per share has reduced by 55% to 75%, which means an expected range for the 53-week period of -77.49 to -43.05 cents.

Funnily enough, having the extra trading week in a 53-week period is a drag on earnings when you’re a loss-making business. There’s an extra week of losses, rather than an extra week of profits. The 52-week vs. 52-week disclosure in the detailed results will be interesting, as it will allow the market to isolate the final week and see exactly how loss-making the group still is based on the latest numbers.

I must point out that a major driver of the reduction in losses is that Pick n Pay tapped shareholders for equity capital so that they could reduce debt, thereby reducing finance costs as well. The real question here is around return on capital, which at the moment is still negative.

Despite the obvious risks, the share price is up 44% in the past 12 months and even closed 3.5% higher on the day of this trading statement.

Shaftesbury: London’s West End keep working (JSE: SHC)

Focused property funds can do very well, provided they focus in the right place

If you’ve ever had the joy of walking around London on a bright summer’s day (that part is very important), then you’ll know just how impressive areas like the West End are. Wealthy people from all over the world want to live and shop there, which is great news for property funds like Shaftesbury who specialise in the area.

They are having no problem with demand, with an update at their AGM noting that recent leasing transactions have been 8% ahead of their December 2024 Estimated Rental Value (ERV) and 9% ahead of previous passing rents. There’s 3% growth in the like-for-like annualised rent roll. Vacancies are down from 2.6% to just 1.7%.

At the beginning of April, Shaftesbury announced a long-term partnership with NBIM, the Norwegian sovereign wealth fund. This sees NBIM acquire a 25% stake in the Covent Garden estate, unlocking £570 million in capital for Shaftesbury.

This gives them plenty of money to deploy into new opportunities. Heck, they can even afford to shop at Harrods with that kind of money!

With a loan-to-value ratio of 17% after taking into account all the recent activity (way down from 27% at the end of 2024), I expect to see deal announcements from them in the coming months. I just hope they don’t lose their strategic focus.

Ever heard of Shuka Minerals? (JSE: SKA)

The company quietly listed a couple of days ago

Some companies list with a bang. Others sneak in, like a ghost in the night (of the non-finance variety). Shuka Minerals was certainly the latter. I thought I was hallucinating when I saw this new name come up on SENS!

Shuka is a junior African mining group that is listed on the AIM in London and now on the JSE as well. Their first update to the local market is about the restart of the Rukwa Coal mine in Western Tanzania. This will be needed to bring operational cashflow to Shuka, so that already gives you a flavour of where they are in their journey.

They anticipate a rather astonishing internal rate of return (IRR) of 80% on the staged ramp-up of the mine. All I can really say is that if every junior mining house always hit its targeted IRR, investors in the sector would have had a very different experience in years gone by.

Good luck to them – I look forward to following this story.

Modest growth at Spear REIT, but the direction of travel is still up (JSE: SEA)

The sector is taking a breather this year

Spear has announced results for the year ended February 2025. With the share price up more than 22% over 12 months despite growth of just over 3% in the distribution per share, we don’t need to look much further for evidence of how market sentiment towards South Africa has improved. With a portfolio focused on the Western Cape, Spear is seen in a particularly positive light.

Trading on a dividend yield of 8.3%, Spear’s yield is currently over 200bps lower than the SA 10-year bond yield. This implies that (1) the market is willing to pay up for focused Western Cape exposure and (2) Spear still needs to achieve strong growth over time to make up the differential to the “risk-free” return on offer with bonds.

Where does this growth come from? One source is positive reversions i.e. new leases being at better rates than the expired lease. Spear achieved positive reversions of 4.18% in FY25, so that’s decent. They’ve also been busy with major transactions, something that they should keep doing if the market is willing to pay up for their equity. You want to raise equity when your shares are expensive, not when they are cheap. Recycling capital (selling existing properties at great prices to then reinvest in properties at cheaper prices) is first prize of course, but if you run out of assets that you want to sell, then raising equity is the next port of call.

There are a few other metrics that are worth touching on. The industrial portfolio has an occupancy rate of 98.85% and in-force escalations of 7.3% – in short, the Western Cape is firmly open for business. The retail portfolio managed positive reversions of 8.53% and in-force escalations of 7.25% – the Western Cape is also open for shopping. And finally, the office portfolio had negative reversions of just -3.17% and occupancy of 92.99% – the Western Cape is increasingly open for people to do meetings in person rather than over Zoom while persuading their cat to stop meowing*.

The group expects distributable income per share to grow by between 4% and 6% for the year ending February 2026. The payout ratio is expected to remain at 95%.

When I read results like this, I remember why I semigrated 10 years ago.

*references to cats are based on my lived experience

A period to forget for Tharisa (JSE: THA)

In mining more than any other sector, there are good times and bad times

And this, dear reader, was a bad time. For the six months to March 2025, Tharisa suffered a drop of 23.9% in revenue and 45% in EBITDA. Net profit after tax tanked by 78.9%. Yikes.

Cash from operating activities fell by 58.2%. It’s just as well that capital expenditure was 46% lower, as this helped protect the overall strength of the balance sheet in a difficult period.

And despite all this, the interim dividend was identical to the comparable period at US 1.5 cents per share. Companies would sooner sell off their first-born child than cut their dividends.

So, what went wrong in this period? One of the issues was that PGM production fell at exactly the wrong time, as this was a rare example of a period in which average PGM basket prices actually moved higher. Chrome output was also negatively impacted, in both cases due to an inconsistent ore mix. This is why PGM gross profit margin more than halved from 15.2% to 6.2%, while chrome gross margin also took a serious knock from 26.5% to 17.4%.

They seem confident that they can make up for it, as they are maintaining their guidance for FY25.

Nibbles:

  • Anglo American (JSE: AGL) announced the results of their dividend reinvestment plan. Shareholders didn’t exactly surge to the front when it came to this opportunity, with holders of just 1.77% of shares on the UK register and 0.89% of shares on the SA register electing to receive shares instead of cash.
  • I generally don’t comment on non-executive director appointments unless I see something that really catches my eye. Santam (JSE: SNT) announced that Richard Wainwright will be appointed as an independent non-executive director. The reason that this is interesting is that Wainwright was the CEO of Investec’s banking business until as recently as 2024.
  • Schroder European Real Estate (JSE: SCD) certainly can’t be accused of not keeping the market updated on operational news. They’ve renewed a lease with DIY group Hornbach, which contributes 11% of income in the Schroder portfolio as the second largest tenant. The new lease is for 12 years and is a triple net lease that is subject to indexation, which is a fancy way of saying that Schroder has great certainty over the amount they will earn and it will increase by an inflation-linked amount each year. They note that the new lease is ahead of the Estimated Rental Value (ERV), but they don’t indicate by how much.

Ghost Bites (Greencoat Renewables | Hammerson | Mahube Infrastructure | MultiChoice | Reunert | RFG | Sanlam – Tyme | Spear REIT | Southern Sun)

The Finance Ghost
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Ghost Bites (Greencoat Renewables | Hammerson | Mahube Infrastructure | MultiChoice | Reunert | RFG | Sanlam – Tyme | Spear REIT | Southern Sun)

Greencoat Renewables is coming to the JSE (JSE: GCT)

We are getting another new listing on the local market!

Here’s some exciting news: the JSE has granted approval for a fast-track secondary listing of Greencoat Renewables on our local market. This is an Irish renewable energy infrastructure company that invests in European renewable electricity generation and storage assets.

With a market cap of roughly €844 million, this is a substantial business. There are plenty of renewable energy enthusiasts in South Africa and this will give them something new to sink their teeth into.

To get to grips with the portfolio and its mix of wind, solar and battery storage assets, along with its focus on delivering dividends to investors, you can register for an upcoming Unlock the Stock session with the management team on 29th May at 12pm.

Hammerson boosts FY25 guidance based on recent activity (JSE: HMN)

They are singing a positive tune over there

With a share price that has delivered a 4% drop in GBP in the past year and a 1.7% drop in ZAR, Hammerson hasn’t exactly been a market darling. The property fund is trying to change that, with recent deal activity and a positive tone to the latest update.

They expect a gross revenue increase of 10% for 2025, which is way ahead of the 4% – 6% medium-term CAGR that they aim for. They have reaffirmed adjusted earnings guidance though, so the uptick in revenue doesn’t seem to be flowing through to shareholders yet.

One of the reasons for the increase is the acquisition of almost all the remaining ownership units related to Brent Cross, with the price representing a 16% discount to book value and a net initial yield of 8.6%. Combined with another recent deal, this means that they recycled the capital from the disposal of Value Retail (at an exit yield of 3.4%) into gaining control of assets at an average yield of 8.5%. That sounds solid.

Like-for-like sales growth isn’t quite as exciting, up just 1% for the first quarter. Remember that the UK is a structurally lower growth market than South Africa (and certainly the European regions that our local funds love), so you would expect to see modest growth.

The company has noted that there’s a real estate conference this week and that they will publish updated investor information.

Mahube Infrastructure’s earnings have taken a big knock (JSE: MHB)

This is due to the change in dividends from portfolio companies

Mahube Infrastructure released a trading statement for the year ended February 2024. HEPS is expected to decrease by between 32.87% and 39.26%, so that’s a significant drop.

They attribute this to lower dividends from the investee companies, at least to some extent because of special dividends in the prior period from refinancing of solar projects. Detailed results are due for release on 30 May.

MultiChoice is getting the right advice on dealing with the Competition Commission (JSE: MCG)

The Commission is recommending that the Canal+ deal be approved

The South African Competition Commission is a tough beast to deal with. They are pretty famous at this point for regulatory overreach, with the term “public interest” being used and sometimes abused to force greater levels of e.g. B-BBEE than would otherwise be the case.

Advisors are clearly learning from this and are trying to go on the front foot, advising clients to rather go in with a proposed package of public interest considerations vs. sitting back and waiting for the regulator to get creative. Believe me, nobody needs or wants creative regulators.

MultiChoice has shown the way here, having proposed various public interest commitments related to B-BBEE and SME participation in the audio-visual industry in South Africa, while supporting local content. This is another reminder of how broad the thinking is at competition regulators and how much of their work goes way beyond what anyone would traditionally think of as competitive factors i.e. whether consumers have sufficient choice.

The Competition Commission has accepted the proposed commitments and will recommend to the Competition Tribunal that the deal should be approved. Given all the financial difficulties being faced by MultiChoice right now, I think it’s pretty clear that a successful deal here is firmly in the public interest.

Tough numbers at Reunert (JSE: RLO)

Earnings are down even if you exclude the battery storage business

Reunert released a trading statement for the six months to March 2025. It’s not pretty, with an expectation for total HEPS to drop by between 19% and 24%.

Now, you may be hoping that things get better if you look at continuing operations, but that isn’t really the case. Even if you exclude the Blue Nova Energy battery storage business that they have decided to cut their losses on and sell, the drop in HEPS would be between 17% and 22%.

This tells you that there are troubles elsewhere in the business. Some of this is a timing issue, like a delayed contract in the Defense Cluster and lower cable sales based on a delayed energy infrastructure investment programme. Perhaps the most comforting news for investors is that a COVID business interruption claim in the base period was good for 32 cents worth of HEPS. That’s obviously a non-recurring source of income, so more than half of the drop in continuing HEPS of between 50 and 66 cents is attributable to the insurance claim.

Still, the share price closed 3.9% lower off the back of this news. Detailed interim results are due to be released on 28 May.

RFG dragged down by the international segment (JSE: RFG)

Margins are under pressure

RFG Holdings released results for the six months to March 2025. They struggled, as group revenue growth of 3.5% didn’t convert into profit growth. In fact, due to pressure on margins, HEPS came in 11.9% lower.

The trouble was in the international segment. While the regional segment grew revenue by 7.6% and only saw its operating margin dip by 90 basis points, the international segment suffered a 17.2% drop in revenue and a collapse in operating profit margin from 11.5% to just 0.1%! Ouch. This is what happens when there is severe selling price deflation coupled with a decline in volumes.

This means that literally all the operating profit in this period was from the regional business. Luckily, it’s by far the largest part of the business (even before international profits collapsed), so the impact on group earnings was painful but manageable. It also helped that average debt and interest rate levels were lower, leading to a significant decrease in net interest costs.

Looking to the second half of the year, they expect the regional segment to continue its momentum. The international segment is showing signs of improvement. This should support a better final dividend, with the interim dividend only representing a payout ratio of 33% (the group target is 50% – so this implies a catch-up later this year).

Despite this, the share price is up around 38% over 12 months and closed 3% higher after this earnings update. The market must be strongly believing in what the second half might bring.

Sanlam teams up with Tyme Bank (JSE: SLM)

The focus is on personal loans with an embedded credit life product

Sanlam just never sits still. It’s incredible how regularly they announce deals and major partnerships. This one is admittedly very close to home of course, as Tyme is part of the African Rainbow Capital stable, which in turn is run by ex-Sanlam execs.

One of Sanlam’s many businesses is called Sanlam Personal Loans. They give loans of between R5k and R300k for between 12 months and 6 years – a typical model in this space. It’s a big book, coming in at R5 billion as at December 2024.

As for Tyme Bank, they have 11 million retail and business customers, so that’s a substantial distribution channel.

The parties have decided to start a new joint venture. Sanlam will sell its loan generation business into the joint venture at an effective valuation of R63 million, as Tyme will buy a 50% stake in the joint venture for R31.5 million. Then, Sanlam will sell 50% of its retail credit loan book for R400 million plus the capital value. Finally, Tyme will pay R320 million for shares that give it 50% of the credit life results related to the loans in the joint venture.

Essentially, what they are doing here is building a lending business on Tyme Bank’s infrastructure, targeting the client base of both entities. They will of course take advantage of Sanlam’s experience in credit life insurance.

As this is a small related party transaction, it can only go ahead if there’s a fairness opinion backing it up. Deloitte have opined that the terms of the deal are fair.

There are a few regulatory hurdles to be overcome, including approval from the Prudential Authority and the Competition Commission. They hope to be done with the deal by the end of March 2026.

Spear REIT picks up a business park in Paarl (JSE: SEA)

There’s plenty of growth around Paarl, so this seems sensible

Although everyone talks about the semigration from Joburg to Cape Town, I don’t often see people refer to the rotation of capital from Cape Town into the winelands. The growth in Val de Vie and neighbouring estates is quite something to behold. Paarl is part of that broader growth story, attracting many families who either work remotely or have jobs in the winelands.

As more people move to these areas, it stands to reason that demand for commercial property will increase. It therefore makes sense to see Spear REIT announcing the acquisition of the Berg River Business Park in Paarl for just over R182 million. If you include transaction costs and immediately required capital expenditure, this increases to R187.5 million.

This is an industrial asset that they are acquiring on a purchase yield of 9.35%. The seller has guaranteed the rental for certain occupied units for 18 months and has also committed to guarantee electricity savings from a recent solar energy installation.

The weighted average lease duration is 5.27% and the weighted average escalation is 7.12%, which is solid. Spear’s investment thesis is built around focused exposure in the Western Cape and they are doing a good job of sticking to their knitting.

Southern Sun has much to be proud of (JSE: SSU)

This remains the best option in the sector

Southern Sun is doing really well. They play exactly where you want to be in the hospitality space: hotels in business centres that play to higher income tourists, business travellers and from time to time, locals. What you don’t want to own right now is old-school casinos. I also remain bearish on cheaper accommodation aimed at local business travellers.

For the year ended March 2025, occupancy grew by 220 basis points to 60.8%. This drove income growth of 9% and EBITDAR (not a typo) growth of 14%. Thanks to a reduction in debt and thus net finance costs, adjusted headline earnings per share climbed 34%. But the best growth rate was saved for the dividend, which casually doubled (that’s a 100% growth rate) to 25 cents per share. Mooi.

Speaking of mooi, the beautiful Western Cape continues to be extremely lucrative for hotel groups, with revenue up by 17% and EBITDAR up 26%. But here’s the real surprise: Gauteng grew even faster (revenue up 19% and EBITDAR 35%) albeit off a more depressed base, helped along by conferencing demand. Alas, KZN and Mozambique can’t say the same, with a lack of conferencing in Durban hurting the story. In Mozambique, political unrest has an incredible way of making people choose other destinations for a holiday. Strange, that.

Although the business is doing really well, it’s still not a simple thing to run. For example, they’ve closed Paradise Sun in the Seychelles for a full refurbishment to help reposition the hotel as a premium leisure resort for European travellers.

The group’s balance sheet is incredibly strong. Provided that South Africa can maintain a decent reputation on the global stage despite the best efforts of certain countries, they should keep doing well.

Nibbles:

  • Director dealings:
  • Although this sale of shares is entirely to cover the tax on share-based payments, I’m still going to mention the extent of sales by directors of Northam Platinum (JSE: NPH) after the vesting of shares under an old plan. The sale comes to a total of R105 million – and remember, that’s just the taxable portion! Best of all, it’s just three directors. It’s a good life.
  • Interestingly, with James Formby (ex-CEO of RMB) expected to replace Gareth Ackerman as chairman of Pick n Pay (JSE: PIK) from August, Formby is going to step down as chair of Boxer (JSE: BOX). Sean Summers is going to replace Formby as the chair of Boxer from February 2026. So, a few familiar names here playing musical chairs. An additional change worth noting is that Pooven Viranna will be the new independent non-executive director of Pick n Pay, replacing the role that Formby leaves vacant as he moves to chair the board there.
  • Curro (JSE: COH) has had its credit rating affirmed with a positive outlook by GCR Ratings. They note that the maturity of the school portfolio and the associated cash flows were positive factors here. As I always remind you, the lens for debt is very different to that of equity investing. Debt investing is about managing downside risk, while equity investing is about chasing risk-adjusted upside.
  • Capital Appreciation Limited (JSE: CTA) has been busy with share buybacks, having repurchased 3.26% of shares in issue based on the general authority given by shareholders for buybacks at the September 2024 meeting.
  • Deutsche Konsum (JSE: DKR) probably isn’t in your portfolio. Just in case it is, I’ll mention that the company has appointed GPEP GmbH to take over the asset and property management for its portfolio. It’s not unusual for the day-to-day management of properties to be outsourced by funds. It all depends on their operating model.

UNLOCK THE STOCK: Astoria Investments

The Finance Ghost
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UNLOCK THE STOCK: Astoria Investments

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 53rd edition of Unlock the Stock, Astoria Investments returned to the platform to discuss the recent numbers and the growth strategy. Mark Tobin of Coffee Microcaps hosted this event with the team from Keyter Rech Investor Solutions.

Watch the recording here:

Ghost Bites (Alexander Forbes | Ethos Capital | Gemfields | Nutun | Renergen | Sasol | Stefanutti Stocks)

The Finance Ghost
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Ghost Bites (Alexander Forbes | Ethos Capital | Gemfields | Nutun | Renergen | Sasol | Stefanutti Stocks)

Alexander Forbes marches on (JSE: AFH)

Results for the year ended March will be in line with expectations

Alexander Forbes has released a trading statement for the year ended March. From continuing operations, they expect HEPS to grow by between 5% and 15% – decent growth overall. There was much higher growth in the discontinued operations (due to a successful legal claim related to a subsidiary that was sold ages ago), leading to total group HEPS increasing by between 10% and 20%.

This is in line with the group’s expectations, with the key drivers being higher average AUM, solid client retention, inflationary increases in fees and higher than expected two-pot claims volumes, which are a revenue driver for the group. The timing of consolidation of previous acquisitions also made a difference here.

Ethos Capital is enjoying a higher valuation of Optasia (JSE: EPE)

As they are planning an exit of that investment, they hopefully aren’t overcooking their expectations

Ethos Capital focuses on measuring its performance using net asset value per share. All investment holding companies should do this of course, but that doesn’t mean that they actually do.

The company has given a voluntary update on growth in that metric. Net asset value per share is up 3.2% over the past quarter and has increased 23.1% since June 2024 (excluding the effect of the unbundled Brait shares).

The increase is mainly due to the higher valuation of Optasia, which they indicate is thanks to its last-twelve-months EBITDA increasing to $84 million. They are implying that they haven’t increased the valuation multiple. Still, as they are looking to go to market with this asset (including via a potential IPO), I hope that their valuation expectations are in line with the feedback they are getting from potential investors. With a recent growth rate of roughly 47% for both revenue and EBITDA, it’s clearly an interesting growth asset.

This is all part of the broader strategy of returning capital to shareholders. With a net asset value per share of R8.10 and a share price of just R5.55, you can see that the market is still pricing in a hefty discount.

Gemfields has released the rights offer prospectus (JSE: GML)

Although the fully underwritten offer is a foregone conclusion at corporate level, it’s still important for shareholders to make a decision

The beauty of a fully underwritten rights offer is that from the company’s perspective, they are definitely going to get the capital that they need. This allows the management team to move forward with the all-important strategies to get things back on track. But for each existing shareholder, they have to decide whether to follow their rights or to try and trade their nil paid letters in the market.

To help with this decision, Gemfields has released a prospectus in line with the strict regulations that govern the capital raising process for public companies. It includes a wealth of information on the company, including an overview of the risks. As the disruption by lab-grown diamonds has fascinated me (regular readers know this), I couldn’t help but look at the extent to which this is noted as a risk for emeralds and rubies. The answer is that although the company does mention that they exist, it’s only raised as part of a narrative that diamonds have suffered to a far greater extent than coloured gemstones that have different supply and demand dynamics. In other words, they are heavily downplaying it. To be fair, lab-grown gems are nothing new and if rampant disruption was going to happen, it probably would’ve already. Still, consumer tastes can be fickle – just ask De Beers.

The prospectus deals with the four key issues facing Gemfields at the moment (on page 50 of the document, for those who want to read in detail). These include the oversupply of Zambian emeralds, the lower production of rough rubies in Mozambique, prevailing uncertainty in the luxury goods and gemstone market (including in China) and general risks in Mozambique related to civil unrest and other issues. With all these issues experienced against a backdrop of heightened capital expenditure, the balance sheet buckled under the pressure.

The risks aren’t over yet, particularly regarding the waiver of covenants under debt facilities. Banks aren’t in the habit of switching the lights off for companies that still have support from equity investors, but stranger things have happened and the underlying operations in Africa are risky.

You’ll find the full prospectus at this link. If you’re a shareholder or if you’re thinking of becoming one, I strongly suggest you read it.

Nutun gives full details of its earnings – and the market didn’t like it (JSE: NTU)

The share price closed 12% lower

Nutun is the debt and business process outsourcing business that used to be part of Transaction Capital. After that group imploded thanks to SA Taxi and cut WeBuyCars loose to go off and flourish without the contamination of the rest of the group, Nutun was left behind like the ash at the bottom of the braai. Even with a new name, there’s a lot of rebuilding to do.

In South Africa, Nutun acts as both principal and agent when it comes to unsecured non-performing loans. They also have international clients, in which case they act as a business process outsourcing solution for a variety of services from customer acquisition and retention through to collection and recovery services. This is essentially a fancy way to say that they are a call centre.

The six months to March 2025 was an unhappy time. Revenue in Nutun South Africa was down 6% and in Nutun International was up 1%. Group EBITDA fell by 17%. Once you take off the amortisation of purchased book debts and the net interest cost, you’re left with a “continuing core loss” off R71 million, which is at least not as bad as R104 million in the prior year.

Is there any good news? Well, they are now focusing on bigger clients, which hopefully means a more efficient business going forwards. Worryingly though, they have an ageing portfolio based on the lack of recent purchases of books, which I interpret to mean that the underlying recoverability of the books is getting worse. It’s fine to have fewer clients, but they need to improve the books they are trying to collect.

To do this, they have funding lines in place until at least September 2027. This should support a renewed focus on acquiring unsecured loan portfolios, as well as the ability to invest in business process outsourcing opportunities.

The group still has a positive medium-term outlook (although practically all executive teams say that). They have indicated that the near-term story is far less ideal, as it will take them a while to rebuild their positioning in the market. The fallout from the association with the broken Transaction Capital balance sheet continues, as Nutun was essentially starved of capital for a while.

There’s no love for this story in the market right now, with the share price down 37% year-to-date. Perhaps this chart of Nutun vs. WeBuyCars tells the story best:

Renergen: throwing cautionaries to the wind (JSE: REN)

The ASP Isotopes deal is very interesting, but the JSE needs to act here

Let me start off by saying that in hindsight, having hosted ASP Isotopes on Unlock the Stock (watch it here) and gotten to know the CEO in that session, I’m not surprised by this deal. Paul Mann is a razor-sharp international dealmaker and he is almost certainly viewing Renergen in the same light that he originally viewed ASP Isotopes: a technical dream wrapped up in a commercial nightmare. This deal is another roll of the dice and if you want to make it big in this world, you better be prepared to keep rolling. I want to make it absolutely clear that there was no (and I mean no) indication in that session of what they were planning regarding Renergen. I was caught by surprise, just like you were.

Here’s the thing that I find astounding: Renergen moved straight to firm intention announcement stage without putting out a cautionary announcement. Now, the technical rule is that you don’t need a cautionary if you can be absolutely sure that no news of the deal has leaked anywhere. Still, it’s good practice to put one out, particularly once you start engaging advisors and the like. And as you’ll see, they are a long way down the road with this deal despite having no cautionary announcement.

I genuinely cannot think of another single example where a company went straight to firm intention announcement without a cautionary. If the JSE doesn’t fully investigate this and make its findings known to the public (regardless of what those findings are), then cautionary announcements have officially become a joke overnight and there’s no point in ever bothering with them again.

I must say, another thing that is on my mind is whether the ASP Isotopes listing on the JSE was always intended to facilitate a deal like this. The official story is that the business is South African and the staff are South African etc. and hence the need for a local listing, but I really can’t help but wonder…

Regardless of the back story, the deal on the table is that ASP Isotopes wants to acquire all the Renergen shares in issue, in exchange for shares in ASP Isotopes. This will be structured as a scheme of arrangement, which means that the board of Renergen is in favour of the deal as a scheme has to be proposed by the board (as opposed to a hostile takeover which is an offer made directly to shareholders). Again, seeing a fully constituted independent director committee and no cautionary announcement is a wildly aggressive application of the rules.

It gets much better (i.e. worse) though. Here’s the list of shareholders who have already given irrevocable undertakings to vote in favour of the deal, once again without a cautionary announcement in sight:

It still gets better. In the absence of any kind of cautionary announcement, Renergen and ASP Isotopes entered into an exclusivity agreement on 31 March 2025 (that’s almost 2 months ago!) that saw Renergen receive an exclusivity payment of R10 million. That was the first step in what has become a bridging loan of $30 million to help Renergen avoid default. The Takeover Regulation Panel has made it clear in this case that they don’t like this element of the deal and this has led to a change in the repayment terms on that loan, otherwise it becomes a coercive element of the deal i.e. a gun to the head of shareholders to support the deal or watch the funding dry up. Oh yes – as you can now see, they’ve also engaged the regulator, sans cautionary announcement.

As for the price, the offer implies a premium of 41.3% to the 30-day VWAP of Renergen. Of course, this premium is going to change every day as this is a share-for-share deal rather than a cash deal. For each Renergen share, 0.09196 ASP Isotopes shares will be issued. The Nasdaq price of ASP Isotopes ($ASPI) will have to be your guide here, as the JSE listing hasn’t been completed yet.

At the very bottom of the firm intention announcement, Renergen thought that it was maybe time to do this:

In the world of corporate disclosure, even Trump and his tariff team would probably describe this as an aggressive approach.

Renergen’s share price closed 38.9% higher, absolutely mutilating any short sellers along the way. And if I was one of those short sellers, I would be all over the JSE’s regulatory department regarding lack of disclosure here. Ditto for any major shareholders who sold in good faith after the release of Renergen’s financials, oblivious to what was really going on. This is how investors lose faith in public markets.

Sasol’s capital markets day is worth a look (JSE: SOL)

This is where the market gets medium-term targets from

A capital markets day is a big deal. This is an opportunity for corporates to allow their management team to shine, while speaking to the medium-term targets that the market will (hopefully) hold them accountable for. Sasol is the latest such example.

Now, a lot of the language becomes pretty consistent when you’ve seen enough of these things, like “resetting the business” as a fancy way of saying “wow this isn’t good, we must fix it” – you get the idea.

I just focus on the numbers. For example, they are promising an EBITDA margin of at least 15% in the International Chemicals business by FY28. That implies EBITDA of $750 – $850 million. I’ll believe it when I see it, as that part of the business has disappointed people more often than the Proteas in crunch games.

Interestingly, they indicate that the break-even level for the South African value chain is an oil price of $50/barrel by FY28. Now, the bad news is that the oil price hasn’t exactly been a story of steady growth, as you can see:

This shows you the problem for Sasol: like all energy companies, they are ultimately beholden to what happens with global commodity prices. On top of this, they are dealing with major South African risks like local infrastructure challenges. This slide from the deck really tells the story, as it shows that the growth at Sasol is based entirely on the International Chemicals business, with the Southern Africa business expected to go sideways:

If you are interested in getting the full details, then you’ll find the presentation and the transcripts here.

A massive positive swing in profits at Stefanutti Stocks (JSE: SSK)

You won’t see percentage moves like this very often

When it comes to year-on-year moves in HEPS, Stefanutti Stocks isn’t playing around. For the year to February 2025, they expect HEPS from continuing operations to improve by between 2,355% and 2,375%. That’s obviously a daft range, so it’s more useful to tell you that HEPS is expected to be between 124.48 cents and 125.58 cents vs. a headline loss per share of 5.52 cents in the comparable period.

If you look at total operations, which includes SS-Construcoes (Mocambique) Limitada (currently under disposal) and Stefanutti Stocks Construction Limited (held for sale), then HEPS came in at between 77.43 cents and 79.33 cents. This shows you that the discontinued operations are making significant losses. Still, it’s a vast improvement on the headline loss per share from total operations of 55.73 cents in the comparable period.

Notably, despite winning in court in Zambia regarding the Kalabo-Sikongo-Angola border gate road, the recoverability of the R148 million they’ve recognised is so in doubt that they’ve raised an expected credit loss of R109 million in addition to a tax charge of R12 million. Something is better than nothing, I guess.

The share price closed 12.4% higher at R3.71. They expect to release full results on 27 May.

Nibbles:

  • Director dealings:
    • Although the CEO of CA Sales Holdings (JSE: CAA) and his family members acquired shares worth roughly R3 million in off-market transactions, there was also a much larger sale of R36 million in shares by the CEO in another off-market transaction. Some of this is due to restructuring, but there’s diversification of wealth here as well. The CEO and associates own 2.6% of the company.
    • In a share-based incentive deal that goes back to 2015, various Northam Platinum (JSE: NPH) execs received a total cash award of R53.3 million in addition to shares worth a mildly astonishing R553 million (pre-tax). All the execs have chosen to commit 100% of their post-tax shares to a new voluntary incentive mechanism.
  • Anglo American (JSE: AGL) will be distributing 110 Anglo American Platinum (JSE: AMS) shares for every 1,075 Anglo American shares. To then provide consistency in the Anglo American share price before and after the demerger, they will proceed with a share consolidation that will see each shareholder have 96 Anglo American shares for every 109 shares currently held. The idea here is to prevent a scenario where the share price drops sharply due to Anglo American Platinum no longer being in the group. They’ve done the maths regarding the reduction of shares in issue to avoid that happening. As for the change of name from Anglo American Platinum to Valterra Platinum, this will be effective from 28 May 2025.
  • Southern Palladium (JSE: SDL) has received the environmental authorisation for the Bengwenyama Project from the Department of Mineral and Petroleum Resources (DMPR). This is an important milestone on the path towards being awarded a mining right. They are also working on an updated pre-feasibility study, focusing on a smaller-scale (and thus less capex-intensive operation), with the results scheduled to be announced in June. The last version of the pre-feasibility study came out in October 2024 and reflected an internal rate of return (IRR) of 28%. Basket prices are off 6% since then, so efforts to downscale the planned operations will hopefully keep the expected IRR at appealing levels.
  • Wesizwe Platinum (JSE: WEZ) has updated the market on the commissioning of the processing plant at the Bakubung Platinum Mine. A number of defects were identified in the initial test runs in 2023, leading to expert help being brought in during 2024. The good news is that the plant rectification is on track and they’ve commenced with hot commissioning. The teething issues that mining houses deal with seem to be a feature of the industry rather than a bug.
  • The seemingly cursed deal for Conduit Capital (JSE: CND) to dispose of CRIH and CLL has finally fallen over. The regulators simply weren’t having it, blocking the deal and leading to a court process. The purchaser eventually reached deal fatigue and elected not to challenge the Prudential Authority’s decision, which means that the deal has lapsed. The parties have no claims against each other as a result of the lapse, so the lawyers on both sides did their jobs properly in the agreements. Of course, this doesn’t help Conduit Capital in the slightest.
  • The formal death of Murray & Roberts (JSE: MUR) in its current corporate form has moved a step closer. The holding company is insolvent and the business rescue plan envisages a scenario in which they have no operating companies or prospects to generate cash by the third quarter of this year. Thus, the board is proposing a resolution for a voluntary wind-up of the company to put it out of its misery. Like so many endings, this one is with just a small puff of smoke from the broken remains of an iconic South African company.

Ghost Bites (Adcorp | Astral Foods | Famous Brands | Netcare | Prosus – Naspers | Renergen | Tharisa | Vodacom)

The Finance Ghost
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Ghost Bites (Adcorp | Astral Foods | Famous Brands | Netcare | Prosus – Naspers | Renergen | Tharisa | Vodacom)

A focus on margins has paid off at Adcorp (JSE: ADR)

The market loved this news

Adcorp tends to have a wide bid-offer spread, but that’s not the reason why the share price was trading 34% higher by the late afternoon. Volumes were almost 5x the average daily volume and all the action came after the release of an exciting trading statement.

For the year ended February 2024, Adcorp expects HEPS to come in between 51.6% and 71.6% higher. This means a range of 127.0 to 143.8 cents, so it’s not a surprise that the share rallied in response. It was trading at R4.10 at the start of the day, which suddenly became a modest P/E ratio even by Adcorp’s standards. Even at the closing price of R5.50 per share, that’s a P/E of just over 4x.

The low P/E is a function of the lack of growth in this space, with Adcorp’s resourcing businesses dealing with a tough economy and a bunch of other factors, like the impact of AI on white-collar jobs. This has forced the group to focus on costs and margins, with clearly visible results.

Full results are due for release on 29th May.

Profits more than halve at Astral Foods (JSE: ARL)

Aah, the joys of poultry margins

The margins in chicken farming are the stuff of legend. It takes just a few changes further up the income statement to cause huge swings in net profit and thus profit margin. This is evidenced by results at Astral Foods for the six months to March 2025, where revenue was up 3.5% but operating profit fell by a nasty 50.7%. This took net margin down from 5.3% to 2.5%. Ouch!

At least the balance sheet is a lot stronger these days, supporting an interim dividend of R2.20 per share (a decent payout ratio vs. HEPS of R4.09). For context, the share price is over R186, so you definitely aren’t buying this for the dividend.

Trying to guess how the broader industry will perform truly is a game of chicken. For example, with SAFEX yellow maize prices up 28%, you would expect there to have been margin pressure in the Feed division. But instead, thanks to a significant drop in soymeal prices (and chickens presumably having more flexible tastes than the average toddler), they managed to not just maintain margins in the Feed division, but improve them by 10 basis points to 5.6%.

The same can’t be said for the Poultry division, where revenue was up just 1.5% and Astral was on the wrong side of the increase in feed costs. Once again, Astral is subsidising the cost of producing chicken, with a loss of R26 million for this division in the period. To add insult to injury, a cybersecurity incident cost the division R20 million.

The outlook statement by the company is essentially a laundry list of risks. And yet, the Astral share price is up 20.7% in the past 12 months. I genuinely don’t understand how anyone can do a reasonable valuation of the companies in this industry, hence I avoid it entirely.

Famous Brands: a scrappy set of numbers, but margins went up at least (JSE: FBR)

And margins are what really matter right now

The year ended February 2025 saw an acceleration in the second half by Famous Brands, as they took advantage of a period that saw practically no load shedding. HEPS for the six months to August was up 9.5% and the full-year result was an increase of 11.9%, so that’s encouraging momentum for the group.

This was firmly a story of margin rather than revenue, as revenue was up just 3.2% and operating profit increased by 12.6%. That’s a 90 basis point improvement in operating profit margin, from 10.1% to 11.0%. This has driven an improvement to the balance sheet, with net debt to EBITDA down from 1.13x to 0.89x.

We begin with the Brands part of the business, which means the franchised restaurants that you know and possibly love. There are various sub-categories here.

Leading Brands, the part of the business with the takeaway businesses that have been the foundation of the group, increased its revenue by 1.6% and operating profit by 7.5%. That’s not exciting on the revenue line, but it’s a lot better than Signature Brands (the fancy restaurants) where revenue fell by 4.4% and the operating loss margin worsened from -1.9% to -5.7%. Looking beyond the South African business, the SADC region grew revenue by 10.0% but suffered a slightly dip in operating profit and thus a contraction in margin from 13.4% to 11.2%. The Africa and Middle East business may have grown revenue by 27.7%, but their operating loss jumped from R14 million to R43 million, a nasty margin of -60.5%. And finally, Wimpy UK had a horrible time, with revenue down 18.5% and the operating margin more than halving from 11.4% to 5.4%.

The Manufacturing side of the business only increased revenue by 2.5%, yet they increased operating profit by 25% and improved the margin from 9.0% to 11.0%. This was the star of the show for Famous Brands in this period.

In the Logistics business, revenue may have been up 4.1%, but operating profit margin declined from 1.9% to 1.4%. Those are paper-thin margins.

As for the Retail division, the margins are even worse. Revenue dipped by 6.6% to R344 million and operating profit fell from R6 million to R1 million. That is a truly horrible return on capital, as the working capital required to support those sales to retailers is substantial.

The group expects a low growth year in 2026. Trading on a P/E of 11.3x, I’m just not sure that there’s enough in this story to keep the multiple at that level.

Margins on the up at Netcare (JSE: NTC)

And a 20% increase in the dividend

Netcare released results for the six months to March 2025. Although revenue was up just 5.3%, they managed to convert this into operating profit growth of 11.5% and a jump in HEPS of 20.9% (or 20% on an adjusted basis). Cash quality of earnings is strong, with the interim dividend also up 20%.

This means that Return on Invested Capital (ROIC) has improved from 10.9% to 11.9%. It’s still too low of course, with hospital groups having quite the reputation for earning sub-par return on capital. At least this metric is trending in the right direction. The group has followed a sensible approach of executing share buybacks, which is what you want to see in terms of capital allocation discipline.

And in line with the recent trend, maternity cases continue to decline. Humanity just isn’t in a particularly great space right now when it comes to making more humans. I always contrast this trend to mental health, where demand is “robust” – another indication of how people are doing at the moment.

Prosus launches the all-cash offer for Just Eat Takeaway.com (JSE: PRX | JSE: NPN)

Bloisi’s growth strategy continues

News of this transaction first broke in March this year. I went into it in some detail at the time in my weekly Moneyweb podcast (you’ll find that episode here and I would love it if you became a regular listener).

Food delivery is one of the verticals that Prosus / Naspers really likes. It’s a familiar space for CEO Fabricio Bloisi, as he cut his teeth by scaling a food business in South America. Europe is certainly not the same place as South America, hence it will need a strategy around efficiencies rather than outright growth. Of course, being able to deliver a product with more efficiency is also a way to drive growth, as it can become more cost competitive.

The offer price of EUR 20.30 per share is a 63% premium to the closing share price on 21 February 2025. It has been unanimously recommended to shareholders by Just Eat Takeaway.com’s board. Top executives including the CEO have agreed to accept the offer.

The timing is clever, as Just Eat Takeaway.com has been through a tough period in which they made mistakes and eventually got out of the US market. This makes it perfect for the Prosus / Naspers crew, as it means that (1) it fits the strategy of building a non-US platform and (2) they can get it for a good price.

The deal is worth EUR 4.1 billion. Revenue over the last twelve months was EUR 3.6 billion. That’s a price/sales multiple of just over 1.1x, which is a bit of a joke for a platform business like this (in a good way). It’s not surprising that some minority shareholders have launched a public campaign to discredit the offer price, calling it far too cheap.

This is how markets work – successful companies get to buy unsuccessful ones and fix them. Here’s a share price chart of Prosus vs. Just Eat Takeaway.com based on their European listings (and thus in comparable currency):

Unlike his predecessor who loved deploying as much capital as possible at the very top of the cycle, Bloisi is able to execute opportunistic deals that take advantage of the broken growth stories in a post-pandemic environment. This is one of the reasons why I’m now long Prosus.

Pressure on Renergen after the release of financials (JSE: REN)

The share price fell 5% on strong volumes

Renergen’s financial performance for the year ended February 2025 wasn’t exactly a secret. The company had previously published a preliminary report that gave a strong indication of what was coming. Despite this, there was a strongly negative market reaction to the detailed financials.

Renergen’s revenue may have increased by 79.7%, but that’s off a tiny base relative to the expenses in the company. This is why the headline loss per share jumped from 75.07 cents to 159.15 cents.

LNG production may have increased by 70% for the year, but that’s not really what the market is interested in. The value lies in helium, which only achieved its first delivery in March 2025 (after the end of this period). This makes the 2026 financial year absolutely critical, as any missteps in the helium story could literally sink the company.

Why is that the case? Well, Renergen is burning through cash and is reliant on ongoing support from funders and investors. That support is based entirely on the expectation of helium successfully being produced and sold. This is why 2026 is the make-or-break year, as I can’t see the market having any further patience.

And here’s the kicker that the market may have particularly hated: as of February 2025, Renergen is in default with the United States Development Finance Corporation. This paragraph from the results should make the risks pretty clear to you:

Tharisa has suffered a huge drop in earnings (JSE: THA)

Chrome prices and the weather were major negative impacts

Tharisa released a trading statement dealing with the six months to March 2025. There’s no good news here I’m afraid, with HEPS expected to drop by between 76.6% to 84.3%. As a reminder, the company reports in US dollars.

This substantial decrease has been attributed to weather-related operational challenges and weakness in chrome prices. Although PGM prices have at least stopped sliding, they also haven’t exactly been on the up. The combination means that operating conditions remain tough in the sector.

With interim HEPS of between 2 and 3 US cents, that share price of R14.50 looks very high.

Vodacom: stretching the term “normalised” as far as possible (JSE: VOD)

This kind of reporting is nonsense

There are many companies out there that distinguish between “reported” and “constant currency” numbers. There are good reasons for this, as it helps investors distinguish between underlying, in-country growth vs. the impact of converting the results into the reporting currency.

It’s also not unusual to see “normalised” numbers, as companies have often undertaken large corporate actions that introduced additional costs into the system.

But I can’t recall another example of seeing constant currency numbers presented as being normalised, particularly when I know that the currency impact is significant. For the year ended March 2025, Vodacom has reported revenue growth of 1.1% and operating profit growth of 1.3%, yet these magically turn into 10.9% (both of them) on a “normalised” basis.

If you are deeply invested in Africa, you cannot tell me that the constant currency basis is “normalised” in the way that most people would understand that term. They shouldn’t be allowed to report numbers like this. I fully understand that companies will try and put the best story forward, but just look at this example of where they are putting the emphasis:

Every small percentage increase is in black. Every large one is in red. Skim readers, beware.

The South African business achieved revenue and EBITDA growth of 2.3%, so margins have been consistent locally. Egypt grew very strongly in constant currency, up 45.2% in revenue and 70.4% in EBITDA. This is where the currency really plays a role, as the numbers reported in rand reflect an 8.2% decrease in service revenue and just 2.9% growth in EBITDA.

The rest of the African business (Tanzania / DRC / Mozambique / Lesotho) saw a 10.4% increase in reported revenue, yet a 13.8% drop in EBITDA. Finally, Safaricom in East Africa grew revenue by 21% as reported and EBITDA by 15.3% on the same basis, making it the genuine standout result.

Credit where credit is due: the fintech business is growing solidly, including in Egypt where it was up 14.1% as reported or 80.1% on a constant currency basis.

There are actually some good news stories in Vodacom. It’s just a pity that they are wrapped up in such a clumsy attempt to gloss over the currency risks that the group faces. How different our continent would look if the macroeconomic situation just needed to “normalise”…

WeBuyCars impacted by the listing structure, but the core business is growing (JSE: WBC)

All the important metrics are going the right way

I have a long position in WeBuyCars for two reasons. The first is that I was a Transaction Capital shareholder at the time when it blew up, so my resultant WeBuyCars stake is essentially the corporate equivalent of a PS: I’m Sorry chocolate bar. The second is that WeBuyCars is a really good business that is consistently winning market share in South Africa. I would much rather be exposed to churn of the existing national car parc than rely on selling new cars to local consumers.

My theory is working out just fine, with revenue for the six months to March up by 15.2%. Growth companies always have to be careful of their working capital, so it’s encouraging to see that cash generated from operating activities was up 6.4%. The growth mindset also comes through in the target dividend payout ratio of just 25% to 33% of headline earnings per share, resulting in an interim dividend of 30 cents. They are hanging onto plenty of capital for growth purposes.

The comparable dividend is of no help, as it reflects the huge pre-IPO dividend that was payable as part of WeBuyCars being separated from its toxic host. This process also significantly impacted the number of shares in issue, which is why HEPS is up by just 1.6% despite core headline earnings being 26.4% higher.

The group remains firmly on a growth path. The impact of the additional number of shares will normalise soon and although the impact on HEPS is frustrating, I’m certainly not complaining about the share price being up roughly 125% since listing in April last year.

Nibbles:

  • Back in September 2024, Grindrod (JSE: GND) announced an intention to acquire the remaining 35% in Terminal de Carvão da Matola Limitada (TCM), the Maputo dry bulk terminal that has been taking advantage of South Africa’s infrastructure failings. All conditions precedent to the deal have been met and they will now move to closing. A deal is never done until all the conditions have been met, so this is important.
  • Gemfields (JSE: GML) achieved strong support at its Extraordinary General Meeting for the fully underwritten rights issue. This isn’t a surprise, as they are in somewhat desperate need of the capital. Interestingly, although 94.41% of votes were cast in favour of the issuance of shares, only 86.33% were in favour of the underwriting issue. That’s still an approval, but it does show some discomfort among shareholders.
  • AYO Technology (JSE: AYO) announced that a potential offeror (at this stage unnamed) has expressed a firm intention to make an offer for all the shares in the company not already held by that offeror. The announcement is currently under review by the Takeover Regulation Panel (TRP) and will be released in due course.
  • MTN (JSE: MTN) announced that Moody’s has affirmed its credit rating with a stable outlook. This gives further support to the overall narrative of how well things have stabilised there.

Sony’s stuck in a Spider-Man spiral

Dominique Olivier
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Sony’s stuck in a Spider-Man spiral

Sony, once a post-war electronics wunderkind best known for pioneering devices like the Walkman and the Trinitron TV, now finds itself tangled in a web of its own making – one spun not from copper wire or silicon wafers, but from red spandex and Hollywood contracts.

To understand how Sony found itself in this tangle of tights and legal timelines, we have to go back (way back) to post-WWII Tokyo. Founded in 1946 as Tokyo Tsushin Kogyo by Masaru Ibuka and Akio Morita, the company that would become Sony was at the forefront of Japan’s economic recovery. It launched Japan’s first transistor radio, helped bring video recording into homes, and changed global pop culture with innovations like the Trinitron television and, later, the Walkman.

Sony wasn’t just good at making things; it was good at predicting the way people wanted to consume media. That foresight led it into music and movies in the 1980s, when it acquired Columbia Records (1988) and Columbia Pictures (1989), giving the company control of both content and the devices that played it. The dream was vertical integration: own the sound, own the screen, own the experience.

And for a while, it worked. Until the business of owning stories got a lot more complicated.

One man’s bankruptcy is another man’s gold rush

While Sony was riding high on its global expansion, Marvel was barely staying afloat. Founded in 1939, the comic book icon introduced a constellation of memorable characters including Captain America, Iron Man, the X-Men, the Fantastic Four, and of course, Spider-Man. But by the 1990s, comic book sales were in freefall, and Marvel found itself on the brink of bankruptcy.

To stay solvent, the company began licensing its intellectual property at bargain-bin prices. Toy Biz got the action figures. 20th Century Fox got the X-Men. Universal Studios took a swing at the Hulk. And in 1999, Sony Pictures swooped in and claimed the big-ticket item, buying the rights to Spider-Man’s film and TV appearances for a reported $7 million – a deal that would go down in entertainment history as one of the most consequential licensing agreements ever signed.

Sony wasted no time turning their new property into box office gold. The first Spider-Man film, directed by Sam Raimi and starring Tobey Maguire, was released in 2002 and shattered opening weekend records. It was followed by two more films in 2004 and 2007. Critics and fans largely embraced the trilogy, though Spider-Man 3, with its surplus of villains and eyeliner, showed early signs of franchise fatigue.

Then came the reboot era. In 2012, Sony reset the franchise with The Amazing Spider-Man, starring Andrew Garfield. It performed well, but the sequel in 2014 underwhelmed audiences and critics alike. Sony, aware they had a box office titan in Spider-Man but no larger universe to support him, began searching for a way out of their creative cul-de-sac. Fortunately, just across the lot, Marvel Studios had cracked the code on interconnected storytelling and was building a little cinematic empire of their own.

Meanwhile, at Marvel

I did a deep dive on Marvel’s big bet – the cinematic universe model – back in October last year. If you’re feeling foggy on the details, you can find that piece here. The short version: while Sony was busy squeezing as much value as it could out of their Spider-Man rights, Marvel was quietly rewriting the playbook. Instead of standalone blockbusters, they introduced the Marvel Cinematic Universe (or MCU, if you’re on nickname terms), built on the same crossover DNA that made their comic books work – recurring characters, shared worlds, and storylines that echoed across films like dominoes. The blueprint was simple: solo hero movies would build to an ensemble Avengers climax, then reset for the next phase.

Fans caught on quickly. Reddit lit up. Theory threads exploded. But one big question kept surfacing: Spider-Man is a core Avenger – so how was Marvel planning to assemble the full team without him, now that Sony owned him?

A marriage of convenience

In 2015, Sony and Marvel Studios (by then owned by Disney) struck an historic deal, allowing Spider-Man to join the MCU on what is essentially a complicated loan. Sony would continue to finance and distribute solo Spider-Man films, while Disney could feature the character in ensemble MCU projects. It was a win-win creatively and financially.

This third iteration of Spider-Man, played by Tom Holland, joined the MCU in Captain America: Civil War and quickly became a fan favourite. He’s since appeared in six MCU films, including Spider-Man: No Way Home, which pulled off a multiverse hat-trick by uniting Holland, Maguire, and Garfield (three generations of Spider-Men!) on screen – a dazzling nostalgic spectacle that really is a testament to the intricacy of this IP dance.

But the partnership hasn’t always been smooth. In 2019, negotiations between Sony and Disney broke down, and Sony threatened to pull Spider-Man out of the MCU entirely. As you can probably imagine, the internet lost its collective mind. Hashtags trended, and Tom Holland reportedly cried on the phone with Disney CEO Bob Iger. Eventually, fan pressure (and logic) prevailed. A new deal was signed, and development began on Spider-Man: Brand New Day, starring Holland and due in 2026.

Can Sony keep spinning?

To Sony’s credit, some of its Spider-Man output has been brilliant. Into the Spider-Verse, the animated Sony film that followed Spider-Man’s stint in the MCU, is widely regarded as one of the best animated films ever made, with its groundbreaking visuals and emotionally rich storytelling. Its sequel, Across the Spider-Verse, doubled down on that performance. But other Spider-adjacent efforts – Morbius, Venom: Let There Be Carnage, and Madame Web – have landed with a thud, critically and often also commercially.

The company seems torn between genuine creative ambition and IP survivalism. Some projects feel like strategic world-building, while others feel like filler meant to hit a legal word count. And there’s a very good reason for that. 

The 71-page licensing agreement between Sony and Marvel, which was unearthed in the infamous 2014 Sony hack, reads less like a casual IP deal and more like the cinematic equivalent of a hostage negotiation. Among the more revealing clauses is a strict set of deadlines. Under the terms of the agreement, Sony must begin production on a new Spider-Man film within 3 years and 9 months of the last release, and must get it into theatres within 5 years and 9 months. Miss either deadline, and the rights to one of the most valuable characters in pop culture automatically revert to Marvel.

There is some breathing room: if Sony manages to crank out three Spider-Man films within eight consecutive years, the timeline extends, but only slightly. They get up to 5 years to start the next production and 7 years to release it. Still, the fundamental rule stands: use it or lose it. And Sony, well, Sony really doesn’t want to lose it.

That ticking clock is a big part of why Sony’s Spider-Man output hasn’t slowed, even when reviews (and memes) suggest they maybe should’ve taken a beat. This is less about passion projects and more about portfolio management. Every film, whether good, bad, or baffling, resets the rights countdown. That’s why you’ve seen the studio invest not just in Peter Parker-led stories, but also in increasingly obscure spin-offs featuring in-universe characters like Venom, Morbius, and Madame Web. Even when a film flops critically (Morbius managed to tank twice), it still counts as another notch on the production timeline. From Sony’s perspective, that’s less of a failure and more of a renewal notice.

Unless the contract is radically renegotiated, Sony will keep making Spider-Man content (animated, live-action, cameo-laden, or otherwise) every few years to maintain its grip. It might be artistically uneven, but it’s commercially inevitable. One day, the rights may revert to Marvel. Or perhaps a more permanent partnership with Disney will emerge. But until then, Sony’s stuck in the Spider-Man spiral, forever climbing, spinning and rebooting.

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 (Blue Label | Collins Property Group | Finbond | MAS | Nampak | NEPI Rockcastle | Newpark | Nutun | Pepkor | Primary Health Properties – Assura | Richemont | Tiger Brands)

The Finance Ghost
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Ghost Bites (Blue Label | Collins Property Group | Finbond | MAS | Nampak | NEPI Rockcastle | Newpark | Nutun | Pepkor | Primary Health Properties – Assura | Richemont | Tiger Brands)

Blue Label could list Cell C separately on the JSE (JSE: BLU)

If we are really lucky, the accounting might even become simpler as well

Aside from being an excellent case study for sadistic lecturers looking for ideas for impossible IFRS questions, Blue Label has been the best punt in the telecoms sector in recent times. Those who were willing to ride the momentum are up 130% in the past 12 months! I have a firm rule of not buying things I don’t fully understand, so I missed out on this.

For the few who actually understood the structure and the many who followed their lead, this is a winner that keeps on winning. The next step in the dance is a potential separate listing of Cell C on the JSE, thereby giving investors the option between exposure to Cell C or Blue Label’s distribution business. If you think about how long Cell C has been around for and how often it has failed to implement a sustainable business model, this step is a big deal.

As you would expect, such a transaction would require a complex restructure of the group. I just hope that above all, they take an approach of simplifying things as much as possible. Having two groups with clean balance sheets and as little cross-exposure as possible should be the goal here.

The market didn’t like something about the Collins Property Group update (JSE: CPP)

Perhaps lack of growth in the final dividend was the problem?

Collins Property Group closed 12.9% lower on Friday after releasing results. When you see something like this, it’s worth checking what time the announcement came out and whether the market had time to properly consider it. As this was a late morning announcement, we can tick that box. The next thing to consider is traded volumes, particularly for smaller companies. The volume on the day was over 6x more than an average day, so this drop was driven by strong volumes. In other words, you should take it seriously.

The share price drop tells us that the market didn’t like something about the numbers, even though distributable income per share was up 16% for the year to February 2025. Although the total dividend for the year was up 11%, all the growth was in the interim dividend, as the final dividend was flat at 50 cents per share. I think this was probably one of the issues, as investors don’t enjoy seeing a decrease in the payout ratio at REITs

The loan-to-value ratio also remains high, having improved by just 100 basis points from 50.8% to 49.8%. Although they make the argument that their asset valuations are conservative, the reality is that the market will benchmark this ratio against other REITs in the sector and Collins won’t be seen in a favourable light based on the current level. This could be another reason for the share price move.

Vacancies have improved in both the industrial and logistics as well as retail portfolios. Although it did go the right way in office as well, it remains very high at 18.4% (vs. 4.7% in retail and just 0.9% in industrial and logistics). They are looking to sell the office properties.

I must point out that despite the negative response to earnings, the share price is still up 27% over the past year.

Losses have worsened at Finbond (JSE: AFT)

Shareholders won’t have to wait long for full details

Finbond’s share price is up 95% over 12 months. Despite this, they are reporting headline losses – and the losses are getting worse!

In a trading statement for the year ended February 2025, the headline loss per share is expected to be between 1.86 cents and 1.94 cents. This compares to a loss of 0.4 cents in the comparable period.

Full details will be available on 30 May.

An interesting potential acquisition of MAS is on the table (JSE: MSP)

It could involve an inward listing of new preferred shares

PKM Development already holds 21.8% in MAS. If the name sounds familiar, its because PKM development is a joint venture between MAS and Prime Kapital Holdings. So, MAS holds 40% in a joint venture that in turns holds 21.8% in MAS (among other assets). Sometimes I’m reminded that the convoluted questions in my Fin Acc IV papers at varsity weren’t so crazy after all!

It gets even more complicated. The subsidiary of PKM Development that holds the MAS shares has now sent an offer to the MAS board for all the remaining shares in MAS. The board of MAS has confirmed that they had no input into the terms of the letter, despite being a 40% holder in the joint venture.

The offer gives shareholders in MAS the option to receive either cash (EUR 0.85 per share) or 5 year redeemable non-voting preferred shares (or a combination of the two). The deal is subject to shareholders not electing to receive more than EUR 40 million in cash, although the offeror reserves the right to increase this amount as required. The MAS market cap is R14.4 billion and even once we take into account the portion already held by the offeror, that seems like a very light cash cap. The deal relies on most shareholders taking the preferred equity.

To try and encourage that choice, they would inward list the preferred equity on either the JSE or the Cape Town Stock Exchange. Will this be enough?

There’s a whole complicated story in the announcement about what the future redemption value would be, with one of the key inputs to the calculation being the face value of each instrument, which increases by 7% per annum (in EUR).

My overall reaction to this offer is: why bother? The price of EUR 0.85 per share works out to around R17.15 at current exchange rates. MAS is trading at R18.77, so the offer price is at a discount to the current traded price. On top of that, it has a limited cash portion and creates a far more complex instrument that is likely to have little in the way of liquidity.

This seems clumsy and opportunistic to me. Perhaps I’m missing something, in which case I’m always happy to be challenged with opposing views!

Nampak is achieving modest growth (JSE: NPK)

Under the circumstances, that’s pretty good

Nampak has released a trading update for the six months to March. They were up against a tough base period for comparative purposes, as well as all the macroeconomic noise that has been a feature of the first few months of this year. Despite this, earnings went in the right direction.

Although they don’t give specific revenue growth at this stage, Nampak has indicated that operating profit is up 7%. That’s a solid outcome.

There are some distortions in headline earnings regarding a medical aid gain, a pension fund surplus and a COVID insurance claim, which is a useful reminder that even HEPS isn’t a perfect measure of sustainable earnings. The net after tax effect of these items is a benefit of R165 million in this period vs. R290 million in the comparable period, so it actually impacts growth in HEPS. This is why guided HEPS growth is only 1% to 8% from continuing operations, despite there being lower net finance costs vs. the prior period.

From total operations, HEPS will jump by between 98% and 114%, impacted by Bevcan Nigeria.

Full details will be available when results are released on 23rd May.

NEPI Rockcastle: why per-share metrics matter (JSE: NRP)

Total growth is less important than distributable income per share

NEPI Rockcastle released an update for the first quarter of 2025. Group net operating income increased by 12.6%, boosted by two large acquisitions in Poland in the second half of 2024. If you split those out and look at like-for-like earnings, they were only up by 5%.

Although footfall was down year-on-year with the timing of Easter to blame, tenant sales were up 3.7% thanks to a 9.7% jump in average basket size. This suggests that the markets of focus in Central and Eastern Europe remain healthy. This supports the decision by NEPI Rockcastle to continue expanding in the area, with various developments in progress.

The balance sheet is extremely healthy, with a loan-to-value ratio of 31.2%. That’s well below the 35% level that the company is comfortable to operate at.

All of this sounds great, until we get to what this translates to on a per-share basis. Due to the increase in the number of shares in issue due to strategies like accelerated bookbuilds to raise new equity capital, the growth in distributable earnings per share for the year ended February 2025 is expected to be just 1.5%. This is why it is very important to take into account capital raising activity (including things like dividend reinvestment plans) and how they affect returns.

Newpark has ramped up its payout ratio (JSE: NRL)

But this doesn’t fix the underlying challenge in the portfolio

Newpark has a focused portfolio with just a few properties in it, including the JSE building in Sandton and 24 Central next door, where I spent many a Friday evening in my early career. They also have a property in Linbro Business Park and one in Crown Mines. Not exactly a coherent selection, is it?

In the year ended February 2025, this portfolio could only manage a 1.5% increase in revenue. That’s nowhere near enough to offset inflationary pressures on costs, so funds from operations decreased by 3.4%. Despite this, the total dividend per share increased by 11.4%. They essentially ramped the payout ratio to 100% of funds from operations per share, which means the dividend growth is no indication of how the underlying portfolio did in this period.

With the loan-to-value ratio up from 41.1% to 43.1%, I’m not sure why they ramped the dividend here. That’s not an overly comfortable level of debt.

Earnings are also going to get a lot worse, as a major negative reversion on the lease with the JSE is going to hit funds from operations per share for the year ended February 2026 by between 41.3% and 50.2%! This implies forward earnings of between 39 and 46 cents per share, which tells me that the current share price of R4.80 is way too high. There’s very little volume in the share, which is why the share price isn’t reflecting the current economic realities.

Nutun isn’t out of the woods yet (JSE: NTU)

The charred remains of Transaction Capital are now loss-making

The sad and sorry tale of what used to be Transaction Capital continues, with Nutun (the renamed group that is now just the old TCRS business) reporting losses for the six months to March 2025.

This is a now a business process outsourcing group that is still primarily focused on collection and debt acquisition services. It always used to make money when Transaction Capital was still in one piece, but there have been considerable restructuring processes underway. There’s little doubt that the broader chaos in the Transaction Capital group negatively impacted Nutun, especially in terms of its access to capital to execute its strategy.

The group notes that this is only the first year of a two-year restructuring process, so it’s going to be messy for a while. Despite a significant reduction in overheads, the expected headline loss per share from continuing operations is -14.6 cents to -16.5 cents, a significant negative swing from positive HEPS of 2.3 cents in the comparable period.

For context, the share price is R1.99, having shed 26% of its value in the past 12 months. As this announcement came out after market close on Friday, I doubt it will be a happy Monday for this share price.

Solid double-digit growth at Pepkor (JSE: PPH)

This is what shareholders want to see

Pepkor has good news for shareholders based on the six months to March 2025. With solid numbers in the traditional retail and fintech operations, the expected increase in normalised HEPS from continuing operations is between 13% and 23%. That’s strong!

In case you’re wondering, the discontinued operation is The Building Company in the base period. There were no discontinued operations in this period. But it’s still critical to look at continuing operations, otherwise you have The Building Company in the base period and not in this one, which limits comparability.

As for the reference to normalised HEPS rather than just HEPS, this is due to changes to the effective tax rate because of a tax settlement. Even without normalising for the tax impact, HEPS was up by between 8% and 18%.

Detailed results are due on 27 May.

Primary Health Properties is still making a play for Assura (JSE: PHP | JSE: AHR)

Until now, the board has been in favour of the private equity offer

As things stand, the board of Assura has been supportive of an offer by KKR and Stonepeak to take the property fund private. Primary Health Properties has been throwing its hat in the ring, but they haven’t won the support of the board. I don’t blame the board, as my view is that the private equity option has been the superior offer.

Nonetheless, Primary Health Properties is going ahead with a firm off to shareholders. It comprises 12.5 pence in cash and 0.3769 new shares in Primary Health Properties for each share in Assura. This is a merger of two listed companies rather than a take-private by private equity investors.

The Primary Health offer represents a 4.7% premium to the offer of 49.4 pence put forward by the private equity consortium. That’s better than what we’ve seen before, when the offer was for 9.08 pence and 0.3848 new shares in Primary Health Properties. At the time, that was an implied value of 46.2 pence for Assura. The updated offer implies 51.7 pence.

But will it be enough of a premium? Mergers are reliant on synergies and there are a zillion examples in the market of deals that failed to achieve the promised benefits. This is why shareholders tend to prefer cash wherever possible, which Primary Health has responded to by increasing the cash component of the offer.

For now, Assura announced that the board is considering the offer and will make a further announcement in due course. It’s all going to come down to whether a 4.7% premium is worth the risk of accepting a mix of cash and shares, rather than just cash. Personally, I don’t think it’s enough of a premium, but let’s see what the UK-based board and its advisors will say.

The market found some highlights in the Richemont numbers (JSE: CFR)

It seems as though sales momentum and dividend growth were good enough for investors to get excited

Richemont’s results for the year ended March 2025 don’t actually tell a positive story. For the full year, sales increased just 4% and gross margin contracted by 120 basis points to 66.9%. Operating profit fell by 7%, so operating margin was down by 240 basis points to 20.9%. It’s not exactly a highlights reel, is it? Profit from continuing operations fell 1%, so they were in the red overall. Despite this, the dividend per share was up 9% and the share price closed 7.2% higher.

Management’s confidence in raising the dividend must be part of why the shares had a good day. The other reason must be sales momentum in the second half of the year, particularly outside of China. In fact, even China had a better second half than first half of the year, although in that region we are talking about a slower rate of decline rather than a faster rate of growth.

Will 2026 be a better year for Richemont? With Asia Pacific contributing 33% of sales in 2025 despite suffering negative growth of -13%, it mostly depends on China. The strong result in key regions Europe (+10%) and the Americas (+16%) is quickly offset by weakness in Asia Pacific. The fastest growing region was actually Japan (+25%), now representing 10% of total sales.

The retail vs. online vs. wholesale mix is always interesting to look at as well. The retail channel (directly-operated boutiques) is 70% of group sales and grew sales by 6% this year. Online was stronger, up 11% (excluding YNAP) off a small base of 6% of group sales. Wholesale struggled, declining 3% and contributing 24% of group sales.

The other way to slice and dice Richemont is by type of product. Jewellery Maisons grew sales by 8% and operating profit by 4% for the year. Interestingly, the recent rise in the gold price actually hurts them here, as it represents higher input costs and thus makes their products even more expensive! Specialist Watchmakers suffered a 13% decline in sales and a particularly ugly 69% drop in operating profit, which shows how much operating leverage there is in this industry i.e. the extent of fixed costs. And although there is a significant Other segment at Richemont, it includes so many unrelated things that I’m not sure we can draw useful conclusions from looking at it.

So, despite a weak year overall, the market is taking encouragement from the growth outside of China, the momentum in the second half of the year and the balance sheet strength that has supported growth in the dividend. The share price is now up 26% year-to-date and 22.8% over 12 months.

Tiger Brands is doing the responsible thing with the Langeberg & Ashton Foods business (JSE: TBS)

This hasn’t been an easy issue to manage

Tiger Brands has finally figured out how to navigate the social-economic disaster that is the Langeberg & Ashton Foods business. If you’ve ever driven through Ashton (and over its unnecessarily fancy bridge), you’ll know that it’s a relatively small town that is largely dependent on this business for its economic viability. Employing over 3,000 permanent and seasonal staff, the impact on the surrounding area of its closer would be the severe.

Having said that, Tiger Brands also has a responsibility to all its stakeholders, including shareholders, which means they can’t hang onto a financially problematic business purely for social reasons. They are a for-profit company, not a governmental organisation.

Is there a happy medium? It seems so, with Tiger announcing the disposal of the business for a nominal R1 to a consortium of parties with a vested interest in the community and the viability of the business, including a local co-operative of fruit growers in the region. That sounds pretty sensible to me. On top of this, Tiger Brands will commit R150 million towards establishing a community trust for the broader Langeberg Community, allowing that trust to beneficially hold 10% of the business. I’m not exactly sure how the back-end structuring is working, as the equity is being sold for a nominal value rather than R1.5 billion. And as a further commitment, Tiger will complete a R31 million effluent plant upgrade.

Either way, what definitely isn’t a nominal value is the extent of working capital required. This seasonal business sucks R900 million per annum in working capital, so offloading it will take pressure off the Tiger balance sheet.

In terms of the impact on Tiger’s supply chain, they will enter into a contract manufacturing agreement with the purchaser for canned fruit under the KOO brand. This is also critical to ensure the sustainability of the business.

Under the circumstances, it’s hard to see how a better outcome was possible.

Nibbles:

  • Director dealings:
    • A few directors and officers of AngloGold Ashanti (JSE: ANG) executed trades in relation to share options. Although one director sold only the taxable portion, two officers sold a total of $765k in shares and part of this was in excess of the taxable portion.
    • A director of African Rainbow Investments (JSE: AIL) accepted the offer to shareholders to the value of R650k.
  • Vunani (JSE: VUN) confirmed that all conditions precedent for the sale of 30% in Fairheads Benefit Services and Fairheads Financial Services to Old Mutual (JSE: OMU) have been met and the deal has now closed.
  • ArcelorMittal (JSE: ACL) corrected an error in a previous announcement (and even in the associated legal documents). The IDC has provided a facility to the group to defer the wind down of the long steel business for a period of six months. That should’ve meant up until the end of September, but the initial announcement and the legal docs referenced the end of August. They’ve corrected the error and confirmed that they have until the end of September.

PODCAST: No Ordinary Wednesday ep100 – a world in flux

Investec No Ordinary Wednesday
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PODCAST: No Ordinary Wednesday ep100 – a world in flux

Listen to the podcast here:

From a global pandemic to fractured supply chains, energy shocks, inflation spirals, rate hikes, AI disruption, war, and geopolitical realignment – the last four years have been anything but dull.

As we celebrate the 100th episode of the No Ordinary Wednesday podcast, we pause the relentless churn of the news cycle to reflect on the macro themes that have defined our world since this show first aired in May 2021. In this episode, we’ve gathered a veritable global panel of Investec leaders from Johannesburg, London, Mumbai, and Dubai to share their insights on what has shaped their regions and the critical forces they will be monitoring in the coming years.

Hosted by seasoned broadcaster, Jeremy Maggs, the No Ordinary Wednesday podcast unpacks the latest economic, business and political news in South Africa, with an all-star cast of investment and wealth managers, economists and financial planners from Investec. Listen in every second Wednesday for an in-depth look at what’s moving markets, shaping the economy, and changing the game for your wallet and your business.

Also on Apple Podcasts, Spotify and YouTube:

https://www.youtube.com/watch?v=xDvLCYsiyqs

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