Aspen still hasn’t started recovering from the market shock in April (JSE: APN)
Looking at the latest earnings explains why
The Aspen share price is down 32% year-to-date, with almost all of that move happening in a single swipe of the ol’ bear claws in April. When people say that stocks take the stairs up and the elevator down, this is what they are talking about:
The driver of that catastrophe was the news of a significant contractual dispute in the business with an expected impact of R2 billion on EBITDA for the year. This kind of thing certainly doesn’t build confidence in the market.
The latest update from the company is a trading statement for the year ended June 2025. HEPS is down by between 40% and 45%, which is awful. If you use normalised HEPS instead, it’s still terrible with a drop of between 27% and 32%. This is why the share price has shown no signs of recovery since that massive knock.
As for the dispute, the latest update is that normalised EBITDA for the Manufacturing business (where the problematic mRNA contract sits) is expected to be down 60% in FY25 vs. FY24. They are in an adjudication process, so the outcome is uncertain.
Silver linings? Well, Aspen’s core Commercial Pharmaceuticals business grew revenue by double digits and achieved normalised positive EBITDA growth. But although operating cash conversion seems to be strong, there’s still plenty of debt on the balance sheet and finance costs are up. It’s hard to find many positives here I’m afraid.
Here’s another negative: changes to tax legislation across South Africa and Mauritius have led to a permanent increase in the effective tax rate, leading to a substantial impairment of R1.7 billion. You can compare this to the mRNA asset impairment of R0.8 billion and other market related impairments of R1.6 billion. These numbers are excluded from HEPS, but they have pushed the group into an overall loss-making position. Ouch.
Looking ahead, they expect mid-single digit organic revenue and stronger EBITDA growth in Commercial Pharmaceuticals in 2026, driven mainly by growth in China and in South Africa. They have invested heavily in GLP-1 products, with the hope that their margins will get fatter while the people get skinnier.
Sadly, the most noticeable loss for people isn’t on their waistlines, but rather in their share values.
Blue Label (which will shortly have a slightly different name) flags a huge earnings jump (JSE: BLU)
And I mean huge…
Blue Label Telecoms will soon change its name to Blu Label Unlimited. Given the latest earnings, I don’t think punters care in the slightest about the name – they just want to see this trend continue.
For the year ended May 2025, Blue Label (still the official name for now) grew HEPS by a rather ridiculous 517% to 521%. If you use core HEPS, you get between 505% and 509%. Either way, that’s pretty wild.
If we focus on core HEPS, the range is 384.03 cents to 387.07 cents. The share price is around R17.20, so the Price/Earnings (P/E) multiple is just 4.5x. This is why the share price is up 228% over 12 months!
Well done to those who took the punt here. I like to stick to my knitting of buying things that I understand, with Blue Label’s financials and underlying business being beyond my comfort zone. This is a good example of where traders can do especially well, as they tend to worry more about momentum than anything else. When it works, it works very well!
Curro just keeps sliding (JSE: COH)
And unless people start having more kids, I don’t see things improving
My view is that Curro is in more trouble than most people realise. All you have to do is go and research the number of births in South Africa in recent years and you’ll see the problematic trend. Curro’s footprint was built on the assumption of stronger demand for the schools over time, rather than weaker demand. In other words, they have too many seats.
The schools are thus nowhere near full and I don’t see that changing anytime soon, with an update for the six months to June 2025 reflecting a decrease of 1.4% in the weighted average number of learners.
This means they either have to cut costs (which is very hard as a class needs a teacher whether there are 18 kids or 22 kids or 26 kids – hence the issue for margins), or increase prices. Even prices are hard to increase, as families that do have kids are facing the well-known squeeze that South Africa likes to dish out to middle-income families. You know, the one where they pay tax to the government and then pay again for all the services that government should be providing (but doesn’t).
The latest trading statement shows us what this looks like in practice. For the six months to June 2025, despite significant share buybacks, HEPS will change by between -3.0% and +2.7%. At the midpoint, that’s slightly negative.
The share price is showing a far sharper drop than sideways earnings would suggest, down 37% year-to-date. This is what happens when growth expectations are washed out of the market. And although impairments don’t affect HEPS, the fact that Curro impaired its assets by R74 million in this period tells you that there are still worries around these assets living up to their potential.
Coal volumes drive Exxaro higher (JSE: EXX)
This is a far more bullish update than we’ve seen from most of Exxaro’s peers
The mining and resources sector has been very hit-and-miss this year, mostly driven by the exact mix of commodities in each company. Occasionally, a company comes out with results that buck the trend, driven by strong execution in the business despite weaker global prices. Exxaro is one such example.
For the six months to June, Exxaro grew revenue by 8% and HEPS by 13%. Although the interim dividend is just 6% higher, these key numbers are all heading in the right direction.
The coal business improved its EBITDA by 10% thanks to higher export and domestic sales volumes, which more than offset the weak price environment that has hurt other businesses in the sector.
Part of the reason for the modest dividend growth is the extent of capital expenditure, coming in at R2 billion in this period – almost double the previous period thanks to the expansion capital required for the Karreebosch renewable energy project. Exxaro has substantial wind energy investments that contribute positively to earnings.
It’s always tough for companies in this space to make accurate forecasts, as there are many global factors at play. The word “stable” comes up a lot on the outlook statement for the second half of the year. When earnings are moving higher, stability is exactly what investors want to see. Exxaro’s share price closed 7.9% higher on the day.
Octodec upgrades guidance, despite all the challenges of being in CBDs (JSE: OCT)
Amazingly, Joburg still hasn’t properly repaired Lilian Ngoyi Street after the gas explosion in July 2023
Octodec plays the property game on hard mode, treading where many others simply won’t go: major CBDs in South Africa (other than Cape Town, obviously). That doesn’t mean that there isn’t money to be made. Quite the opposite, actually, as evidenced by the latest pre-close update for the year ending August 2025.
The portfolio isn’t exclusively inner city properties. There’s a lot of other stuff in there, including the likes of Killarney Mall in Joburg. But despite that feeling like an “easier” property to manage on paper, it has a vacancy rate of 18.5% and is held for sale. Just because one property is in a rough area and the other is in a better area doesn’t mean that the latter is automatically a better investment.
Vacancies remain a challenge across much of the portfolio, with tenant affordability as a handbrake on growth. The general state of urban decay doesn’t help, nor does the impact of a massive hole in Lilian Ngoyi Street that still hasn’t been fixed after the gas explosion in July 2023.
In terms of the financials, the loan-to-value ratio is expected to be below 40%, with Octodec aiming to get it below 35%. Financing activity is leading to better interest rates, which will assist with earnings growth for investors.
Speaking of growth, despite the obvious challenges at play, the company has upgraded its full year guidance. They expect distribution growth of between 3% and 6% vs. original guidance of 2% to 4%.
Spur’s strategy keeps working (JSE: SUR)
Get the ice cream and sparklers – there’s something to celebrate
Spur’s share price has been choppy over the past year, with no obvious trajectory after the strong performance in early 2024. The market is always nervous of South African consumer stories, particularly in discretionary categories like restaurants.
In the background though, the company has been consistently delivering. In the year ended June 2025, revenue was up 11.2% and HEPS jumped by 16.8%. And for dessert, how does dividend per share growth of 40.4% sound? Return on equity came in at 31.7%, a useful reminder of the kind of returns that businesses in this space can generate when things are working.
Update store designs are making a significant difference here across the Spur and Panarottis brands in particular, with improvements also being made to John Dory’s, Hussar Grill and Doppio Zero. There’s no mention of changes to RocoMamas and I’m not surprised, as there’s really no need to change anything there (perhaps I just really like the wings and ribs with the kids – goodness knows I’ve contributed to their revenue growth this year).
Here’s an interesting statistic: the largest revenue stream for the group is lunch. I guess that makes sense when you consider the typical approach of a family going shopping for a few hours and making a stop at a Spur group restaurant in a mall somewhere.
Franchised restaurants turnover was up 8.3%, which is well below group revenue growth of 11.2%. The gap is explained by company-owned stores and particularly the acquisition of Doppio Zero, along with the manufacturing and distribution division in the group.
Overall, Spur’s brand portfolio is clearly working very well. It’s a great example of the power of focus and the value of understanding consumers in one particular region, rather than running off overseas in the hope of finding something new to buy.
WBHO is enjoying growth in earnings (JSE: WBO)
But the share price has told a different story this year
The construction sector provides a great opportunity for the old joke about making a small fortune – after starting out with a large one. Generally speaking, investors have been hurt in this sector, not least of all because there is such limited investment in infrastructure in South Africa. And in cases where companies have gone overseas, results have mostly been awful.
In what feels like an ocean of despair at the moment, with Murray & Roberts (JSE: MUR) now dead and Aveng (JSE: AEG) fighting to turn the corner, WBHO has come out with a positive trading statement. They appear to be growing across basically all their markets, with overall order book levels up by a meaty 23%.
Is this translating into earnings growth? Simply: yes, it is. HEPS from continuing operations increased by between 5% and 15%, while HEPS from total operations was good for growth of between 10% and 20%.
You would never say this from looking at the share price, which was down 27% year-to-date coming into these numbers. Understandably, the market appreciated this trading update and the share price was up over 3% by late afternoon trade.
Nibbles:
Director dealings:
An associate of the CEO of Acsion (JSE: ACS) bought shares worth R1.2 million.
A director of Kumba Iron Ore (JSE: KIO) bought shares worth R85k.
The latest at MAS (JSE: MSP) is that the group of institutional shareholders who requested the upcoming extraordinary general meeting has now withdrawn the resolutions related to the appointment of directors. I can only imagine that this is because of the extent of shares that Prime Kapital managed to secure through their offer. The other proposed resolutions will still be voted on though, including the proposed removal of certain existing directors.
Assura (JSE: AHR) is fast approaching a level at which I can’t see the company remaining listed, with Primary Health Properties (JSE: PHP) now holding 81.37% in the company and pushing for it to be delisted. If they get to 90%, they can pursue a squeeze-out, but that’s not a prerequisite for a delisting. The takeover has certainly been a success, which I think can largely been attributed to the strong recent numbers from both companies and the fact that a merger gave investors the chance to remain invested in the sector vs. selling out to private equity for cash. In such a case where there’s a bullish view on the sector, share-based offers can be superior to cash.
There’s still nothing easy about the relationship between RMB Holdings (JSE: RMH) and Atterbury Properties, the company in which RMB Holdings has a stake that is proving to be really difficult to monetise. RMB Holdings is a value unlock play, but unlocking it requires a complicated key. It’s interesting to note that shareholder activist Albie Cilliers (a good example of a complicated key) is now on the board of Atterbury. The latest announcement is that fellow director Brian Roberts was set to be removed by the controlling shareholders in Atterbury, but that RMB Holdings has the power to appoint him to the board under the shareholder agreement. So, it looks as though Roberts stays on the board, if I understand the announcement correctly. There’s a lot of money at play here and clearly some strong differences of opinion on the board.
In happy news for Trellidor (JSE: TRL), the disposal of Taylor Blinds and NMC South Africa has now become unconditional. The company has had some tough times in recent years and is hopefully in a better place now. Time will tell.
PPC (JSE: PPC) announced that PPC Zimbabwe has sold vacant land for $30 million. It’s been quite the story with that property, as the Zimbabwean government tried its best to expropriate it over the years until 2010. In a nice surprise for shareholders, this land was only valued at R37 million in the financials for the year ended March 2025. And no, the two currencies aren’t a typo – they really did sell it for $30 million after carrying it at R37 million!
South Ocean Holdings (JSE: SOH) released results for the six months to June 2025 that I’ll just give a passing mention here. The electrical manufacturing company saw revenue fall by 10.1% and operating profit collapse from a profit of R68 million to a loss of R31.6 million. The headline loss per share is 15.20 cents and the share price is now just R1.00. Unsurprisingly, there’s no dividend.
Wesizwe Platinum (JSE: WEZ) has announced the appointment of three new directors, including a new CEO.
Randgold & Exploration Company (JSE: RNG) has flagged a much smaller headline loss per share for the six months to June 2025, but it’s still a loss. They expect to be at between -8.22 cents and -9.38 cents.
The disposal by Nedbank of its 21.2% stake in Ecobank Transnational Incorporated (ETI) comes as no surprise. The group indicated recently in its interim results that the stake was classified as held for sale but its unhappiness with the asset has been well documented for a number of years. In 2008 Nedbank and Ecobank established a strategic business co-operation relationship. In 2014 Nedbank exercised the option to acquire a 20% stake in ETI for which it paid at the time US$493,4 million (R5,57 billion). Last week Bosquet Investments, the private investment vehicle of managing partner and co-founder of Enko Capital, acquired the stake for $100 million (R1,8 billion). Nedbank says the disposal represents a reset for the Bank’s strategy on the rest of the African continent with a clear focus on the SADC and East Africa regions in businesses Nedbank owns and controls.
African Rainbow Minerals (ARM) is to purchase 25,781,715 shares in Surge Copper at a price of C$0.175 per share for a total consideration of C$4,51 million. The acquired shares increase ARM’s stake from 13,44% to 19.9%. The transaction represents a non-brokered private placement and was undertaken for investment purposes.
African Infrastructure Investment Managers (Old Mutual) through its IDEAS Fund and Motseng Investment have formed a joint venture company Motseng Ideas Infrastructure Group (MIIG). MIIG’s mission is to invest in, develop and operate assets that directly improve the lives of communities and drive inclusive growth. MIIG is a black-owned, black women-led entity.
Dipula Properties has acquired Protea Gardens Mall in Soweto from Pietersburg Property Development for a purchase cash consideration of R487,1 million. In addition, Dipula acquired a further four properties from various vendors for an aggregate R215,6 million. Two of the properties are industrial, one retail and the fourth, which is land, is adjacent to Tower Mall in Jouberton which will allow for future expansion potential.
Through its Isle of Man-based subsidiary, Equites Property Fund has concluded an agreement to dispose of the last-mile logistics facility know as Unit 1, The Hub, situated in Burgess Hill in the UK. Proceeds from the £17,6 million (R422 million) cash disposal will be applied to settle the associated debt. The property is being sold at an initial net yield of c.5% which is in line with its book value as at 28 February 2025.
Deneb Investments has disposed of 9 Warrington Road in Mobeni Durban for R170 million to Siana Property. Deneb will receive an initial cash deposit of R4 million and the balance secured by the issue of a bank guarantee. The asset was considered non-core to its strategy and represents a category 2 transaction, not requiring shareholder approval.
PPC Zimbabwe (PPC) has concluded an agreement to dispose of vacant immovable property situated in Harare, known as the Arlington Estate, to a privately held Zimbabwean company for a cash consideration of US$30 million.
PK Investments increased the maximum cash amount it was offering to shareholders from €110 million to €115 million to be applied to all acceptances of the voluntary bid. At the Bid’s close, shareholders holding 14.38% of MAS accepted the offer with PKI collectively holding 36.32% and 49.4% together with concert parties.
The Competition Appeal Court has approved Vodacom’s acquisition of a 30% stake in Maziv subject to the set of revised conditions proposed by Vodacom, Remgro and Competition Commission. Implementation of the transaction now awaits ICASA’s unconditional approval.
The Competition Tribunal has approved the acquisition, first announced in December 2024, of Barloworld by Newco, a consortium comprising Gulf Falcon, a subsidiary of Saudi Arabia’s Zahid Group and Entsha, a company linked to Barloworld CEO Dominic Sewela. The transaction is still subject to the implementation of certain agreed public interest conditions, including the implementation of a B-BBEE structure after delisting.
Harmony Gold Mining has received approval from the Australian Foreign Investment Review Board to acquire MAC Copper from minority shareholders in a $1,03 billion (R18,4 billion) deal announced in May this year. Harmony received SARB approval earlier this month – shareholders will vote on 29 August 2025.
Peabody Energy has indicated that it intends to terminate the $2,05 billion (R36,9billion) deal with Anglo American announced in November 2024 citing a Material Adverse Change event. The decision follows a fire in Anglo’s steelmaking coal business Moranbah North in March this year which suspended operations. Anglo believes the event does not to constitute a MAC under the sale agreement with Peabody and will initiate an arbitration to seek damages for wrongful termination.
Unlisted Companies
VEA Capital Partners, the investment arm of VEA Group, has announced a strategic investment in Cape-based StraTech. The fintech is a full-stack enterprise fintech infrastructure company delivering payment, reconciliation, and treasury solutions for complex, high-volume industries across Africa. The investment will unlock StraTech’s next phase of growth, enabling the expansion of its core platform into new verticals and regions, accelerating enterprise sales and strategic partnerships across Southern Africa, and further enhancing its suite of embedded compliance and treasury tools.
Alterra Capital Partners has made an undisclosed investment in the Cobra Group, a designer and manufacturer of customised mining support and firefighting vehicles, and critical enabler of operational productivity and workplace safety. The partnership will enable Cobra to expand into new markets and scale its capabilities.
Orion Minerals’ share purchase plan has closed with 158,5 million shares purchased for an aggregate A$1,79 million (R20,6 million). The purchase plan follows the capital raising recently completed by way of a private placement of 289 million shares and an agreement to convert outstanding loan amounts owed via the issue of 233 million shares for an aggregate value of c.A$5,8 million.
In terms of the revised offer to Assura plc shareholders by Primary Health Properties plc (PHP), a further 73,665,754 new PHP shares will be listed this week. The revised offer remains open for acceptances until further notice. As at 20 August 2025, PHP had received acceptances in respect of 2,65 billion shares, representing c.81.37% of the issued share capital of Assura.
A creditor of Murray & Roberts (M&R) has instituted liquidation proceedings against the company, which M&R says it will not oppose, bringing to an end a 120-year legacy for the construction and engineering giant.
Blue Label Telecoms’ name change to Blu Label Unlimited has been accepted and placed on file by CIPC. The company will commence trading under the new name on 3 September 2025.
This week the following companies announced the repurchase of shares:
Investec ltd intends to execute a share purchase and buy-back programme of up to R2,5 billion (£100 million) whereby Investec ltd will purchase Investec plc ordinary share and repurchase Investec ltd ordinary shares. The programme will run until 31 March 2026 subject to market conditions. The Investec ltd shares will be cancelled, and the Investec plc shares will be treated as if they were treasury shares in the consolidated annual financial statements of the Investec Group.
Bytes Technology will undertake a share repurchase programme of up to a maximum aggregate consideration of £25 million. The purpose of the programme is to reduce Bytes’ share capital. This week 118,594 shares were repurchased at an average price per share of £3.85 for an aggregate £151,789.
Glencore plc’s current share buy-back programme plans to acquire shares of an aggregate value of up to US$1 billion. The shares will be repurchased on the LSE, BATS, Chi-X and Aquis exchanges and is expected to be completed in February 2026. This week 9,3 million shares were repurchased at an average price of £2.97 per share for an aggregate £27,6 million.
In May 2025 Tharisa plc announced it would undertake a repurchase programme of up to US$5 million. Shares have been trading at a significant discount, having been negatively impacted by the global commodity pricing environment, geo-political events and market volatility. Over the period 11 to 15 August 2025, the company repurchased 28,603 shares at an average price of R20.48 on the JSE and 299,445 shares at 87.39 pence per share on the LSE.
In May 2025, British American Tobacco plc extended its share buyback programme by a further £200 million, taking the total amount to be repurchased by 31 December 2025 to £1,1 billion. The extended programme is being funded using the net proceeds of the block trade of shares in ITC to institutional investors. This week the company repurchased a further 594,538 shares at an average price of £42.43 per share for an aggregate £25,22 million.
During the period 11 to 15 August 2025, Prosus repurchased a further 2,285,237 Prosus shares for an aggregate €119,7 million and Naspers, a further 108,067 Naspers shares for a total consideration of R996,15 million.
Six companies issued profit warnings this week: South Ocean, Aveng, Northam Platinum, Randgold & Exploration, Curro and Aspen Pharmacare.
During the week one company issued or withdrew a cautionary notice: Hulamin.
DRDGOLD already released pretty detailed disclosure around the latest financial year, so the release of full results hasn’t told us much that we didn’t already know.
The TL;DR is that gold production fell by 3% in the year ended June 2025, which is unfortunate timing as the average gold price received was up by 31%. Under those circumstances, you would obviously love to see production running as high as possible.
Cash operating costs were up 8% per kilogram of gold, although they were actually down per tonne of material processed. This tells you that they are getting more efficient at managing throughput, yet it’s also becoming harder to extract the gold. DRDGOLD is shifting towards having higher throughput and lower yield, so you can expect to see this trend continue. It’s fine, provided the cost per kilogram of gold is well managed – something that will rely on technology being used effectively.
Thanks to the high gold prices, operating profit jumped by 69% and operating margin came in at 44.7% vs. 33.4% in the prior period. HEPS also jumped by 69%.
Guidance for FY26 is production of between 140,000 and 150,000 ounces of gold. They produced 155,288 ounces in FY25, so you don’t need to get the calculator out to figure out that this is the wrong direction of travel. They would like to get to over 200,000 ounces, which feels like a long way away from current levels.
Equites Property Fund is selling one of its large UK properties (JSE: EQU)
This is part of a broader strategy to exit the UK market
Equites Property Fund announced the sale of a logistics facility known as Unit 1, The Hub in Burgess Hill in the UK. They are selling it for around R422 million. For whatever reason, the announcement doesn’t disclose who the buyer is.
Importantly, the selling price is a net initial yield of 5.0% and is in line with the book value as at February 2025. They will use the proceeds to settle debt.
The disposal is part of the overall plan to get out of the UK portfolio, which comprised seven assets at the time of making that decision in early 2025.
Here’s something interesting to learn about property in this sector: as this is a 25-year lease (typical of logistics properties), rental reviews only happen every 5 years. The most recent one was in March 2024, leading to an uplift of 69% to the base rental! Even if you work that out over 5 years, it’s still a huge uplift – especially in hard currency.
The deal has already closed and the asset was transferred on 19 August, so there’s no implementation risk.
Prosus reminds the market of the Tencent Plus strategy (JSE: NPN | JSE: PRX)
The shareholder letter after the AGM carries on where the Capital Markets Day left off
If you’re following the Prosus story closely (as I am – mainly because I’m long Prosus), then you’ll know that the recent Capital Markets Day was all about the “Tencent Plus” strategy – a clever narrative from CEO Fabricio Bloisi that talks to how the group excluding Tencent should be seen as a positive contributor rather than a detractor from the story. This speaks directly to growth in the broader eCommerce business interests.
They’ve got a lot of work to do, both across organic initiatives and deal integrations like the recent JustEatTakeaway and Despegar transactions. The exciting thing about JustEatTakeaway is that regulators approved the deal far more quickly than anyone expected, giving them the opportunity to realise those benefits sooner.
When it comes to targets for organic growth, the first quarter of 2026 suggests that Prosus was on target for revenue (which meant 15% growth) and 14% ahead of target for adjusted EBITDA (translating to 54% growth).
My long position at Prosus is based on where they are on the J-curve and how deeply they can embed AI in their business. So far so good, with the share price up 44% year-to-date. I bought the very odd dip at the start of the year, so my position is thankfully up 58%. Goodness knows things don’t always go that way in the market, but it’s lovely when they do.
Sabvest saw a strong increase in NAV per share in the past 12 months (JSE: SBP)
And this is the right metric for the investment holding company
As investment holding companies go, Sabvest is regarded as one of the best ones. The company has a portfolio of two listed and thirteen unlisted companies, which means that the bulk of the portfolio is in assets that you otherwise can’t get exposure to. In theory at least, this helps to minimise the discount to net asset value (NAV) that the fund trades at.
In practice, with the NAV per share at R138.82 and the share price at R94.90, there’s still a huge discount in place. The market just doesn’t show much love to investment holding companies.
In Sabvest’s case, there’s certainly no lack of performance. The NAV per share has achieved a 15-year CAGR (compound annual growth rate) of 18.1% without dividends, or 19.3% with dividends reinvested. The latest period shows that NAV per share grew by 17.8% over the past year.
In case you’re wondering whether these are all just paper gains, Sabvest has declared an interim dividend of 40 cents per share, which is 14.3% higher than in the comparable period. They’ve also increased their allocation to share buybacks.
They have a bullish outlook, with an expectation for growth in the second half of 2025 to be “in line with prior years” – and with the track record that they have, that’s strong guidance to give.
Sabvest’s share price is up roughly 30% in the past 12 months
Nibbles:
Director dealings:
The founder and CEO of Datatec (JSE: DTC) bought shares in the company worth R5.7 million.
A director of South Ocean Holdings (JSE: SOH) has been buying up shares in multiple tranches since April. Why is it only being announced now, I hear you ask? Great question. The total comes to over R630k, so I also wouldn’t describe this as an immaterial trade, nor would I describe this as acceptable disclosure.
The CEO of Vunani (JSE: VUN) bought shares worth R6.7k – this may sound insignificant, but he’s executed many such recent trades. The challenge is that liquidity in the stock is limited.
Those watching the Investec (JSE: INP | JSE: INL) share prices carefully may be interested to know that the company is commencing a share buyback programme of up to R2.5 billion that they expect to run until March 2026.
You’ll need sharp eyes to notice the difference, but Blue Label Telecoms (JSE: BLU) will start trading under its new name (Blu Label Unlimited) from 3 September. The JSE code is unchanged, mainly because most of the name is also unchanged.
Inflation is at 3%. The Reserve Bank wants to lock it there. Interest rates are edging down. But the bigger picture is far from settled:
Growth is stuck below 1%
US tariffs threaten trade and jobs
The rand’s strength rests on fragile global sentiment
Consumers are squeezed and government finances remain stretched
In this episode of No Ordinary Wednesday, Jeremy Maggs speaks to Investec Chief Economist Annabel Bishop about the shifting sands of macroeconomic policy, and what it means for business, households and markets.
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.
Anglo American laughs off the sale of the steelmaking coal business to Peabody (JSE: AGL)
This avoids a long and expensive legal fight around the MAC terms
A MAC clause in a transaction is an important thing. It stands for Material Adverse Change and is a critical protection for the buyer, as it is effectively an escape clause if something goes wrong with the target asset during the time between the agreement and implementation of the deal. It’s rare to see it invoked in practice, but it does happen.
A perfect example is Anglo American’s attempted sale of its steelmaking coal business in Australia, which Peabody Energy agreed to buy in late 2024. An underground fire at the mine in March 2025 spooked Peabody and they invoked the MAC clause, arguing that this event gave them the ability to walk away from the deal. Based on the lack of damage to the mine and all the progress made in restarting the mine, Anglo American argued that this isn’t in fact a MAC. An AC perhaps, but not a MAC.
Sadly the arguments over the “M” (Material) can become really burdensome, particularly in vague legal agreements. Remember, the more vague the definition of a MAC, the more wriggle room the buyer of the asset has.
I suspect that the state of the coal market this year is also part of the decision. If Peabody really wanted the asset, they would’ve surely negotiated with Anglo and gone ahead with a deal. Instead, it’s a convenient escape clause that allows Peabody to be more cautious with its capital.
Rather than becoming embroiled in a long and expensive legal battle in which only the lawyers are the ultimate winners, Anglo American is giving up on the deal and focusing on the safe restart of the mine and the performance of the broader steelmaking coal portfolio. Having said that, they will be initiating an arbitration process to seek damages for wrongful termination, so that could get pretty interesting.
Anglo claims that they have received unsolicited inbound interest for the asset in recent months, which suggests that an alternative sales process could be on the table soon. Of course, the price is what really counts, with the coal market in a rough place this year and unlikely to support a strong price.
BHP’s headline earnings dipped in 2025 and remain well off 2023 levels (JSE: BHG)
If you want consistent growth, the mining industry isn’t for you
BHP’s share price is up 4% in the past 12 months, which is probably a fair reflection of the mixed bag that the commodities sector has been in the past year. This is the benefit of buying one of the diversified mining houses as opposed to one of the specialists that can have great years and awful years. The diversified names tend to have a smoother experience.
This doesn’t mean that earnings are smooth, though. In the year ended June 2025, HEPS fell by 6.9% (reported in USD). This puts HEPS at 182.4 US cents, which is way off the 2023 levels of 256.1 US cents. Even in the diversified names, you’ll see the cyclicality in the sector coming through.
I quite enjoyed this waterfall chart in the earnings presentation, which shows the split between “external” factors (like commodity prices and forex) and “controllable” factors (like production and operating costs):
The EBITDA margins vary substantially across the different commodities. For example, iron ore (with record production) was the star performer in this period, with EBITDA margin of 63%. Copper (another record) wasn’t far behind at 59%. Steelmaking coal was then some way off at 17% and energy coal firmly brought up the rear at 10%.
Here’s another great chart from the presentation that I think is helpful in understanding how the capital cycles work in mining, showing how the levels of debt change over time based on the extent of capex plans vs. the earnings in the business:
Aside from the obvious focus on copper, what BHP would really love to see is an uptick in global activity that would support higher iron ore prices. BHP is the world’s lowest-cost major iron ore producer, so they can literally print money when things go their way.
Deneb remains committed to selling properties (JSE: DNB)
Mobeni Industrial Park is on its way out – hopefully
Unless there is an exceptionally good reason for doing so, operating companies shouldn’t own properties. This is because property doesn’t have the same return profile (or risk) as commercial operations, so it’s better to separate the two and allow property investment companies to hold property and lease it to companies.
That’s the theory, anyway. There are many examples on the JSE of non-property companies holding large property portfolios, not all of which are for financially sound reasons.
The broader Hosken Consolidated Investments (JSE: HCI) group has been offloading property recently, which is good to see. Deneb is part of that, with a recent attempt to sell 195 Leicester Road in Durban in a deal that unfortunately fell through. Thankfully, they aren’t giving up.
The latest attempted sale is for Mobeni Industrial Park for R170 million, which makes it much bigger than the 195 Leicester Road deal which was only R48.5 million. I guess if only one of the two goes through, the bigger one is better!
Mobeni Industrial Park was valued at R170 million as at March 2025 and generated profit after tax of R11.5 million for that financial year. That’s a yield of just 6.8%, which shows you exactly why Deneb is much better off having R170 million on the corporate balance sheet and ready for investment in its own operations.
This is a Category 2 transaction, so shareholders won’t be asked to vote on it. Now we wait and see if the money actually materialises and the buyer completes the sale!
Dipula is buying Protea Gardens Mall in Soweto (JSE: DIB)
And a few other properties as well
There aren’t many pockets of growth in South Africa at the moment, but one of them is in township-adjacent and commuter-focused retail properties. Dipula Properties knows this, which is why they are happy to spend R478.1 million buying Protea Gardens Mall in Soweto.
Importantly, the mall boasts 70% occupancy by national tenants (i.e. large retail chains), so that’s a strong income underpin.
Instead of just giving us the latest financial performance of the mall, the announcement includes a forecast for the 9 months to August 2026 and then the 12 months to August 2027, as they assume that it will transfer during November 2025. This is frustrating disclosure.
Given the seasonality inherent in retail, I can’t see much use for the 9 month forecast. Using the 2027 12-month forecast, net property income is estimated to be R56.2 million. If we discount that for two years at 10% per year, that’s roughly R45.5 million in 2025 terms. This would be an acquisition yield of 9.5%, which feels a bit expensive to me. By the time you allow for debt, it’s likely that the distributable income of the mall will be below the dividend yield that Dipula’s shares are trading at (currently 8.7%).
Of course, if they actually disclosed the current level of net property income, I wouldn’t have to guess.
Dipula has hinted in its announcement that they may need to issue new shares to help fund the deal, although nothing is finalised at this stage. That’s perhaps something for retail shareholders to keep in mind, as such capital raising activity is usually in the form of an accelerated bookbuild that focuses only on institutional investors. Perhaps the company will surprise us here and give everyone a chance. Just to be clear on this – there’s no guarantee that any issue of shares for cash will take place.
But that’s not all folks – Dipula has also concluded a further R215.6 million in acquisitions that get a casual mention near the bottom of the announcement. The biggest individual one is Abland DC for R134.4 million, accompanied by the acquisition of Airborne Industrial Park for R63 million and marking a significant investment in logistics property around the airport in Joburg. They’ve also announced the acquisition of the Woolworths Gezina building for R16.2 million, along with land adjacent to the Tower Mall in Jouberton for R2 million.
Dipula has clearly been very busy. As the fund’s market cap is over R5 billion, the size of these acquisitions means that shareholder approval won’t be needed for any of them.
Harmony Gold can finalise the Mac Copper deal (JSE: HAR)
Harmony Cold? Harmony Gopper? Perhaps a better name is needed
Harmony Gold has ambitions to grow beyond what the name suggests. The allure of copper is so strong at the moment than even gold companies are keen to get in on the action, with Harmony acquiring MAC Copper in Australia in a deal that was announced back in May. The relevant update is that the Australian Foreign Investment Review Board (FIRB) has given the green light for the deal.
I can only assume that one of the conditions was to let them win a game of rugby. The timing is too suspicious.
There are a few remaining conditions to be met, not least of all shareholder approval 29 August.
Nibbles:
Director dealings:
After suffering a massive sell-off, the Bytes Technology (JSE: BYI) share price has recovered by 11% over the past 30 days and can now boast significant insider buying by various directors as part of the bullish thesis. The on-market purchases come to roughly R6.6 million in total.
An associate of the CEO of Acsion (JSE: ACS) bought shares worth R604k.
Des de Beer has bought R454k worth of shares in Lighthouse (JSE: LTE).
A director of Orion Minerals (JSE: ORN) participated in the company’s Share Purchase Plan to the value of A$6k (almost R70k).
The CEO of Vunani (JSE: VUN) bought shares worth R11.5k.
The chairman of Assura (JSE: AHR), Ed Smith, has notified the board that he is resigning as a director. As Assura might remain listed depending on the level of acceptances achieved in the Primary Health Properties (JSE: PHP) offer, the company has appointed senior non-executive director Jonathan Davies to take his place.
CAFCA (JSE: CAC) has almost zero liquidity in the stock. The cable manufacturing company operates in Zimbabwe and saw a 14% drop in sales volumes year-on-year. It looks like the mining sector was the culprit, with the construction and manufacturing sectors achieving growth to offset some of that pain. With three quarters out of the way, revenue is down 5% year-to-date and margins have also fallen.
Note: Ghost Bites is my journal of each day’s news on SENS. It reflects my own opinions and analysis and should only be one part of your research process. Nothing you read here is financial advice. E&OE.Disclaimer.
A much better credit loss ratio drove higher earnings at Absa (JSE: ABG)
This is how modest income growth led to 16.5% growth in HEPS
Absa’s results for the six months to June 2025 offer a fascinating way to learn about the drivers of banking earnings. The overall story looks great for investors, with the dividend up 14.6% thanks to a 16.5% jump in HEPS. Return on Equity – a key driver of bank valuations – increased from 14.0% to 14.5%.
And yet, net interest income (the core source of income for banks) increased by just 3%. What happened here?
Firstly, you need to understand that Absa finds itself in a situation where the decline in interest rates hasn’t driven a substantial increase in economic activity. Total loans and advances increased by 8%, but net interest margin contracted from 4.69% to 4.58%. That was enough to blunt the growth in net interest income to just 3%, as mentioned.
Then, you need to understand that although net interest income is the biggest source of income (R36.3 billion), they also have non-interest income at R20.2 billion. Thankfully, that was up 10% thanks to juicy underlying numbers like a 36% increase in net trading income. As non-interest income is far less capital hungry than net interest income, growth in this area is great news for return on equity.
The next critical point is that net interest income is measured before credit provisions. Absa’s credit loss ratio has improved sharply from 1.23% to 1.00%, which means the impairments charge in this period was 14% lower than in the prior year.
What does this mean in practice? Well, pre-provision income (including all sources of income) was up just 5.2%, whereas operating profit (after impairments) was up 8.6%. When you compare this to operating expenses growth of 6%, it shows you that the much-improved credit loss ratio helped Absa get on the right side of margin growth.
This tells us that although shareholders have something to smile about here, the reality is that Absa’s numbers were boosted by an increase in the credit loss ratio that won’t happen every year. Once the ratio is back within target range, impairments tend to move by a similar percentage to the overall book. Absa is less of a growth story right now and more of a recovery story, which is why the share price is actually flat year-to-date.
Another way to look at this is to take the segmental earnings, where there are wild swings in headline earnings that reflect how difficult things are in some of the underlying businesses. Focusing on the client-facing segments, Personal and Private Banking was up 23%, Business Banking fell 12%, Absa Regional Operations (rest of Africa) grew by a lovely 35% and Corporate and Investment Banking was up 10%. The rest of Africa did the heavy lifting in this period.
Aveng may need the Avengers at this rate (JSE: AEG)
And I’m talking about the superheroes, not the Covid-era shareholders they had
The pandemic delivered some pretty incredible cultural moments in the market, not least of all the self-styled “Avengers” on X (then Twitter) who were punting at Aveng. This was in the pre-share consolidation days, when Aveng was trading at literally a few cents a share – a genuine penny stock.
Sadly, after an 18.6% drop on Monday to take the year-to-date performance to a drop of 62%, the Aveng share price seems to miss its penny stock days and wants to get back down there as quickly as possible. It is now at R4.80 per share, way off the near-R30 levels it traded at after the consolidation.
This is unfortunately what happens when you swing from HEPS of R3.64 to a headline loss per share of -R7.44 for the year ended June, driven by huge losses in major projects like J108 and Kidston. This is precisely why I avoid the construction industry completely: just one or two projects need to go wrong and earnings get obliterated.
Silver linings? Well, there was still a free cash inflow of R257 million, so there’s that. The net cash position actually improved from R2.1 billion to R2.5 billion. They’ve also come into the new financial year with higher work in hand of R37.5 billion (up slightly from R37.2 billion).
In case you’re wondering, it’s the Australian Infrastructure business that is breaking the income statement. I wish someone had the time to do the research on just how many South African listed companies have been given an Ellis Park-level drubbing by the Australian market. For whatever reason, the business environment there is even more frightening than the spiders.
The other two major segments (Built Environs and Mining) both reported improved operating earnings. Before you get too excited, there’s an “Aveng Legacy” book of problematic non-core assets that contributed a significant operating loss.
Aveng’s corporate strategy is to split the group in two, which means the sale of Moolmans (the local Mining segment). They have made “significant progress with a preferred party” on that sale. This would leave them with the businesses in Australasia and Southeast Asia, which is like being left with your least favourite family member on a three-day hiking trip with no access to cellphones. You may survive, but it won’t be fun.
CA Sales flags high-teens growth (JSE: CAA)
The impressive growth story continues
Although there are some worries in the market around the risks to the Botswana economy from the collapse in the diamond market and what this might mean for the likes of CA Sales Holdings with significant exposure to that country, there’s no indication at this stage that growth is suffering. Quite the opposite, in fact, with the company releasing an encouraging trading statement.
For the six months to June 2025, CA Sales expects HEPS to increase by between 14% and 19%. As is the norm for the group, the growth is coming from a mix of organic sources (i.e. existing businesses they already owned) and the integration of new businesses that they’ve acquired (bolt-on acquisitions are core to the growth plan).
Detailed results are due for release on 1 September.
MTN released incredible overall numbers – yet the share price closed over 8% lower (JSE: MTN)
The likely reason for this is very close to home
MTN saw a monumental improvement in its overall business in the six months to June 2025. Driven by the results in the rest of Africa, group service revenue was up 23.2% as reported, or 22.4% in constant currency – and it’s lovely to see such a small difference between those numbers, as currencies in Africa stabilised recently thanks to dollar weakness and other factors.
When it comes to EBITDA, the jump was 60.6% as reported or 42.3% in constant currency. The gap is much larger there, but both those growth rates are fantastic. EBITDA margin was 42.7% as reported or 44.2% in constant currency.
The growth rate in HEPS was a bit daft really, up 352%. It’s easier to understand this as a swing from negative to positive, with a headline loss per share of -256 cents in the prior period and positive HEPS of 645 cents in this period.
As the icing on the cake, MTN upgraded its medium-term guidance to reflect group service revenue growth of “at least high-teens” vs. the previous level that reflected mid-teens.
It’s almost easy to forget a time when MTN was focusing on its balance sheet metrics rather than revenue growth, with huge challenges in getting the cash from the African subsidiaries to the mothership. Thankfully, those problems are largely behind them, with Holdco net debt to EBITDA at 1.5x (stable vs. 1.4x as at December 2024) and group net debt to EBITDA at just 0.5x. Non-rand debt at Holdco level was 17%, well below their upper limit of 40%.
Free cash flow conversion remains a challenge in this sector, as the large companies need to invest a fortune in their networks. Although reported EBITDA was a meaty R46.6 billion, free cash flow was just R6.7 billion. Aside from interest and tax payments, R22 billion in capex is the major reason for that gap.
In South Africa, service revenue growth was just 2.3%. It won’t surprise you that voice was down 2.2%, while data was up 4.3%. Despite a substantial drop in cost of sales, the South African business saw EBITDA fall by 3.6%. This could be why the market reacted negatively to the news, as South Africa is meant to be the steady anchor for the group. There’s also surely an element of profit-taking in the market here, as MTN has been on an incredible run and investors often get jittery in the search for a reason to exit.
In a separate announcement, MTN noted a restructuring of its group into three platforms: Connectivity, Fintech and Digital Infrastructure. There is plenty of reshuffling of chairs at Exco level to make this happen, including a new CEO in South Africa.
Here’s what Monday’s profit-taking exercise looks like on the chart:
For traders, this chart needs to come down and test moving averages that haven’t had a chance yet to catch up to the recent rally. I suspect that MTN is therefore firmly on the watchlist for punters!
Northam Platinum’s recent numbers reflect how rough things got in the PGM space (JSE: NPH)
The rally in share prices in the sector this year has been firmly forward-looking
Although the PGM sector has dished up some massive share price returns in 2025, you certainly won’t find the reason for this in the earnings over the past year or so. Across the board, earnings in the sector have been rough, with everyone looking ahead to hopefully better times thanks to higher PGM basket prices.
Northam Platinum is another perfect example of this, with a 6.9% increase in sales revenue for the year ended June 2025 and an 8.1% increase in the cash cost per ounce. The revenue increase thus wasn’t enough to offset mining inflation, leading to a 25.5% decrease in operating profit.
By the time we reach HEPS, Northam Platinum expects a drop of between 9.4% and 19.4%.
If we dig a bit deeper, the Eland mine is clearly the culprit. The cash cost per ounce jumped by 17.2%. To make matters worse, it was already the least efficient mine in the group, so the cash cost per 4E ounce is now up at R40,562. Compare this to Zondereinde (R26,758) and especially Booysendal (R18,502) and you can see the problem. For reference, the revenue per refined 4E ounce was R32,690, so Eland must have been heavily loss making in this period.
Importantly, Northam expects costs at Eland to normalise over the next two years, with the performance in this period attributed to safety interventions that limited production (even though total production was still up). Either way, the numbers are disappointing for shareholders.
For all the exuberance in the sector, Northam’s outlook statement includes plenty of sobering commentary and a reminder of how cyclical this market is. The share price is up 122% year-to-date, with the market piling into the sector regardless of the risks.
Orion Minerals raised roughly half of the planned amount under the Share Purchase Plan (JSE: ORN)
Under the circumstances, that’s pretty good
Sadly, when companies need to raise equity capital, the default setting is to work through brokers and advisors who bring large institutional investors to the table. This leads to a quick capital raising process that achieves the objectives of the company, but that also tends to shut out retail investors who aren’t given the opportunity to participate.
Full credit goes to Orion Minerals here: they are one of the few companies that give retail investors a fair chance to get involved. The share price has had a rough time this year (down 28% year-to-date), so I was curious to see how the latest Share Purchase Plan would turn out in terms of investor appetite. This was especially the case after the recent Unlock the Stock event with the company, in which retail investors peppered the management team with questions. Getting a wide range of investors onto the shareholder register can be a double-edged sword!
It looks like there’s still strong support from investors, with Orion managing to raise R22.2 million under this initiative. They initially targeted up to R46 million, but that was always going to be a long shot. Encouragingly, they raised R20.6 million from South African investors, so the overwhelming majority of the support came from investors who are close to where the assets are: right here in SA.
Thungela’s profits plummeted, but they’ve maintained the dividend (JSE: TGA)
In fact, the payout ratio for the period is more than 100%!
Things haven’t been pretty in the coal market. Thungela’s revenue fell by 12% for the six months to June 2024, which was enough to drive a rather hideous 80% drop in HEPS. Welcome to cyclical mining companies, particularly those with single-commodity exposure rather than a diversified basket.
Despite HEPS dropping from 952 to 192 cents, Thungela has maintained the dividend at 200 cents per share. This means that they are now paying out more than they earned for this interim period, which is an unusual situation. They would sooner sell their first-born children at Thungela than cut the dividend.
Tempting as it may be to point to the 21% drop in capital expenditure as the reason for the maintenance of the dividend, the reality is that adjusted operating free cash flow fell by 48%. Sure, the capital expenditure decrease helped blunt some of the impact of lower earnings, but there’s still a huge year-on-year drop here that isn’t reflected in the dividend.
The outlook for the second half of the year isn’t exactly bullish, with Thungela referencing risks to the coal price from global economic growth. Much will depend on the restocking activities in the Northern Hemisphere, along with levels of global production and how the supply – demand dynamic plays out.
Not only has Thungela maintained the dividend, but they’ve also approved another share buyback programme. With the share price down 35% year-to-date, that’s probably a sensible allocation of capital.
Nibbles:
Director dealings:
A prescribed officer of Standard Bank (JSE: SBK) sold shares worth R5.1 million.
Des de Beer is back on the bid for Lighthouse (JSE: LTE) shares, picking up another R2.14 million in the company.
The CEO of Crookes Brothers (JSE: CKS) sold share awards worth R191k (not just the taxable portion from what I can see).
With Hulamin (JSE: HMN) having previously flagged that the poor performance of the extrusions business has led to a strategic review, they’ve now released a cautionary announcement noting that they have entered into negotiations for a potential disposal of that asset. No other details are available yet.
Although it is very likely that a deal gets approval from the Competition Tribunal when it has been recommended by the Competition Commission, it’s not a guarantee. It’s therefore an important milestone for Barloworld (JSE: BAW) that the consortium’s offer to shareholders has now been given the green light by the Tribunal. The parties are working towards getting the remainder of the conditions precedent ticked off the list.
Omnia (JSE: OMN) announced that its credit rating has been affirmed by GCR Ratings. Although a credit rating isn’t an indication of equity returns, an affirmed rating does mean that the cost of borrowing should be steady (assuming constant rates in the market as well), which helps the company plan for growth and ultimately benefits shareholders as well.
Introducing Rabia Ghoor, founder of swiitchbeauty®:
Rabia Ghoor, founder of swiitchbeauty® and winner of multiple awards, is one of South Africa’s most celebrated young entrepreneurs thanks to her fascinating backstory of starting the business at the age of 14 and dropping out of high school shortly thereafter.
But in the decade or so since then, Rabia has built a powerhouse of an eCommerce business – a business that deserves the limelight beyond its founder.
On episode 2 of The Finance Ghost plugged in with Capitec, we gave the business lessons from the journey building swiitchbeauty® just as much attention as Rabia’s story.
Episode 2 covers:
The biggest mistake made along the way.
The entrepreneurial DNA in Rabia’s family and how an upbringing surrounded by the hustle contributed to her brave and unusual decision in high school.
The initial innovation that sparked the business, namely the use of Instagram and other social media channels in a way that traditional competitors weren’t doing.
The value of building an authentic online community over a long period and using that as the foundation for a brand.
Curating a product range over time and developing key differentiators, with the importance of ‘just starting’ without necessarily knowing all the future answers.
Advice for businesses on how to get the most out of social media.
The Finance Ghost plugged in with Capitec is made possible by the support of Capitec Business. All the entrepreneurs featured on this podcast are clients of Capitec. Capitec is an authorised Financial Services Provider, FSP number 46669.
Listen to the podcast here:
Read the transcript:
Intro: From side hustles to success stories, this is The Finance Ghost plugged in with Capitec, where we explore what it really takes to build a business in South Africa. This podcast features Rabia Ghoor, who started swiitchbeauty when she was just 14 years old and built it into a household name.
The Finance Ghost: Welcome to the second episode of The Finance Ghost plugged in with Capitec – such an exciting one today because I get to speak to Rabia Ghoor, who founded swiitchbeauty, literally a household name in the South African beauty and cosmetics space. I’m so looking forward to tapping into these insights from not just her early journey as an entrepreneur, but of course, everything she’s achieved in the decade thereafter.
This includes winning a whole lot of awards that recognise young South African entrepreneurs. And I think “young” is a feature that just keeps following you around, Rabia. It’s such a core part of the story of swiitchbeauty, and yet you have the kind of business experience that most people are lucky to have by their 40s if ever.
And full credit to Rabia here – she’s been so busy this week doing pop ups pretty much across the country, she’s apparently been irritating shopping centre security with just the sheer number of people who have shown up for these pop ups. So there’s another sign of success. And Rabia, you still made time to do this podcast even though you’re not even feeling well. So thank you very, very much – it really means a lot, just for you to be able to come here and share your story and your insights with the audience and certainly the inspiration that I think we’re all going to take from this, me included. So thank you for doing this.
Rabia Ghoor: Thank you so much for having me and for all of the grace with the rescheduling, etc. and so on and so forth. I am very, very honoured to have the opportunity to share with you. Just thanks for having me.
The Finance Ghost: No, it’s a great pleasure. And I think as we talk more about the backstory of this business and what you’ve built today, I think it’ll become very clear to any listeners who maybe aren’t familiar with you yet, exactly why we’re doing this podcast. So let’s jump into it because I think the backstory of swiitchbeauty is incredible. And for those who want to Google it, by the way, it’s with two i’s in the middle – swiitchbeauty, one word.
People say you’re never too young to be an entrepreneur, you’re never too young to start something. But generally when people say stuff like that, I don’t think they have 14-year-olds in mind as people who start businesses. It really is fantastic. And I’m keen to understand more about that early start because my understanding is you then left school at age 16 to go into the business full time, which is really quite a remarkable story.
So Rabia, what is it like being the poster child for teenagers everywhere who are arguing with their parents and claiming that teenagers know better, because you did in fact know better, or perhaps your parents were supportive of it? I’m keen to understand, but maybe talk us through from your perspective at least, what drove you at that age, what led you to do this?
Rabia Ghoor: That is hilarious, Ghost. And I really would love to – I think I need to kidnap you to be on my PR and marketing team because, wow, you have presented me so well and made this all sound so, so elaborate and, and cool that maybe I should hire you.
The Finance Ghost: Maybe, hey! Maybe.
Rabia Ghoor: So yeah, I think there’s been a lot of focus over the years when I’ve been asked questions, been a lot of focus on the age and I always answer and people always think I’m telling a joke, but it’s really very true that Indian people sell anything, you know, and so growing up, the coolest thing you could do at school is sell something, like anything – stickers, or I remember back then these sharpeners were really cool, erasers. It’s just nature. It’s in the nature of an Indian person, I think, to trade. And so you really are selling virtually anything from any age. And so it wasn’t that big of a deal when I think I decided to take it a little bit more commercial or a little bit more seriously with the onset of social media and Instagram. I had historically been selling all kinds of stuff at school up until that point in time.
Also, family of five kids and last of five kids. And so I kind of grew up watching my siblings sell all kinds of stuff, like phones and earphones and all types of chargers and stuff – anything that was cool or hot or trending, chances are my brothers were selling it to someone, somehow, some way. I grew up in a really commercial environment.
My dad has been an entrepreneur his whole life, my mom as well. So my mom actually, funnily enough, her family owns a spice business, a spice shop at the Victoria Street Market here in Durban. And they’ve owned the business for many, many, many decades. And in her prime of her life, what she would do is she created a mail order system for the business, because there were many foreigners that came through the Victoria Street Market, it was a big tourist attraction, and they loved to purchase the spices. And they always asked my mom: how can we get it when we go back to our countries or to go back to our hometowns? And my mom would take down their details and then ship to them on almost like a subscription – which was really ahead of its time.
Then later on, as my dad had been through many different businesses in his life, ups and downs, my mom then started a catering business from the house to sort of help out where she could. And so I’ve just witnessed a lot of commerce all of my life. My grandmother, actually, who I’m named after, she was an absolute maestro and legend of note. She had 10 children and 10 boarders. So in those days, you would have boarders that would come to stay because there were very few institutions that allowed people of colour to study. And in Pretoria, there was obviously TUKS, and people of colour could study at TUKS. So people from outlying areas would send their children to live with my grandmother and obviously board there. And that was one of her businesses.
Another one of her businesses was she would buy in bulk all kinds of groceries and then create grocery packs for all of the people that lived in the surrounding areas. So because she had 10 kids, she would just send one kid to buy each thing. So the one kid would go and buy like, 30 butters, and the other kid would go and buy, like, 30 loaves of bread, and the other kid would go and buy 30 litres of milk. And so she contracted out the work to each child, and they all came back with the groceries. And then she got them to form an assembly line at home to create the grocery packs. And then each grocery pack would then get delivered by one kid to one household. And so she had this whole system going. And so obviously, if she ran this type of system, then whatever groceries she purchased for the house were free because she would add a small markup to each grocery pack for the labour, etc. You just come up with a plan. And a lot of the time that plan involves commerce. And so this is sort of my background where I come from, so it seems very natural to see where it has led.
The Finance Ghost: Yeah, I love that. I love the richness of culture, obviously, just coming through and all of those influences in your early life. It’s fantastic. The hustle started young with you, clearly. I had a similar experience, actually. I also – even in high school, I was busy buying and selling stuff because I actually really wanted a PlayStation and there was no way my parents could afford a PlayStation for me. This was back in like, sho, this was probably PS1 days, maybe, it must have been PS1. And there was no chance I was getting one any other way. And so I managed to figure out there was this particular way I could buy stuff and then sell it to the other kids at the school. And I got to a point where eventually I’d made enough to actually buy myself the PlayStation in like grade nine, I think it was, or whatever the case is. So, you know, whatever that motivation factor is, I think you either have it in you or you don’t.
I mean, my theory on this is always, if you give me a choice between someone who’s a natural entrepreneur and someone who’s got an MBA from the fanciest possible college, and you ask me which one I’d rather choose in a high stress situation of running a business, I will choose the natural entrepreneur every single time. Because I think that when you get the academic stuff on top, yes, it can supplement what’s inside you, but it cannot teach you to be an entrepreneur. It’s like if I took a course to become an Olympic sprinter, I could literally have Usain Bolt as my teacher – it would not make a difference, I’m not going to be an Olympic sprinter. And I think it’s much the same with being an entrepreneur. There’s an element of “it’s in you” and you’ve got these influences around you – and it’s not to say that you have to come from an entrepreneurial family. Actually, on this podcast series, my first guest was Makomborero Mutezo, who started TheHungryMute. And what’s really great with his story is his mom is a professor of risk in an academic environment. So you can imagine this poor woman stressing over her son going out there and starting a business.
And I wanted to ask you about how your parents responded to this because you’ve mentioned the Indian culture stuff there. A lot of the sort of memes and stuff we see online and from tech in the US and stuff is the jokes of how high the expectations are of Indian parents. Often – it’s just like this standard trope that you see online. And I’m curious what it was like for you going to your parents and saying, look, I’m actually done with school. I mean, much as they’re entrepreneurs and much as there’s that rich family history. Did they kind of support that view. Did they just jump at it or did they try and talk you out of it?
Rabia Ghoor: You know, it’s really funny when you ask me this question, my mind jumps back to a memory that I have of when – so I once got busted in school for selling these sticker packs or something like that. They sent me to the principal’s office and principal’s like, yo, do you know you’re not allowed to sell stuff in school? And I’m like, I didn’t know that, sorry, whatever the case is. And I then proceeded to bribe the principal with a commission on said sticker packs!
And there was a great affinity in school for chicken wings during lunchtime. And so I would get off, like, five minutes before break time. I would tell the teacher that I needed to go to go to the bathroom, and then I would go to the cafeteria and I would buy out all the chicken wings. And then the bell would ring and it would be break time. And then I would proceed to then sell said chicken wings, which I now have a monopoly over, back to the students. And so…
The Finance Ghost: …that’s incredible! Never mind big oil. It’s big chicken. You were literally big chicken.
Rabia Ghoor: It’s big chicken!
The Finance Ghost: I’m starting to wonder if you dropped out by choice or if they actually just said to you, Rabia, please, this isn’t working. You’re ruining our school. Can you just go, please?
Rabia Ghoor: So I’m just thinking about those two things that I’ve mentioned. I’m thinking about what my parents might have been witnessing at the time. See, I’m the last of five, right? And no last of five was planned. Any last of five is likely a mistake. And so I think by the time I was born, my father was 50. And so I think, they were just really, really exhausted.
The Finance Ghost: Sho, I’m tired, actually, just thinking about that. I’m 37 now, and my kids keep me nice and busy. I cannot imagine having a baby at 50.
Rabia Ghoor: Yeah. As I was saying, I think by the time I told my parents that I wanted to leave school, not only did I have this incredible track record of doing things that I said I was going to do, like if I said I wanted to start something, I would do it and see through the whole way. I had also been in business for two years already by that point in time. I’d been doing switch online for two years at that point. So I had something to show them. It wasn’t like, hey, I’m going to leave school to start this business. It was more like, I’ve started this business., it’s doing – it’s doing pretty decently, I’m going to leave school. I want to pursue it full time.
And something that I was very lucky – my parents had, at that point, full confidence in me. You know, there really wasn’t even a glimmer or like even a hint of doubt in them at that time. And it was a very crucial point, right? Because you’re 14 years old, you’ll believe anything that they say. So if they tell you that you can’t do it, or if they tell you that, you know, maybe just think about how easy it would have been for my father to be like, yo, just finish. Just finish high school and then you can start this and I’ll support you. Then I think about how easy it would have been for him to…
The Finance Ghost: …I think your dad was 64 and he was like, let me get this straight, Rabia. You want me to stop paying school fees and then you’re not going to go to varsity? He was like, great, this is wonderful for the pension plan!
Rabia Ghoor: Absolutely, absolutely.
The Finance Ghost: But, I mean, all jokes aside, obviously belief from the people around you is important, and it’s very hard to build a business where you don’t necessarily have that belief from your immediate support structure. That certainly makes it a lot harder. It’s definitely not impossible, but it helps tremendously – everything that is positive around the whole story, because it’s a hard thing to do. Aany wins you can get, you’ll take at the end of the day. And obviously family support is a big part of it. So it is a pretty great backstory. It really is.
I think – because you must be quite tired of actually talking about this backstory to basically everyone, because it’s such a feature of it – and I think it’s really a small part of the journey because all it is, is the start. And anyone who’s built a successful business and been at it for a number of years understands that the start is exactly that – it’s the start. A whole lot of things have to happen after that in order to make the thing work.
So I think let’s jump into more about the business that you have today and how you think it actually got here. You’ll have to forgive me here, because I’m not your target market. I’m not someone who wears makeup, personally, so it’s quite hard for me to look at the cosmetics markets and say, okay, I can see that swiitchbeauty’s competitive advantage is X, Y, Z. This is what makes you different, this is what you’re up against. So I’m very keen to understand from you what you think it is that has actually made swiitchbeauty a success and a standout and everything else. And I did obviously research the company, look on the website etc. and I wonder if that tagline: “makeup and skincare for lazy girls by even lazier girls since 2014” perhaps holds a clue here, because that really is a lovely bit of brand messaging and was very endearing. And I think it actually – it says a lot, right? Even for me, someone who doesn’t wear makeup, I can kind of see where this is going.
Rabia Ghoor: I think it’s important that we go back to the start to try and understand why things have shaped up the way they have over the years. And the way I started was literally on Instagram, talking to the people who supposed to buy my products, talking very informally and very sincerely, as opposed to trying to portray the image of like big brand, or like conglomerate or like institution. For the first time, a conversation was being had in beauty that wasn’t an aspirational thing. It wasn’t a brand telling a customer: you need to buy X and Y and Z in order to be X and Y and Z. For the first time. I think the streets were open both ways. Both lanes were open, right? Where historically, a lot of brands had not made it onto social media at that point in time. It was a very critical juncture. 2014, a lot of brands had not made it onto social media just as yet. People started hopping on in 2016, 2017, and there was an entire zeitgeist that had already developed in that time – ‘14, ‘15, ‘16. And so if you hopped out in ‘17, you were real late to the party.
Many of the brands only came around in 2020. Covid kind of forced them onto the platforms. And so this tiny, tiny, tiny community that started building – you know, these days the word community gets thrown around a lot in marketing. It’s sort of become a really hot marketing buzzword, but we’ve lost the essence of what it truly means. Community means being seen and being heard. Not just being listened to, but being truly heard in a space amongst other people. It doesn’t mean your likeness, so it doesn’t really mean that this person looks like me or they sound like me. It just means that they are looking at me and they are hearing me and I’m looking at them and I’m hearing them.
And so what starts off with just this tiny segment of people, say 50 people, then grows into 100, 150, 500, a thousand, etc. It’s a slow, slow, slow burn. But a slow burn means that you are scaling at a pace that is manageable. You are scaling at a pace in which it’s possible to still maintain the essence or the truth of the message or the brand or whatever it is that you’re trying to convey. And so these kind of things, I look back at them in hindsight and it’s very easy for me to assign these big words or social phenomenons to them. But at the time it just felt like, oh, this is cool, this is happening, let’s go. But at the time I didn’t really understand the impact of what was happening amongst this very, very small core group of people who today I am still very proud to say that they are with the brand, they’ve evolved with the brand, the brand has evolved with them. All things regarding the brand – things like development, things like activations, things like retail, all the ways in which the brand has been able to scale or grow or evolve – these people have been a part of that. Not in like a weird poll or weird survey way, but in a truthful sort of face-to-face way in which they – they don’t feel like they’re being heard because they are being heard. So they don’t need to feel like they’re being heard because they are being heard. They’re not being made to feel like they’re being heard. Do you understand?
The Finance Ghost: It’s the authenticity, right? It’s not just saying the thing, it’s doing the thing.
Rabia Ghoor: I wonder Ghost if that answers your question?
The Finance Ghost: Yeah, I think it does. Because what I’m hearing is that and just some context for listeners and you know, we forget – so Facebook IPO’d, which means it listed on a stock exchange, in 2012. Now it existed for a few years prior, it was only in 2012 that Facebook listed on the market. And at the time I was working in investment banking and I remember how people would say this is a joke, Facebook doesn’t even make money, it’s a free product. What is the business here? This is just going to fall over. What is this nonsense?
Well, today Meta is one of the biggest and most important companies in the world. People also forget that the first iPhone was in 2007. I remember because I was first year varsity and because I’ve referenced that stat before, because I still find it astonishing that 18-year-olds today were basically born when the first iPhone came out. That’s how old the iPhone is. You know, you could sell the iPhone a drink legally! So that’s just how much the world has changed in such a short space of time.
And I think it’s allowed for businesses like yours and like mine to actually work because suddenly you don’t have all this gatekeeping of these traditional distribution channels. Because what I’m hearing from you is that in the beginning, because of the focus on social media and because it was such an interesting story to have you involved at such a young age and living and breathing the brand, it almost sounds like it was an influencer model before people understood what that actually means. It was more of a distribution play in the beginning, building community, getting that authenticity, getting people to like you, which is not difficult. Then they come and they buy the product.
Or do you think that there were also key differentiators to the product right from the very beginning? Or do you think that’s actually been curated over time and you’ve rather built on the strength of the distribution that happened up front?
Rabia Ghoor: I think in the very beginning there was nothing really unique about the product or about the offering, just I think unique about the delivery. As I mentioned to you, our route to market was distinctly Instagram. As I mentioned earlier, there weren’t a lot of brands that were taking social media, let alone Instagram seriously.
Even things like Facebook, like in the beauty industry at that point in time, it was unheard of for big beauty houses to be even on Instagram, let alone having a conversation, a two-way conversation on Instagram. And so what that conversation allowed me to do was in real time do some of the most important market research. I didn’t know it was market research at the time because I was just chatting, right?
And so it allowed me to really get to know my customer on like a one-to-one level where it’s not this odd survey or this inauthentic questionnaire that they’re filling out, but this true and real conversation that is being had and that I’m able to then go back to the drawing board and modify my product and evolve and develop and morph it into something that this person truly, truly needs and wants. And the way that I know that they truly need it and want it is because I just asked them, because I was just chatting to them. You’re not throwing mud at a wall and like hoping that it sticks. These are informed development decisions that are rooted in literal conversations.
The Finance Ghost: So, Rabia, we’ve spoken a lot about how distribution was a big part of the early journey and Instagram and everything else. But of course today, it feels like everyone’s talking community and online and everything else. I imagine your product has now also developed to the point where it’s differentiated, or at least it has one or two key selling points that your audience really attaches to it. So what has been that key selling differentiator for you beyond just having an amazing Instagram profile, for example?
Rabia Ghoor: Wow. So basically, the philosophy of Switch is “for lazy girls by even lazier girls” – and that concept is really well and truly meant by each and every single one of the products. When I am developing something, my number one concern with it is how little time can this cost me. Like, in fact, can it save me time? Can it give me time back?
If I think about it, maybe I use five products in my makeup routine or three products in my skincare routine, if each product can just save me one minute, then I have gained five minutes in the morning. To give a woman five minutes in the morning – no one can claim to do that. Also, she’ll never forget it. It’s like lasting, it’s forever. It means that I had to wake up five minutes later. It means that these robots on the way to work are not going to take me out because the brand that I love so much gave me five minutes back.
It’s something that you don’t even notice. When something saves you time, you barely even notice it, but it makes a world of difference in how you feel. And nobody really remembers what you told them, but they just remember how you made them feel, right?
So, yeah, each product is designed with really big focus on function and ergonomics. I think a lot of the beauty products on the market these days are considered greatly in form and aesthetic. Not many of them are treated like tech products and have that attention to detail, in terms of function and ergonomics, how does this perform? How do we make it perform faster? How do we make it perform in a way that is more efficient to the user? Because most products that are made in the beauty market aren’t actually made by the user. They’re made by chemists or artists, not by users.
The Finance Ghost: I love that point around people remember how you made them feel. There is a huge amount of value in there from a marketing perspective for any business. So that is certainly well worth remembering.
So I want to bridge this concept now around your key differentiators when you started and your client value proposition now, and how people often feel when they sit down and they think about starting a business, sometimes people sit down and they say, oh, you know, I can’t think of what business to start. I just don’t know, like, what’s missing out there? What is my big idea? What is the incredible product that’s gonna change the world? You don’t need to do any of those things. You actually just need to innovate. And innovation is a very incremental concept. You didn’t invent makeup – definitely not. But what you did do was you said, hang on, there’s a gap here in terms of distribution, and distribution is an innovation at the end of the day.
Capitec, who are making this podcast possible, they didn’t invent banking. They didn’t invent business banking. They certainly didn’t invent retail banking, but they saw a way to do it differently, and they’ve built an absolute powerhouse as a result of that.
I think the same is true for you. I think the same is true in terms of my own business. I didn’t invent finance or financial media or writing about the markets or podcasts, but there’s a unique mix of skills there that makes Ghost Mail and The Finance Ghost and the whole ecosystem something that people look to for insights that they can’t necessarily get very easily anywhere else.
So that’s all that innovation actually is – and I wish more people would just think about it that way and say, okay, here’s my skill set, what can I do with it? And what can I do with it that is just different enough to what’s already there in a way that’s going to make it more economically lucrative? So well done to you for spotting that at the tender age of 14.
I guess what helps is that at the time, you and your friends would have all been checking out all the new social media stuff. Instagram’s new and exciting. And then because you’d already had such an entrepreneurial lens on the world and your daily life and your, you know, slightly dicey dealings at school, you kind of looked at this and said, hang on, there’s actually something that I can do here. And I remember reading a piece by an author named Seth Godin. So he’s like a marketing guy, and he writes these quite interesting books. A lot of his books are actually just a collection of ideas, it’s not really something you’ll easily read cover to cover. But I remember reading something he wrote, now it must be 10 years ago at least, and it left such an impression on me where he wrote about how the internet just is this great disintermediating factor. It takes away the gatekeepers and it helps people take what he calls their art to the world. And he writes about the concept of having 1,000 true fans. And if you can build a business around having 1,000 true fans, and I think that’s exactly what you’ve done, is you built this community, it was authentic, people really liked you, they trusted you. You had this army of true fans. And today you go and do a pop up and you have thousands of true fans in one city. But you don’t get that overnight, you know, you start by building 10 true fans and then 100 true fans. And now look at where you are. I mean, does that sound like a pretty decent summary of this journey for you?
Rabia Ghoor: I’ll say, I’ll say. Also, you know like how every time they have these interviews with entrepreneurs and then they ask if there’s one piece of advice, what would you give? And then the entrepreneur says the advice would be to just start. And then you get kind of annoyed because you’re like, okay, but can’t you just tell me how to start? Why are you telling me to just start? But you know, earlier you were asking all of those questions. The only way you get to asking those questions is by starting. Sometimes you don’t go out the gate knowing all of those answers. If you just start somewhere, the chances of that question coming up will be more likely and the chances of you needing to answer it then naturally are more likely. So the whole “just start” thing is cliché because it’s true.
The Finance Ghost: It is true. And I will also say that the benefit of starting is that you don’t actually know what it’s going to lead to next. So, I learned how to build a community-based business because I initially did it on something that had nothing to do with finance and had everything to do with my particular interest, especially more so at the time, today I’m a bit busy for it, sadly, but I had this big interest in classic cars. I was rebuilding a classic car and I thought, okay, there’s going to be other people out there who are doing this. I’m quite young for that, or I was at the time. Let me start something that’s kind of interesting around this and the motorsport that I was involved in. And then I realized that I could, if I was creating content around this and people were following it, there was an opportunity to sell advertising around this and that actually paid for my racing. So I had this beautiful circle where I was like, hang on, I can blog and create content about stuff I love, which then attracts advertisers, which then pays for the thing I love. This is fun!
And that taught me so much about how it works online, how websites really work, what sort of things people resonate with, etc. I basically just took those learnings and then said, okay, well, if I can scale that up to finance, which is a vastly bigger audience with much, much bigger advertisers, maybe I can have a really strong business. And here we are today.
So I think “just start” is good advice. I think start with a plan, definitely. And start in a way where you don’t risk everything that’s going to hurt you so much upfront. You know, as you say, you already were two years into the journey. You kind of had a brand, you could show that you had achieved some resonance with it, and that was what made it easier for you to say, okay, I’m going to go all in on this thing. From the sounds of it, I’m not sure you would have been focusing at school really anyway, because I can imagine how this was absolutely dominating every though, every bit of excitement. But you had the guts to do it. You had the guts to actually roll the dice and start. And you’re right – I think that is a big part of what people need to think about in the early stages of having a business.
And I imagine that you’ve had some pretty cool validations over the years, right? People who love your product, people who give you that feedback, people who spot you in the wild, maybe because you are the face of the business to a large extent, or at least you certainly are a publicly visible founder. So I imagine you have had that a couple of times, hey?
Rabia Ghoor: I’ll say. Yeah. But it’s a really, like, friendly thing that happens. It’s not like – very rarely will people even ask for a pic, because it’s not like that. It’s just like a – I see you and you see me, and we know we’re from the same place type of thing. And what’s really beautiful about it is that it spans ethnicities and genders, even religions, all types of socioeconomic statuses. It’s just like a, I know a switch girl when I see a switch girl and I know that she knows me look of recognition. And there’s even sometimes a smile or exchange which happens. It’s a really lovely thing that happens. I haven’t ever experienced it to be annoying. Do you know what I’m trying to say? An annoying thing, like celebrity type thing that happens.
The Finance Ghost: Yeah, it’s like a respectful recognition, which is great. That’s exactly, that’s exactly what you want, right? That’s the best. But I guess as well with building a business around a specific personality like you’ve done certainly in the initial stages, it’s a bit of a double-edged sword, right? I mean I face much the same issue where you kind of become the voice or the face of a business.
And you’re lucky in a way – well, not lucky. It’s by design, right? You’re not actually the product, people are buying makeup as the product. So that’s one up on mine, as me writing and speaking is the product. So that’s – I don’t know how to solve that problem. But I can imagine for you it was tough to actually start to bring people on board to actually start to get help. This is I think the biggest thing that entrepreneurs struggle with, successful entrepreneurs. So once they’re out the gate and they’ve got a business that works, they’ve got an idea that works, they’ve got product market fit, one of the hardest things then is to actually figure out, okay, how do I scale this thing? How do I bring people in? I mean, how have you handled that part of the journey?
Rabia Ghoor: I really am battling to think about how to answer this question because I think one of the luckier places I got in life is starting so early that even if you made like a really, really, really small amount of money to you, it was a really big amount of money because you were a kid.
And so at every given point in time the scaling of this business has changed, felt very natural and very much where it’s supposed to go. Simply because I really never expected – it’s not that I never expected it to become successful, it’s just that I never really needed it to because I always thought of myself as like a kid. Do you know what I mean? I feel like the older you get, the more you kind of get pressure. When you get to grade 10, people are like, what subjects are you taking? And then you get to matric and people are like, oh, how many A’s did you get? And then it’s like after matric, oh, what are you going to study? And then after you study it’s like, oh, where will you get your first job? And there are all these questions – and so I suppose now if I start to think about scaling from this point onwards, it can be more of an anxiety inducing thing because I wonder where to from here? But then I look back at the last 10 years and at any given point I could have wandered way too from here and it could have been a source of fear for me, a source of anxiety for me, but instead, I know this is going to sound so incredibly whimsical but bear with me: what if I just trust the process and go along with the journey and keep doing what I’m doing? There has to be a reason why it’s worked out until this point. So what’s the reason why it won’t continue working out in the future?
The Finance Ghost: I don’t think it’s whimsical at all. I think if you’ve got the track record, there’s no reason to believe that it won’t continue.
A lot of entrepreneurs do also find that there are different phases of the journey, right? So as you get bigger and bigger, then there’s another – you know, initially you scale some of the relatively basic things like admin processes and one or two of those sort of things. But as a business really matures, then you have to start outsourcing strategic decisions and giving people the ability to make product decisions on your behalf and marketing decisions on your behalf and eventually finance decisions on your behalf. And that’s how you eventually become a larger organization. And I think each of those scaling journeys is actually quite a scary and difficult thing to get right. It really isn’t easy.
I think you’ve touched on a point there which is also really helpful. And I often say this to people when they’re thinking of starting a business is: just take a proper look at your life right now, are you actually able to do this? Because if you are sitting with two very young kids in school and maybe your partner’s income is not going to necessarily cover everything if anything goes badly wrong for you and you won’t necessarily get another job quickly. Let’s not glamorise taking a risk. Taking a risk and saying, okay, that’s it, I can make this work. Yes, it’s an amazing thing to do when you’re 14, but you’ve got a massive safety net as well. You know, you’re not – your parents are not going to lose their house because you didn’t quite sell as much makeup that month as you thought. Whereas when you get into adult-level risk taking, the downside is very real and it gets very ugly very quickly. So I always give people a realistic view on this and just say, look, don’t romanticise the risk you’re taking. The reward can be wonderful, the journey can be great, but there is huge survivorship bias. For every Rabia who’s able to do this podcast, there are a lot of people where it hasn’t worked out. And that’s why entrepreneurship is so exciting, is because it’s a risk. So I always suggest to people: feel inspired, definitely, but don’t be silly. You know, take a realistic view and actually make those decisions in a – I think just a disciplined and just smart way. I don’t know if you’d agree with that?
Rabia Ghoor: You know, I think it’s difficult to tell someone to dream and to be realistic in the same breath. When I was growing up, my uncle would always say to me that if you’re going to play with a bomb, that you should take it outside of the house and play with it outside. And what he meant was that you look after the thing that is currently sustaining you, right? So whatever that thing is – at the time, for me, the thing that was currently sustaining me was school, right? And so you look after the thing that’s currently sustaining you. Meaning if that’s your job or if there’s something that is making you money somehow and it’s covering your day-to-day expenses, look after that. And when you would like to play with the bomb, go outside and play with it. So that’s after-hours, pre-hours, you wake up before your job and you work on your business, you work on your business after your job, but you are still working on your business. You’re still playing outside with the bomb, but you’re just playing with it outside of your house so that anything happens. So if it decides to go off, it’s not going to blow up your house.
The Finance Ghost: I think that’s a great analogy. So thank you. And I think that is an incredibly good point. It’s why I’m a big supporter of side hustle and businesses that start as side hustles because it lets you figure out stuff like product-market fit and whether or not you actually want to be doing this then long before you resign from your job and roll the dice. So that is lovely advice.
On the subject of advice, I’m going to hit you with three quickfire questions as we start to bring this to a close. So the first one is around just social media and businesses looking to really make it work on the socials, which is clearly something you’ve done extremely well. I think just the first kind of do’s and don’ts that come to mind for you, if people ask you for advice on this, what do you think works? What do you think absolutely doesn’t work?
Rabia Ghoor: The number one thing I would tell you to do is not outsource your social media to an agency because chances are you’re not going to get anything novel or unique, which is what ultimately does well on social media, is novelty. And even that one-off, like virality or whatever the case is, I would suggest hiring younger people, people even much, much, much younger people than you would think to hire. There’s an intangible zeitgeist, nuanced language digitally native language that is spoken on these platforms and more often than not they are spoken by the youth, which is now, mind you, escaping me as well. I can’t consult people my own age anymore. Every time there’s a family function and there are these gen alphas…
The Finance Ghost: You’re at that point, Rabia, where you have to say, back in my day, it’s coming.
Rabia Ghoor: Dude!
The Finance Ghost: I don’t think you’re there yet, but you’re almost at “back in my day” – it comes for us all.
Rabia Ghoor: I’m already meeting kids and telling them that I knew them when they were this big. And then you like signal how big they were.
The Finance Ghost: Oh, that’s great.
Rabia Ghoor: It’s like, yoh, dude.
The Finance Ghost: Yeah that does happen to us all.
Rabia Ghoor: But yeah, I – every time we have family functions and there are Gen A’s around, I bring them all together around the table and I start asking them questions about TikTok and I start asking them questions about their purchasing behaviour and what influences them. And obviously the older you get, the more informed these kind of questions become, the more you know exactly what you’re looking for. It’s one thing to listen to what they’re saying and go, okay, yes, but you’re just a kid. It’s another thing entirely to try and understand what sort of incentives or thinking patterns or mental phenomena are influencing these answers that this child is giving me. It’s a greater psychoanalysis that goes into this evaluation. It’s like a think tank but on steroids. And you also have to take them very, very, very seriously. The mistake that people make is by thinking that they’re smarter than the kids. That’s the big mistake.
The Finance Ghost: I love that point. So I’ll give you a very real example for me as well. I was one of the first financial analysts in South Africa who started writing properly about lab grown diamonds and how I thought it was going to fully disrupt the diamond market. And today De Beers is now loss-making, so it has happened. And it wasn’t because I sat around and thought, oh, you know, I can see this happening out there. No, it’s because my now fiancé, who is five years younger than me, said to me: I want a lab grown diamond. I said to really, you know, like, are you sure? I mean, I love you, you don’t have to get a lab grown diamond kind of thing, because I just didn’t understand. And then she kind of walked me through the way she thinks about it and the way she has this outlook on what it means that it’s a lab grown diamond versus having come out of the ground versus where money could be spent instead, etc. And this penny dropped for me of, hang on, it’s only a five-year age gap. But if this is how she’s thinking, then how are girls in their mid-20s thinking right now who are even more inclined to go down a route of sustainability, etc? And then I started doing the research and I was like, hang on, this whole mined diamond thing is in serious trouble. And it’s because I spoke to someone who is right there in the market saying, I don’t want that thing.
And that’s your exact point is it really doesn’t help you if you are outsourcing marketing functions and speaking to people who are not actually your target market or even remotely of their age because they don’t get it. They’ll try and sell you a story that they do, but they don’t get it. So I think that’s great advice, I really do.
Next quick question is just around supply chain and maybe biggest learning from that journey because now that your business is quite big, there must be a lot of plumbing around the back there keeping this thing working. What’s been your biggest learning from a supply chain perspective in this business?
Rabia Ghoor: Ooh my biggest learning is that a lot of the time people use acronyms to try and make it sound like it’s a lot more difficult than it actually is. But if you just learn the acronym or if you just ask the person what the acronym is, you don’t sound dumb. You’ll just be able to create more efficiency. So my biggest learning is just learn the acronyms!
The Finance Ghost: Yeah, that’s great. Actually. It’s amazing how similar that is to the world of finance. So it’s don’t fight the jargon, learn the jargon and then you won’t feel like you’re not involved in these things.
I think that’s a general thing that comes through from you, is get a deep understanding of all the stuff that your business is going to be made or broken on. Is that a fair statement?
Rabia Ghoor: Yeah, I think sometimes if you’re not qualified in something specifically, or maybe you don’t have experience in it, it’s very easy to feel as though you are on the back foot. But sometimes the very thing that you think to be your disadvantage turns out to be your greatest advantage. Because if you are not qualified in that thing or not learned in that specific thing, then you have the opportunity to look at it with a bird’s eye view instead and to innovate or to disrupt, right? So, yeah, don’t let the jargon intimidate you.
The Finance Ghost: Last question, Rabia, on this wonderful podcast. Your biggest mistake, because I’m sure there is one, there must be one that burns or that you will remember for the rest of time or something you’re obviously willing to share publicly – but what would that biggest mistake be?
Rabia Ghoor: Cool. So there was a point in time in which switch was really starting to take off and there were many opportunities for me to develop my personal brand. And I bit, I bit too quick and I bit too fast. If I could go back in time, I would probably have developed my personal brand a lot less and just worked on developing switch a bit more. But obviously I was young and you see any opportunity as an opportunity, right? To just kind of go along with it with the journey. But in retrospect, I think I would have done a lot less from a personal brand marketing perspective.
The Finance Ghost: So, Rabia, thanks. We’ve covered so much ground here. As usual, the podcast is longer than I planned. It always goes that way because I’m lucky enough to speak to such fascinating people who have amazing insights to share. Well done on building such a cool business and I think to do it at the age you did it – I know that’s all the focus that a lot of people put on this thing, but actually, as much as that’s impressive, I almost think it’s the follow-through that’s even more impressive, which is what’s happened in the decade after that to actually build this thing. Because it could so easily have just stayed a little side hustle and a little trading business, and instead you have an incredible brand that is widely followed. It’s just a great story. It’s a very inspiring South African business story, so congratulations to you.
Thank you for giving up your valuable time to be on this podcast. Luckily, you have a lot of valuable time because you use your own beauty products, so it saves you that five minutes a day. And all those minutes add up then into being able to come onto this podcast! So Rabia, thank you. Congrats and just carry on doing what you’re doing. I think it’s lovely.
Rabia Ghoor: Thank you so much. It’s really me who should thank you for having me and for honouring me in this way. I think it’s been a really lovely thought exercise for me as well and an amazing experience. So thank you. Thanks so much.
The Finance Ghost: Thanks Rabia. Ciao.
Real stories and real people. Yours could be next. Plugged in with Capitec. Capitec is an authorized financial services provider, FSP 46669.
African Rainbow Minerals increases its stake in Surge Copper (JSE: ARI)
They describe the stake as being for “investment purposes”
When listed companies acquire stakes in other listed companies, it’s usually because there’s a long-term plan at play. The market doesn’t reward companies for owning small random stakes in other listed companies, as shareholders can just as easily replicate that situation for themselves by going and buying the shares that they actually want. It becomes a different story when a listed company is either buying up shares as they are working towards a takeover, or at least significant influence in a company, as that’s not something that shareholders can go and do themselves.
So, what is African Rainbow Minerals’ plan in respect of Surge Copper? We don’t know at this stage, with the company merely describing the stake as being for “investment purposes” – but they seem to be investing a whole lot more in it, so could there be a bigger plan here? After the latest investment of around R57 million, African Rainbow Minerals will own 19.9% in Surge Copper. They previously had 13.44% before the latest tranche.
With copper as a hot asset at the moment, African Rainbow Minerals is clearly seeking diversification from its core business (iron ore and a few other commodities) and exposure to the copper growth story. Time will tell if they have ambitions to control this asset.
Aveng is indeed loss-making, and by a huge margin (JSE: AEG)
The initial trading statement gave little indication of just how rough the year was
In early June, Aveng released a trading statement that indicated that the company would swing from a profit to a loss in the year ended June 2025. Full marks to the company for giving this early warning and for not taking the easy way out, which would’ve been to say that profits will be more than 20% lower. But even then, the full extent of the loss is quite something to see.
Things got so bad that the headline loss is between A$83.8 million and A$87.2 million vs. a profit of A$38 million in the prior year. On a HEPS basis, that means a headline loss per share of between 63.3 and 67.2 A$ cents. With the share price currently on R5.90, you can therefore very quickly see why the price is down 53% on a year-to-date basis.
Construction is an incredibly risky sector, as projects that go wrong and generate losses are capable of producing huge losses. There are substantial problematic projects in Southeast Asia and Queensland. In fact, the only highlight seems to be New Zealand, where they are now paying tax, as assessed losses have been used up by that operation.
Detailed results are due for release on 19 August.
The concert parties in Prime Kapital’s offer for MAS almost have outright control of the company (JSE: MSP)
Holders of 14.38% of MAS shares found the offer compelling enough to accept it
On a day that started with the news of Prime Kapital increasing the maximum cash amount in the MAS bid from €110 million to €115 million, things ended with an announcement that holders of 14.38% of MAS shares said yes to the Prime Kapital offer.
Cash was king here, attracting far more interest than the preference shares that will be listed on the Cape Town Stock Exchange. The cash allocation is 45.8607% of total cash acceptances, so there was considerably more demand for cash than cash available.
The final numbers are that 11.74% in the company is being acquired for cash and 2.64% is being acquired in exchange for the issue of the new preference shares. The preference share portion would’ve been much smaller if not for a segment of shareholders who noted that they were happy to receive prefs instead of cash in the event of a scale-back of the cash portion.
The announcement from Prime Kapital notes that the joint venture should still have sufficient liquidity to make a distribution to its shareholders (including MAS) and to therefore give MAS a chance to make dividend payments from September 2025.
With the next step being the extraordinary general meeting later this month to vote on potential changes to the board, it looks to me as though Prime Kapital has done enough to ensure that only the directors they feel comfortable with are elected to the board. I know from one of the podcasts I did with Martin Slabbert of Prime Kapital that one of their concerns is the perceived independence of Des de Beer as the most well-known name on the list, given his extensive interests in Europe through Lighthouse.
It’s certainly been an incredibly interesting deal to follow from a corporate finance perspective!
Nedbank is selling its stake in Ecobank (JSE: NED)
Combined with the recent iKhokha acquisition, this means they are doubling down on South Africa
Nedbank is an interesting story at the moment. Unlike a competitor like Standard Bank (JSE: SBK), where South Africa is only around half of group earnings, Nedbank makes most of its money in South Africa. Focus is welcomed by investors, unless the focus is on a market where there isn’t much growth to get excited by. This is why Nedbank’s share price is way off its peers this year, down 17.4%.
There are really only two choices here for Nedbank: they either need to take major steps to diversify away from South Africa in the hopes of playing catch-up on the rest of the continent, or they need to do the very best they can to compete in South Africa while hoping for an improved macro story. The latest corporate activity tells us that they are choosing the latter.
Hot on the heels of the news of the acquisition of iKhokha in South Africa for around R1.6 billion, Nedbank has now announced the sale of the 21.2% shareholding in African banking group Ecobank for around R1.8 billion. The buyer is a private investment company and they will be taking up that full stake.
It’s going to take a few months to finalise the deal, with an expected close in the fourth quarter this year. That would be a quick outcome though, as large deals can often take much longer to go through.
Although Nedbank will still have some exposure to Africa through businesses that it controls rather than has a significant minority stake in, this is still a substantial swing in exposure towards South Africa. It’s a brave play that will be interesting to follow!
Sibanye-Stillwater’s HEPS is a casual 19x higher! (JSE: SSW)
But the share price seems to be running out of puff
Sibanye-Stillwater has been quite the recovery story this year. The share price is up 128% in 2025, but has dropped 17% since the recent 52-week high. Through luck rather than design, I sold at almost exactly the top and redeployed capital into Mr Price (JSE: MRP). It was a long and painful journey of seeing my Sibanye position in the red before we got to that point.
The only way to truly learn from cyclicals is to own them, that much I can tell you.
For the six months to June 2025, Sibanye’s trading statement demonstrates why the share price has done so well. HEPS will be between R1.80 and R2.00, which is around 19x higher than the comparable period! Both gold and PGMs had a stronger performance than before, although it must be noted that they are still in “reduced losses” territory in the US PGM business, rather than a profitable position there.
This sets the scene for the next issue: there’s an impairment in the US operations thanks to the One Big Beautiful Bill Act that was signed into US law on 4 July 2025 and that amended the treatment of credits for critical minerals, phasing them out from 2031 to 2034. There’s also an unrelated impairment at Keliber lithium, based on lower forecast lithium prices and other inputs. These may not impact HEPS (impairments are excluded), but they are a sign of concerns.
There were some production issues in the period that led to stockpiling of inventory in both the South African PGM and gold operations. If those prices stay strong in the second half of the year, this should give Sibanye a boost. PGM production was consistent year-on-year and gold production was down 13% year-on-year, so things never seem to be easy for Sibanye.
STADIO is still growing beautifully (JSE: SDO)
The interim period is a great start to the year
STADIO is still coming through as one of the best growth stories on the JSE, with tertiary education as a lucrative business to be in. It’s certainly better than primary education at the moment, with the lower birth rate impacting the ability for companies in that space to fill their schools.
There are no such challenges at STADIO, with the six months to June reflecting growth in HEPS of between 22.8% and 32.7%. This puts it on a range of 19.9 cents to 21.5 cents.
The share price is up almost 30% this year and closed just 1.6% higher on the day of release of this trading statement, reflecting the extent to which high growth is already priced into the shares.
Vodacom is close to the finish line with the Maziv deal (JSE: VOD | JSE: REM)
There’s one major approval to go
After such a long and painful battle to get this deal across the line (the first SENS announcement was in November 2021!), Vodacom and Remgro are nearly there with the fibre deal. Although this deal is certainly important for Remgro, it’s even more crucial for Vodacom as they look for new sources of growth in South Africa.
The Competition Appeal Court has approved the deal based on the revised conditions that the parties worked on with the Competition Commission. Although this was expected, it’s always good to see official notification come through.
The significant remaining hurdle is now unconditional approval of the transaction by ICASA. Given that ICASA gave a conditional approval back in 2022, it’s hard to imagine a world in which this final milestone isn’t achieved timeously.
Nibbles:
Director dealings:
A director of Famous Brands (JSE: FBH) sold shares worth R11.6 million through the exercise of a put option that was part of a collar hedge entered into in August 2023. This is a common structure when a director is using shares as security against a loan from a bank. The share price has struggled to show a clear positive trajectory and is actually trading at very similar levels to what we saw when the collar was entered into!
Through the acquisition of a private company that holds shares in Collins Property Group (JSE: CPP), Christo Wiese’s Titan Premier Investments acquired almost R9 million worth of shares in the company.
The founder and CEO of Datatec (JSE: DTC) bought shares worth R5.6 million.
An associate of a non-executive director of The Foschini Group (JSE: TFG) bought shares worth R163k.
A director of Renergen’s major subsidiary (JSE: REN) sold shares worth R75k.
With the Primary Health Properties (JSE: PHP) offer to Assura (JSE: AHR) shareholders having been largely finalised (it is still open for acceptance), Primary Heath Properties now has a controlling stake of 62.93% in Assura.
MC Mining (JSE: MCZ) announced that open pit mining at the flagship Makhado steelmaking hard coking coal project in Limpopo has commenced. They are also constructing a coal plant that is on schedule for commissioning by year-end 2025. Importantly, other key infrastructure at the mine is on schedule. The share price closed 12.8% higher off the back of this update.
There is very little liquidity in South Ocean Holdings (JSE: SOH) stock, so the latest trading statement only gets a mention down here. Perhaps that’s just as well, as the company has swung sharply from a profit to a loss. For the six months to June 2025, they expect a headline loss per share of -15.20 cents vs. HEPS of 21.50 cents in the comparable period. Detailed results will be released on 20 August.
The sad and sorry tale of Murray & Roberts (JSE: MUR) is nearly over. A creditor of the company has instituted liquidation proceedings against the company and this application will be unopposed. Although the major underlying businesses will continue as they were acquired by a buyer who saw the opportunity in business rescue, this liquidation will bring an end to the listed holding company.
Exchange Traded Funds (ETFs) offer diversified exposure through a single investment, just like buying a box of biscuits and getting to enjoy a variety of flavours inside. But if you don’t know how to read a fact sheet or assess which ETFs you like, then there’s no way of knowing what’s in the box. We don’t buy biscuits without the packaging making it clear what’s inside. We shouldn’t buy ETFs like that either!
To help bridge the gap and enhance your understanding of what to look for when selecting ETFs and reading fact sheets, Siyabulela Nomoyi (Quantitative Portfolio Manager at Satrix*) joined me on this podcast. It offers an excellent learning experience for both experienced and newer investors in ETFs.
Listen to the podcast here:
Transcript:
The Finance Ghost: Welcome to the Ghost Stories podcast and on this edition we are speaking once more to Siyabulela Nomoyi of Satrix*. Siya, you are a regular voice on this podcast. You always bring not just great insights I think, but passion for the markets as well, which is fantastic. It’s a really big feature of how you conduct yourself in the markets. And anyone who follows you on X or any of the other social media platforms will know this about you. Certainly anyone who’s listened to this podcast.
And what I’m looking forward to today is we are going to dig into some real nuts and bolts around not just what ETFs are and the different types and all of that, but also how to understand them better, how to actually do the research, the really practical stuff around adding them to your portfolio.
So, Siya, thank you so much for joining me as always. It’s lovely to have you and I’m keen to dig in here.
Siyabulela Nomoyi: Hi Ghost, and hi to our listeners as well. Always great to be on your podcast. Third one this this year, hey! Officially a hat-trick.
The Finance Ghost: Season ticket.
Siyabulela Nomoyi: Yeah, who’s counting? But thanks for inviting me again. Very keen to dive into today’s topic and see if we can educate people more on ETFs.
The Finance Ghost: Yeah, absolutely. No, it’s great to have you and let’s dive straight in. It’s something I have discussed on this podcast before, I don’t think with you, is the concept of whether ETFs are active or passive. I know it’s something I’ve definitely debated with the likes of Nico. The point is that I think the mechanics of an ETF are passive in nature in that it’s a rules-based investment mechanism essentially, or investment structure. But you’ve still gotta decide which ETF you wanna buy, right? And that’s an active decision. No one else is gonna do that for you.
Let’s just set the scene here in terms of how broad ETF landscape is, because I think sometimes people underestimate just how active that decision is. It’s not like you have one or two or even three to choose from – there are a lot of ETFs aren’t there?
Siyabulela Nomoyi: I guess we’ll speak more about the JSE-listed ETFs today. But it’s quite remarkable how large the universe of ETFs is when you’re looking at it globally as well. I mean we’re talking about 14,000 or even higher than that in terms of ETFs which are listed globally. That’s a huge number and I think that’s like a quarter of the number of listed stocks worldwide. That growth has been really fuelled by the idea of indexation – so not trying to be “clever” if I can say that, and just tracking the particular index like the S&P 500 or the FTSE/JSE All Share index, which are traditionally known as passive investing – more vanilla index tracking in my preference, as there’s absolutely nothing passive about it. We’ll get to that later on. Innovation has quickly started to spin off other product ranges from that – sector ETFs, thematic ETFs, factor ETFs, there’s bonds, there’s money market and so on. And then moving away from equity-based ETFs as I mentioned, there’s innovation in other asset classes like bond ETFs, commodity ETFs.
And really the rise of retail clients. I think we spoke about that in our previous podcast, this really pushed providers to innovate even more on these products eventually to the point that you have raised, that clients start to need to actually take active decisions to switch between these exposures.
So in as much as you can look at it as passive investing, you have to actively decide on which ones you’re actually investing in. And then now we also have actively managed ETFs as well, which we can speak to as well later on. But pulling this back into the South African market, there are quite a lot of ETFs listed on the JSE – 115 to be exact, index tracking ETFs and active ETFs. So 115 ETFs Ghost – again approximately a quarter of the number of stocks listed on the JSE, if I’m not mistaken. But that number is even more significant if you look at it versus the number of liquid stocks on the JSE – probably looking at 90 to 100 very liquid stocks on the JSE. There are more ETFs than our liquid stocks which are listed on the JSE. Investors actually are looking at a very large universe to make decisions to which ones they want to hold on their investment portfolios.
So I think in our local market we have quite a broad number of ETFs, but in terms of themes that those ETFs can capture, there’s still lots of work to do there. There’s quite a lot of overlap from providers, first of all, and the other part is – well, when I say overlap, you have for instance, three or four providers which have an MSCI World Index Tracking ETF or an S&P 500 Index Tracking ETF. And in terms of the assets under management, there’s like 50% of the AUM in ETFs that are offshore equities, but providers issuing the same index track as I mentioned, and very low representation of multi-assets ETFs, bond ETFs as well. There’s around 15 or so bond ETFs, whether you combine that offshore and onshore. In terms of AUM, that’s only like 6% of the total market of the ETF. And then we have local equity ETFs with Satrix having launched the first ever local ETF – that’s why we’re here – listed on the JSE, Satrix Top 40, since 2000, so celebrating 25 years this year. And then there’s commodity ETFs and so on.
So there’s quite a nice universe of ETFs for clients to choose from. That is where their active decision actually comes in.
The Finance Ghost: Yeah, 25 years – that’s amazing actually. Congratulations! And talking 25 years, quarter of a century, something you mentioned there – more than a quarter of the stocks on the JSE. I suspect it’s even more than that actually from an ETF percentage perspective, because there’s been so many delistings on the JSE. I’m not actually sure what the number is. I think it’s 300 and something stocks on the JSE. But as you say, the investable universe, the practically investable universe is actually a lot smaller. ETFs as a percentage of the practically investable universe – very, very high.
And the other thing I just wanted to touch on, you mentioned some of the growth in international ETFs there and thematic ETFs and absolutely, there’s some fascinating stuff overseas. A perfect example – the other day I was looking at European stocks and obviously one of the areas that have done really well in Europe this year is defence stocks, because there’s had to be this big uptick in spend by European governments on defence because the US has kind of said, listen, it’s time that you guys pulled your weight. So that’s been great for European defence stocks.
And there the power of an ETF is you don’t have to actually go and do tons of research on each underlying one and try and pick the winner. Especially if you go in with basically zero knowledge, which I would say, on average is the amount of knowledge that any of us here in South Africa would have about European defence stocks. You’re not going to find too many people in the street who can tell you the difference between the European defence stocks and what each company does. So there’s a good example of where you can go and do something thematic on the global market. You can go find an ETF. You know – there is an ETF for that, as the old joke goes, and you can go and research it and we’ll talk more about how you research these ETFs just now on the show.
Then locally, as you said, lots of opportunity, lots of JSE-listed ETFs that reference international markets as well as local markets, many of which are of course offered by Satrix. And like you say, work to be done.
I think on some of the thematic stuff – on a few of these podcasts before, I’ve been calling for something like a retail ETF. It feels like we have this big retail sector on the JSE, but there’s no ETF that just brings it all together. We’ve got property ETFs, we’ve got resources ETFs, but we don’t have a retail ETF which would let you take a view on South African consumers in one instrument. So I think we’ll see more and more developments over time, and I hope to see some of this stuff coming through.
Before we get into some of the different types of ETFs though, I don’t want to lose that point around actively managed ETFs, because that’s a relatively new thing. Maybe we could just spend a minute understanding what an actively managed ETF actually is, and then I’m quite keen to dig into some of the other types of ETFs and some of the buckets that we’ll see.
Siyabulela Nomoyi: Yeah, so normally the clients would think of ETFs as this fund which tracks a certain index, and that’s what you get from it. If the return on the index was 10%, the ETF’s mandate is to actually get that 10%. But there’s another space, because when we look at the investment spectrum at Satrix, we’ll look at three one perspectives. So there will be the vanilla space, which will be just standard market cap weighting indices which can be tracked. And then you can move on to a more complicated part where you are trying to move away from the market cap weighting and tilting your weights towards a certain point in terms of whatever the conditions would be. So that would be your factor space. And then eventually, you get to a part where the recipe, you can’t find it on the internet. So it’s like – conviction, the provider will select stocks based on research that they’ve done. They will overweight those stocks based on that and they will change between styles. They’ll have be either a value manager at one point and then eventually there’ll be a momentum manager, they switch to quality and that changes with time. And you can’t – you don’t know how they determine that. They’ll just provide their active decision.
That segment of the market has been mostly through unit trusts or segregated funds. But there is a movement of people getting that exposure through actively managed ETFs where the provider has this way of creating a bucket based on whatever the recipe is, trying to beat a certain index instead of tracking that index. And then you have this bucket of those shares and then that will translate to this ETF that actually is feeding through that bucket of stocks.
Creation of the basket is no longer this vanilla way of weighting the stocks or the constituents in them, there is an active decision to actually create the weights or the constituents, moving them in and out of that ETF, so that the investment decision inside that bucket is actually active and then that translates into an ETF.
So that’s where these active actively managed ETFs are coming from. Their target would not necessarily be tracking an index – there will be an index, but they want to actually have a higher return versus that and they’ll switch between different indices or different constituents based on that. They no longer have to be constrained to the fact that they are tracking a particular index. They actively want to actually have a return that’s over and above a particular index.
That’s where the space has come from. I mean that’s been coming the last four, five years or so. And there’s quite a number of them listed on the JSE. If I’m not mistaken, there’s about 93 vanilla tracking ETFs and then the rest of that 115 is actively managed. I might have my numbers incorrect there, but they’ve been listing for some time now and the market has adapted very well on that.
The Finance Ghost: That is interesting. Look, I’m sure your numbers are pretty close to right. You’re willing to put 93 out there as a guess. Most people would just say, you know “roughly 90”, but Siya, you know your stuff. I’m guessing when you say 93 with that amount of confidence, I suspect you are not far off the mark at all.
Of course, within those 93 – that’s sort of the traditional ETFs, the way people understand them. And just for people listening to this, don’t get confused by everything we just talked about there with actively managed ETFs. That is a very specific type of ETF. It’s still a small part of the market. It’s not a traditional ETF in the way people really understand them, which is a very rules-based, index-tracking type of fund. That is essentially what an ETF is.
And typically when you say to people, oh, what are the, you know, big buckets of ETFs, the different types? I think the thing that would come up all the time is offshore versus local. I think a lot of investors understand that there’s an ETF for the S&P 500, there’s one for the Nasdaq, if you want to own the Euro Stoxx, if you want to own China, if you want to do MSCI World. And there’s a lot of overlap among providers, as you say, in some cases there isn’t. Sometimes there’s only one provider doing something specific. But then you get a lot of local ETFs as well that track not just the JSE Top 40, but the Resources index, some of the others as well.
So there are a lot of different buckets and I think offshore versus local is kind of the easy one. But obviously there’s some problems there in that for example, you go and buy a JSE Top 40 ETF – it might be local in terms of its JSE listed stocks, but they look-through exposure is so international in nature. I mean it’s Prosus, Naspers, Richemont, British American Tobacco, gold stocks – these things are not based on what’s going on on the ground in South Africa, which is really interesting. But you’ve actually highlighted some other types of ETFs in one of your earlier discussion points here on this podcast. I think let’s just touch on some of those buckets, because local versus international is just one of them. There are other different buckets that you can use to categorise ETFs, right?
Siyabulela Nomoyi: Yeah. So I mean just to go back to what you were saying Ghost, I think it’s a very important point in terms of just the look-through when you’re looking at the indices because that also just helps clients in terms of what they’re looking for when they’re looking at broader indices or something like the Top 40 index in as much as it’s locally listed stocks. If you’re looking at the revenue exposure on that it’s like 60% / 70% offshore. So you do have a listing onshore, but what you’re actually exposed to is outside South Africa.
And that’s a very important point because the primary reason why after the JSE decided to do the whole index harmonisation, changing the way that they weight the All Share to how the SWIX is actually calculated, therefore just upweighting the more SA in stocks because the All Share, if you’re looking at it, its history it was more offshore. But the way that the SWIX is weighted is looking at is what the STRATE ownership is and then that’s eventually upweighting the SA Inc part. And then eventually Satrix also after that we launched the Global Investing ETF which is also just giving you total rand hedge exposure as well. And then the SA Inc will sit on the SWIX.
So it’s very important to – just apart from the fact that it’s a vanilla tracking index that’s giving you locally listed ETFs. If you’ve got the information and if you’ve got the data, you can actually look even further and see what kind of exposure you’re getting from there. So what you’ve mentioned now is that this is where people actually need to start putting in some work Ghost, because there are layers to actually uncover when you start talking about the types of ETFs.
One of the podcasts that I’ve recorded with you is that you made this cool example about ETF investing, likening it to someone walking into a store I think and there’s different aisles to actually go through where they can go and pick what they want according to what they wanted in their basket at that time. And I think it’s a great example because even in that case when you go into an aisle of let’s say biscuits, you’re not only going to see one type of or one brand, you will have to look into what’s on offer. So different brands of biscuits. From that 115 ETFs that I’ve mentioned, sticking to your example, investors can work through these aisles where they can divide the shop in half. Then one side is the offshore side and then the other one is the local ETF exposure side.
And then if you start on the offshore side, they’re able to select ETFs that give you exposure to offshore equities and then to decide what they feel like. Something like a US-flavoured ETF like this one that’s actually tracking the S&P 500 index. Or they could be looking at the Nasdaq-tracking ETF, or they would like an Asian flavour by looking into the China tracking ETFs like the Satrix China ETF, or Satrix India ETF. So investors can actually have country specific exposures.
Or, they could even – using the biscuit example – they could go to Choice Assorted where they buy this box filled with different biscuits in it – it could be an ETF like the Satrix MSCI ACWI ETF that’s got 23 developed markets and 24 emerging markets exposure. So that’s all in one. You don’t have to go and pick each of those different types.
But still sticking to the offshore side, there’s also a choice of offshore nominal bonds as well like the Setrix Global Bond ETF. Then there’s quite a lot of thematic exposures in that offshore side to choose from. If there’s interest in infrastructure, ESG, offshore property and so on.
That’s quite a long answer Ghost. But when you move to the local section, you get the same in terms of the types of ETFs but the themes actually change when you come to South Africa. There’s plenty of equity tracking ETFs like the Top 40 and others and local bonds, whether you’re looking at nominal or ILB. There’s also a choice of whether you want specific sector exposure. So, you want property exposure, you want RESI, you want INDI, you want Financials – it’s your choice. Or you can even take it further. If you want high dividend yield stocks you also get an option actually to buy an ETF that tracks stocks which historically pay high dividends, so that’s also available there.
And then lastly, staying on the shop and aisle example because I love it so much. So now you leave all the aisles and go to the back section of the shop where there’s ready-cooked meals and you can sort of put stuff together. Put a plate together and it’s ready and wrapped for you. And that’s where the multi-asset ETFs come in. So it’s a mix of different flavours of different foods or different types of foods, they’re all wrapped into one. That’s where you get exposure to equities, bonds, properties offshore and so on, all in just one plate and it’s all wrapped up for you and ready to go. So those would be the different types of ETFs that you can get and how you can actually go about looking at which ones are available.
The Finance Ghost: Yeah, I love the biscuits example. So we’re recording this on a Friday and if your Formula One t-shirt didn’t give me a clue that you’re ready for the weekend, Siya, I think the biscuits example certainly does. I love that that’s your go-to. I think it’s great that you can kind of walk down the aisles and pick and choose what you’re looking for. And we’re going to start speaking shortly about how you research and understand these ETFs. And that’s really how you look at what’s on the box and say, well, here’s what’s inside, what do I feel like?
But I think before we get there, there’s definitely – aside from talking about lots of other ways to slice and dice this, like market cap weightings and equal weightings and factors and all of that, maybe we’ll see if we have time for that at the end because I don’t want to lose the point around the MDD research, that’s minimum disclosure documents – but before we get to that, what we need to talk about is the different risk profiles across all these ETFs, because I think that is an important point to land for anyone listening to this podcast or reading this transcript.
ETFs do not have equal risk profiles. They might all be ETFs, they might all be tracking an index, but they have very, very, very different underlying risk profiles, right? What should you say there to help someone as they pick the biscuits off the shelf, Siya? How should they think about the risk of those biscuits?
Siyabulela Nomoyi: So just going back to conversations that I’ve had in terms of retail clients when they start investing, the excitement of getting a portfolio and they’ve deposited money and then they’re investing. They’ll be excited that they’ve got 10 ETFs in their portfolio. And then when you ask them what they actually have, you’ll find that five of those are actually S&P 500 index tracking ETFs from five different providers. And in their minds, the portfolio is diversified, whereas it’s literally giving you the same thing. It’s the same index, same risk profile, just different providers, different fees that you’re actually getting.
So I think from that, people have actually moved on in terms of understanding what the difference is. But what I’m trying to say is you might have different providers, if they have got the same tracking index, it’s going to give you the same being the same risk bucket. Soyou need to understand what that risk means in terms of the different types of asset classes. That’s the first one. And then the other part is: how do you actually measure risk? It’s quite a tough one to explain, and also just make sure that an individual on their own understands it from their point of view in terms of what they want at the end – I think that the very important part here is the end game.
I think that the understanding of risk from clients has evolved and there’s much better understanding of it, though there’s still room for improvement here, which is why we get to record such podcasts as well. I think when it comes to risk, the client needs to understand it in terms of term. I always try to explain it in that sense – as in, how long are they willing to leave that money in that investment account? That’s the first part. So if they know that term, they’ll start to know which products actually fit in that term. Everything else really just is a spin off from that.
If you want the money to be invested, for instance, for the next 20 years versus you want the money next year January, there’s absolutely no way, no chance that you can take the same risk for those two terms. If you want the money in 20 years versus next year January, you can’t take the same risk on that. But what does that actually mean? The basic thinking behind investing, I think everyone who’s listening to this agrees that for any individual, if you buy into an asset with R100k, by the time you take out that money, you should have more than R100k after the fees. And that that R100k must have grown in such a way that it still has the same or even better buying power than when you invest it. So that’s real return versus total returns, which we can go back to and have different podcasts for that.
But that buying power needs to be there with that hundred bucks. If it was affording you a loaf of bread, milk and slice of polony or whatever, that hundred bucks, that should be there as well.
The Finance Ghost: Sho, I preferred the biscuits. Definitely preferred the biscuits to the polony, Siya.
Siyabulela Nomoyi: Yeah, exactly. So if it was buying you a box of Choice Assorted for 100 bucks, this is more expensive than that anyway right now. At whatever time you want to pull out the money, it still needs to buy you that basket of biscuits and even more if possible. That’s what you want when you’re actually investing.
So what are the chances of a major loss when you invested that 100 bucks in the next year? Would it not be better to actually protect that capital rather and gain some interest or money market rates on it in the next six months? Or are you prepared to put it in an asset where you have seen major drawdowns in short periods of time? So that’s where the measure – now talking about the drawdowns, whether you can lose a lot of money in the next period or not.
That’s where the history of the asset class comes from in terms of what they’ve done historically. I think we spoke about drawdowns in the last podcast and how you measure that. So when it comes to longer term, that question actually just tends to be a bit easier to answer and people can then start taking more riskier assets into their portfolio, like foreign equity exposure and also even our onshore equity markets, which have done very, very well actually in the last 10, 20 years.
But then here you start trying to skin the cat in different ways – no cats harmed during this recording of this podcast, Ghost! Sure you can take risks, but it is rewarding over the long term. And the ETF you will consider here in order to actually diversify your overall portfolio, or whether you are doubling down on a certain theme if you hold certain ETFs, or really offering yourself the opportunity to have a good chance of good portfolio growth in that instance, ride out all the volatility you will experience in the next 20 years. That depends on if you are comfortable with that risk profile.
So each ETF listed on the JSE will tell you what the risk profile is. You will get these different statuses, whether it’s low risk, moderate risk or moderate-to-aggressive or aggressive risk. So that will feed into how long you want to actually hold your investment. The risk part of investing is quite tricky and I would encourage everyone, especially if they just started to really consider, to understand this part very well before they dive into the unknown. Most of the time this leads to panic trading. And I mean someone will put in the hundred bucks today – I think on social media people were posting about the All Share hitting a 100,000 points, first time in history. If they invested at that time and they come back now, it’s like 97,000 points, they panic because they don’t understand what’s going on or the risk of that investing on that type of asset class. It’s just a matter of understanding why it will move from that point to 97 all of a sudden, but it can actually move up again. How long are you willing to actually ride out those waves? And if you’re doing that panic trading and you’re constantly in and out of different positions, you’re eroding your investments because you continue locking in losses while you’re actually paying a lot of progress.
The Finance Ghost: Yeah, I agree. I’ve got to say, even within the high-risk bucket that a lot of these equity – pure equity funds would get put into, I mean there’s high risk and then there’s very high risk. If you buy an ETF that is a broad market index, it’s going to probably come through on the MDD as high risk because equity is high risk. But relative to going and buying a very thematic ETF on some or another kind of quite tech-heavy, I mean let’s use something crazy like a biotechnology ETF overseas – that is super high risk, but in all likelihood it’s kind of just going to get shown on the same risk bucket.
So again, this is why it’s important – yes, ETFs are passive, but the decision to invest in them is active. And the research that you need to do to understand this is active. And I definitely want to spend a few minutes just talking through minimum disclosure documents and fact sheets. I’ll tell you what I love the most about fact sheets actually is to look at the constituents. And that’s because I love doing the bottom-up, what’s in here kind of analysis. And if you go and you download any fact sheet or MDD for any ETF, it’ll show you at least roughly its top 10 holdings. Now what’s interesting with that is it’s a very good way to go and see, oh, you’re interested in the top 40. Okay, well there’s a Satrix 40 ETF and if you go and have a look at the constituents, that will actually tell you what is in the Top 40 of the JSE. You don’t even necessarily have to have a data feed from the JSE or whatever the case may be. You can just go look at the ETF for that sector and you can actually see what’s in there. It’s a really cool research tool as well. Let’s say you do want to go and do some detailed stock research on European defence stocks – I’ll just use that as another example – so you go and find the European defence ETF, which will be listed somewhere overseas. Go find the fact sheet – it doesn’t look that different overseas to what it looks like here. Go and look at the constituents and bam, there are your answers. Here are the biggest names in the game. Maybe you pick two or three to go read about as you decide okay, this is a sector I want to be invested in, I like the narrative that’s coming through from a couple of the biggest names, let me go and buy the etf.
So I think the constituents are very important part of any fact sheet. Stuff like fees as well, a bunch of other things. So, Siya, I’m going to let you bring us home on this podcast by walking us through just some of the most important areas to look at when you open up a fact sheet, you go onto the website, you find the ETF, you download the thing, you’re hit with this two or three page document. What would be the most important things to look at, for those who aren’t familiar with these things yet?
Siyabulela Nomoyi: The minimum disclosure document, so MDD for short. I’ll just say MDD throughout and other people call it fact sheets – these are actually the first bit of information that is applied to investors that is publicly available and providers have certain information that they need to disclose on it, required by regulations. And if we didn’t have MDDs online, we would answer be answering calls every two seconds because someone wants to know about the Top 40. They don’t have information online, they’ll have to call Satrix directly and they’ll have to talk to the…
The Finance Ghost: …tell us about your biscuits Siya, we want to know…
Siyabulela Nomoyi: …exactly, every two seconds…
The Finance Ghost: That’s what it will be. But it is actually – it’s like if that Choice Assorted box was just grey…
Siyabulela Nomoyi: Yes!
The Finance Ghost: …had no pictures and no information, right? Like, what’s in here? You don’t know. You’re not going to buy the biscuits. It’s actually a great analogy.
Siyabulela Nomoyi: Yeah, exactly. And then imagine the line with people with those grey boxes, the line going to ask the question about what is in this thing. So it’s very important to actually have that information at hand, publicly available and free. People can actually download that. We update these monthly, so the information there is quite fluid. If you go on the Satrix website, for instance, you will see that all our Collective Investment Scheme products, the unit trust ETFs which are listed on our website, each of them has own MDD. This is to help investors actually have all the basic information and very important information at hand and then to make an informed decision about what they would like to invest in.
So let’s take the Top 40 ETF as an example. You’ll see that I’ve been speaking about it quite a lot today because that’s a very big and very important ETF in our lives. If you open that on your side, the first thing you want to know as an investor is what does the fund actually track? So first and basic knowledge that this fund tracks the Top 40 index, the FTSE/JSE Top 40 index. And then the MDD will give you the information on that part. Sometimes it will be like a sentence or two, but it will describe that the index tracks, for example, the Top 40.
And then after that, what you mentioned now – the top 10, so just to give you a glimpse of what the fund actually holds. The top 10 can give you lots of stories. It can give you if the index, for instance, is quite concentrated. For instance, if you go in there and you find that one or two stocks are 50% of the index, right away you know that this is quite a concentrated index. Other ones will be very diversified index where the top one is like 4%, 5% and the weights don’t change that much, so it can also tell you the story about the concentration and how far it goes in terms of how big the constituents are in the index.
So for instance, you go to the Top 40, you’ve got Naspers as the biggest weight in there at the end of June this year, 14%. And then the next one is 6%, FirstRand and then so on and so forth. Then for interest sakes, just to see how that fund has been performing in the past, you can also look at the return profile, so that also gives you an opportunity to actually understand the return profile historically and you can understand the drawdowns that you can experience from that particular fund. This helps you have an idea of how it has done over the short and long term, over a year, three years, ten years, depending when it was launched. But it does not necessarily mean that this is how it will perform going forward. So if it’s done 10% in the last 12 months, it doesn’t necessarily mean that next 12 months are 10% as well.
The part that can well be important is the fund information bit, because there you’re told what the ETF’s listing code is, if you want to buy into the ETF. For instance, you’ll see that the Top 40 ETF is the STX40. So you can search for that if you want to invest in it, in whatever platform you’re using. And then you’re also told how much it will cost you. This helps, especially this issue of having different issuers or different providers having the same index. We’ve got three top 40 ETFs on the JSE, got four or 5 S&P500 or MSCI World indices. So you can literally just take those three providers, put them side to side, they are tracking the same index, but how do I decide which one I go? Okay, this is the TR for this one, it’s actually double the other one or it’s lower than the other one. And then you can also look at the tracking – how is the ETF better than the other in terms of tracking the index? And you can sort of choose from that.
It can help you choose the provider, understand the risk, understand the cost as well. And then you can actually make a very, very informed decision. People who really are interested in how much income for instance an ETF generates, the MDD will also show you this in the frequency of receiving dividends or the income here as well.
Going back to the part where we were talking about risk, the risk scale or the status is disclosed as well. For the top 40 it’s shown as aggressive, so this will make sense as the fund is an equity tracking fund. You can get moderate, you can also get moderate-aggressive and you also get low risk.
But your point there that you raised is very important to understand, that the equity tracking ETFs will have the same risk profile. That would be like aggressive, aggressive, aggressive. But you need to understand how aggressive it is based on whether you’re investing in a certain theme. You’re going to Resources, for instance, full-on Resources versus Top 40. Those might be aggressive, but one of them is actually more aggressive than the other. That’s where the return profile will actually tell you the story of how aggressive it is. So that can help you in terms of choosing which one based on what risk level you think you are.
So those are the important bits. The rest is really just for knowledge, like the size of the fund, how many people are investing in it, the last price and so on. As long as you get through the fund formation part, you should be good to make an informed decision, Ghost.
The Finance Ghost: Yup, Siya, I love it. There’s a lot of really good stuff in there. Thank you so much. I think that biscuit analogy will stay with me because I really do think it’s great. ETFs are those biscuits in the aisle. There are a lot of very sweet things to choose from and you’ve got to find your tastes, you’ve got to find what’s going to work for you. You’ve got to look on the boxes and decide what’s in there and if that’s what you want and all the different mixes that you can get and then compare the prices, of course, and then find what will work for you to put in your trolley.
Thank you for sharing a lot of really good insights into a part of the market that is just so important. You know, I say every time. ETFs are a core part of my portfolio. They are my building blocks. I love picking stocks. I definitely do that on top of my ETF exposure, but the ETFs are the foundation of that portfolio. They are obviously what you buy in your tax-free savings account – or at least what you are limited to buying in your tax-free savings account from an equities perspective, but that’s fine because there’s so much good stuff you can choose from. And that’s obviously what I do with my tax free savings – it’s all in ETFs.
So, Siya, thank you so much. It’s been another great show. Lots of cool stuff that we’ve covered here. In the show notes, I’ll include an example of a recent minimum disclosure document and the link where you can find them on the Satrix website. And Siya, I know you’re also very up to answering questions from people on the socials.
So if you want to chat to Siya on X or on LinkedIn, get hold of him, ask the questions, get hold of the team at Satrix, engage with them. They really do love what they do. Siya, thank you so much for coming back on the show and I look forward to the next one with you.
Siyabulela Nomoyi: Awesome. Thanks, Ghost. And thanks to loyal listeners as well. Always great to be here. Until next time, eh?
The Finance Ghost: Yeah, till next time. Thank you. Ciao.
*Satrix is a division of Sanlam Investment Management.
*Satrix is a division of Sanlam Investment Management.
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Satrix Investments (Pty) Ltd & Satrix Managers (RF) (Pty) Ltd is an authorised financial services provider. The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. For more information, visit https://satrix.co.za/products
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