Things are looking much better at AECI (JSE: AFE)
AECI Mining has achieved a significant margin uplift
With the share price up by roughly 16% year-to-date (and we are only in February), AECI is clearly doing something right. The group turnaround is showing decent momentum, with the release of results for the year to December 2025 confirming that HEPS is moving firmly in the right direction.
Revenue from continuing operations may have dipped by 4%, but EBITDA from those operations was up 12% as margins improved.
You pay dividends (and reduce debt) with profits, not revenue!
Earnings per share from continuing operations improved by 36%, while HEPS was up by an excellent 53%. Before you get too excited, the dividend was only 4% higher, so this HEPS move hasn’t been backed up by an exciting dividend move.
But here’s why: net debt has plummeted from R3.7 billion to R465 million. It doesn’t help to ramp up the dividends to shareholders while you owe the bank. AECI has quite rightly taken the improved earnings and used them to stabilise the balance sheet. They also realised R2.2 billion in asset disposals, so that did wonders for debt reduction.
AECI Mining did the heavy lifting in terms of EBITDA margin, achieving its highest ever EBITDA despite a drop in revenue. They’ve focused on margins and pricing in the business, with the results clear to see. EBITDA margin improved from 12% to 15%.
AECI Chemicals remains a problem though. Margins went the other way, as a 4.5% revenue increase was accompanied by a 5% decline in EBITDA. Pricing pressure was one factor, with expected credit losses being another. On the plus side, segmental free cash flow improved by 34%.
Overall, they are making significant progress.
Solid numbers at Bidcorp (JSE: BID)
The company has spent years growing into its valuation
Bidcorp is easily one of the best examples of a company that has roots in South Africa and beautiful blooms all over the place in offshore markets. Through bolt-on acquisitions and a consistent strategy, they’ve built what can genuinely be referred to as a food service empire.
The valuation was always helped along by the “rand hedge” era, in which companies were desperate to have exposure elsewhere. South Africa is on a much firmer footing now, so investors are less inclined to chase offshore opportunites. Combined with a demanding valuation, this is why the total return in this stock over three years is only 18%. That’s in the green, but not exciting.
But at some point, the company will have grown into its valuation. The share price is down 7.5% in the past year, yet the freshly-released results for the six months to December 2025 reflect growth in HEPS of 8.5% (or 6.9% in constant currency). The Price/Earnings (P/E) multiple is now in the mid-teens. For such a great company, that’s starting to become interesting.
For all the rand strength that we keep talking about, it’s worth remembering that this is mainly against the US dollar – a market that Bidcorp doesn’t operate in. This is why revenue for the period was up 7.1% as reported, or 5.9% in constant currency. There’s still a rand hedge element to this story, as the rand tends to weaken against the markets where Bidcorp operates.
Trading profit increased 8.1% as reported (6.9% in constant currency), so margins improved in this period. But nothing improved quite as much as the cash margins, with cash generated by operations (net of working capital) up by a juicy 27.2%. Working capital can skew this from period to period, but that’s still good to see.
The interim dividend increased by 9.8% – a solid outcome.
A scan of the segmental numbers does reveal one ugly duckling. And of course, it would be Australasia, the ultimate widowmaker for South African businesses. Revenue fell 0.3% and trading profit was down 4.6%. They note cost inflation, a tight labour market and ongoing wage inflation.
Believe me, if Bidcorp is struggling in that market, then the clothing retailers must still be getting hammered.
Dividends are back at Blu Label Unlimited (JSE: BLU)
But the numbers are still impacted by accounting complexities related to Cell C
Blu Label has had quite a year. They successfully executed the separate listing of Cell C (JSE: CCD), setting that business free to go off and execute a strategy built around the MVNO offering as a key growth engine. Blu Label has retained a stake of 49.47% in Cell C. This is below the threshold for control, so the stake will be equity accounted going forwards.
This will do wonders for the simplification of Blu Label’s financial reporting, but we aren’t quite at that point yet. They’ve had to recognise significant accounting losses related to the restructuring.
To mitigate that pain and to show the market that there’s a business underneath all this, Blu Label has resumed interim distributions by declaring an interim dividend of 43.56 cents. At least this gives the market a base to work with.
On the subject of bases, revenue was a neat R5.0 billion and gross income was R1.35 billion. EBITDA came in at R535 million, so the EBITDA margin is north of 10%. Headline earnings came in at R398 million, or a margin of around 8%.
In terms of group prospects, one of the major growth initiatives is BluEnergy, which has secured a multi-year energy trading licence from NERSA. They are looking to play in the renewable energy space, so that’s going to be one to watch.
The share price closed 12% higher on the day, perhaps because the market can finally understand more of the numbers?
I’m keen to get your views on this one. Please participate in the poll below:
A short and sweet trading update at Fortress Real Estate (JSE: FFB)
Mid-teens growth is the order of the day
Fortress Real Estate has given the market a brief update on the expected earnings for the six months to December 2025. The announcement may be devoid of additional commentary or management narrative, but at least they give a precise number.
Shareholders can expect a dividend per share of 87.89 cents, representing an increase of 15.4% year-on-year. The share price is up 36% in the past 12 months.
Hammerson has grown its earnings in the UK market (JSE: HMN)
6% dividend growth in pound sterling isn’t a bad outcome at all
UK property fund Hammerson has released results for the year ended December 2025. Like-for-like net rental income growth of 3% got things off to a good start on the income statement, with EPRA earnings growth of 5% by the time you work through the expenses. As for the cherry on top, dividend growth was 6%.
That might not sound exciting, but you need to remember that this is a hard currency return. And although there are a lot of valid concerns about the UK economy at the moment, the pound has proven to be a lot more resilient than the US dollar.
The portfolio value increased by 33% through a combination of acquisitions, growth in rentals and compression in valuation yields. They had record leasing activity and strong positive reversions in leases. Occupancies sit at 96%, so the Hammerson portfolio is doing well overall.
The flagship portfolio increased footfall by 2%, with the fund highlighting a “best and the rest” trend that is making it increasingly important for investors to look for quality retail properties. I agree with this sentiment, particularly in this omnichannel retail world.
The loan-to-value (LTV) of 39% is on the high side by South African standards, but the UK benefits from a lower cost of borrowing than we have here. This encourages funds to run at higher debt levels.
It looks like a solid set of numbers overall, with Hammerson up 23% in the past year.
Well, the market didn’t like something about the Motus update (JSE: MTH)
But I thought it looked pretty good overall
Motus has a diversified business in the automotive space. It’s worth giving you that context before we dive into the numbers.
In Import and Distribution, they have approximately 15.5% passenger vehicle market share in South Africa, powered by exclusive import rights for big brands like Hyundai, Kia and Renault (amongst others). This generates 17% of group operating profit.
In Retail and Rental, they then expand the offering to represent 29 OEMs and 38 brands across a footprint of 337 dealerships in South Africa. This takes their market share in new passenger vehicles to 18.4%. This is also where you’ll find their UK and Australian businesses. This is the biggest segment, contributing 40% of group operating profit.
Mobility Solutions is the value-added and financial products piece of the business. Despite generating just 2% of group revenue, this segment is responsible for 22% of group operating profit.
And finally, the Aftermarket Parts business gives them ongoing economic participation long after the customer has driven out in a new car. This segment has operations in South Africa, the UK, Asia and Europe, contributing 21% of group operating profit.
Does this give them enough flexibility and resilience to defend against the incursion of Chinese and Indian vehicles? With the share price up 11.6% in the past year and a juicy dividend yield as well, it seems that way. But despite releasing what I thought were solid interim results for the six months to December 2025, the share price closed 4.4% lower.
Revenue for the period increased 3% and operating profit was up 8%. With net finance costs coming down by a significant 23%, they managed to achieve a lovely jump in HEPS of 19%. The dividend was even better, up 25% year-on-year.
The real joke is cash flow from operating activities, which was up more than 10x from R186 million to over R1.9 billion.
Net debt to EBITDA improved from 2.1x to 1.5x, so that’s another highlight in the numbers.
Motus is certainly enjoying the improved new car sales in South Africa, with operating profit up 15% in the home market despite so much activity in the so-called emerging brands. The UK market also achieved some growth in vehicle sales. Although Australia’s economic growth has been revised downwards, that market achieved a new all-time high in vehicle sales.
I can’t see an obvious reason why the market didn’t like these numbers, so it could just be profit-taking by investors and punters. With the most diversified model of the automotive-focused players on our market, Motus should weather the storm of disruption in this sector.
Mustek’s profits have jumped off a low base (JSE: MST)
Revenue fell by 2.4%, yet HEPS is up 256%!
Just like people, income statements come in all shapes and sizes. Mustek’s results for the six months to December 2025 are a great example, with revenue dipping by 2.4% and profits up sharply.
The profit boost didn’t come from the gross profit margin, as that contracted from 13.9% to 12.6%. EBITDA was down by 1.6%. Nothing about this sounds like it should be boosting HEPS!
When you reach the net finance cost, you find the reason for the HEPS move. Net finance costs fell from R83 million to R48 million. Compared to EBITDA of R128 million, that’s a big difference. This is why net profit increased from R13 million to R45 million.
This boosted HEPS from 23.47 cents to 83.54 cents. The huge percentage move has been driven by a reduction in finance costs, along with the low base for earnings in the comparable period.
Shaftesbury continues to celebrate London’s West-End (JSE: SHC)
Dividend growth looks exceptional
Shaftesbury released results for the year ended December 2025. They are excellent to say the least, with the fund’s West End-focused strategy in London working beautifully.
Much as your social media feed may try to convince you that London is now a hellhole, the reality is that it remains a beautiful and incredibly important city that attracts people from all over the world. The West End is one of the best areas in the city, so that’s a good place to own property.
The portfolio valuation increased by 6.2% on a like-for-like basis, reflecting the underlying appeal of the area. Another indication of success is the leasing activity, with rentals coming in 13.9% ahead of previous passing rents (this is how UK funds talk about reversions).
With underlying earnings per share up by 12%, this is an impressive double-digit growth performance in hard currency. Oddly enough though, under the HEPS rules, earnings actually dipped from 3.4 pence to 3.3 pence per share.
The dividend is what investors will focus on though, up by an excellent 14% year-on-year. Shaftesbury shareholders just might treat themselves to a West End shopping spree!
Earnings almost doubled at Valterra Platinum (JSE: VAL)
The same certainly can’t be said for the dividend
Valterra Platinum released results for the year ended December 2025. Revenue increased by 7%, which sounds like a modest improvement. It was enough for adjusted EBITDA to jump by 68%, and for HEPS to increase by a casual 98%.
Yes, they nearly doubled earnings off revenue growth of just 7%!
And to add to the weird shape of the numbers, the dividend per share is down 37% year-on-year. Hmmm.
If you’re wondering why revenue growth wasn’t higher, you aren’t alone. After all, the PGM basket price did amazing things in 2025 – Valterra’s average realised basket price for PGMs increased 26% in rand. The flooding in Amandelbult took the shine off things unfortunately, driving a 10% decrease in PGM production. Refined PGM production fell 13% and sales volumes were down 15%. This is why revenue wasn’t nearly as high as you might expect.
They delivered cost savings of R5 billion though, so that helped create a decent outcome for earnings. It’s also worth noting that they received R2.3 billion in flooding-related net insurance proceeds, reducing the impact of that irritation and boosting earnings without a related increase in revenue.
With a net cash position of R11.5 billion, they’ve really turned things around from the net debt position at 30 June 2025. This does raise further questions about the move in the dividend, though. I know that the company’s demerger from Anglo American (JSE: AGL) would’ve affected comparability, but still.
Guidance for 2026 remains unchanged, with refined production guidance of 3.0 – 3.4 million PGM ounces. They achieved 3.4 million ounces in 2025, so the midpoint of guidance is actually a decrease from current levels.
At least capex guidance has been moderated by a couple of billion, coming in at R17 billion – R18 billion. This should help free cash flow.
The business is in much better shape than in early 2025, as evidenced by the share price doubling over the past six months. It’s just a pity that the dividend hasn’t kept pace with the earnings growth, with the company taking a more measured approach to lock in the balance sheet strength.
Nibbles:
- Director dealings:
- Here’s something you won’t see every day: the CEO of PPC (JSE: PPC) funded R5.6 million worth of tax liability (related to share-based payments) using a one-year term loan. He’s pledged shares worth R15.6 million against this debt. If that isn’t a show of faith in a company, I don’t know what is.
- An associate of a director of Goldrush Holdings (JSE: GRSP) bought shares in the company (and entered into CFDs) worth nearly R158k.
- An associate of a director of Visual International (JSE: VIS) sold shares worth R38.6k.
- Here’s something interesting: iOCO (JSE: IOC) announced that Dennis Venter has resigned as the co-CEO of the group. This leaves Rhys Summerton as the sole CEO. I’m never a fan of co-CEO structures, so I don’t see this as a bad thing.
- Back in December, Mahube Infrastructure (JSE: MHB) released a firm intention announcement regarding an offer by Sustent Holdings. The circular is expected to be released in early March. But here’s an interesting development: the company has announced that an entity named Bunter Capital (and related parties) has built up an interest of just over 10%. One has to wonder about the chess moves in the background.
- Labat Africa (JSE: LAB) has renewed the cautionary announcement regarding negotiations with an AI and technology company operating in the SADC region. The parties are still finalising the terms of whatever this deal might be. As always, there’s every chance that the talks just fizzle out, hence the need for shareholders to be cautious.
- Shuka Minerals (JSE: SKA) announced encouraging results from recent samples at the Kabwe Zinc Mine. This is surface testing that sounds like it used rather rudimentary methods to conduct, but it gets the job done – the company feels good about the significant material available at the surface. Testing at the surface is surely cheaper than testing the metallurgical characteristics of the ore body much further down.
- Africa Bitcoin Corporation (JSE: BAC) announced that Buyisiwe Makunga has resigned as a director and Chair of the Group Audit and Risk Committee. The company stresses that this isn’t because of governance concerns, but rather a conflict of interest in a business opportunity. I’m sure that’s true, but the timing is still unfortunate based on the precipitous drop in the bitcoin price and the rebrand of the group.
