Altvest is planning many fund launches (JSE: ALV)
Walking before they run definitely isn’t the approach here
Altvest certainly can’t be accused of being light on ambition. As their latest annual results show, they are planning to launch a further 6 funds over the next 12 months or so. This adds to the Altvest Opportunities Fund, Altvest Growth Fund and Altvest Credit Opportunities Fund.
To add to the complexity, they also give small businesses the opportunity to access the market through distinct listed preference shares, as they did with Umganu Lodge and Bambanani restaurants. Heck, they are even involved in bitcoin!
They are also trying to get a slice of the Springbok action, with the group trying to put a deal together to allow South Africans to invest in their most widely-loved sports team. Again, no shortage of ambition.
The challenge is that they are trying to do a lot. I’m all for the ambition here and they certainly need to scale quickly to get past the overheads of being listed, but this really is like building a gigantic house that currently has very little furniture in it.
For context, the most exciting business they have at this stage is the Altvest Credit Opportunities Fund, which has R365 million in committed assets under management. That’s a great start, but it’s far too small to be profitable on even a standalone basis, let alone large enough to carry the group’s ambitions.
I’ll give Altvest a lot of credit for the extent of disclosure here. Check out this chart on disbursements by that fund, with a weird drop to zero in Januworry:
As for the other businesses, Umganu Lodge recognised a small operating loss in the year ended February 2025. Poor Bambanani lost R4.8 million this year vs. a loss of R4.2 million in the prior year. A new restaurant in Bedfordview was part of the expenses, but the fact of the matter is that the business is now in a turnaround situation despite being around for 15 years. As a dad, Bambanani looks like a delightful place to take the kids – but that doesn’t mean I want to own shares in it.
Altvest’s reporting is objectively beautiful and they care deeply about the brand and what they are building. I just hope that they will find sufficient support along the way, as they really are trying to fly an executive-level jet while building it, never mind a plane.
AngloGold Ashanti to sell a Brazilian mine (JSE: ANG)
This is part of a more focused strategy at AngloGold
AngloGold Ashanti has agreed to sell its interest in Mineração Serra Grande mine in Brazil. The buyer is Aura Minerals.
The up-front amount is $76 million, subject to working capital adjustments at closing. Deferred consideration payments will be paid quarterly, equal to 3% net smelter returns participation.
The mine has an uncomfortable place in the AngloGold portfolio, with a high cost of production and a small contribution to the overall story. It therefore makes sense to send it on its way to a new owner, unlocking a cash payment in the process along with future potential payments.
That Bell Equipment take-private offer is a distant memory (JSE: BEL)
And the earnings trajectory is a major worry
I’ve written a few times now that the minority shareholders who blocked the Bell Equipment take-private were being greedy at the time. I fear that the same thing is happening at Barloworld at the moment, but time will tell.
When there was a deal on the table for Bell Equipment, it was at R53 per share. Today, the company is trading at R41.50. That’s already a painful example of what might have been. But if the current earnings trajectory continues, it’s going to get a lot worse.
For the six months ending June 2025, Bell expects HEPS to be at least 50% lower than the comparable period. This implies that interim HEPS will be no more than 160.5 cents for the period. Worst of all, with a month to still go in this period, it’s very possible that the drop is actually a lot worse than 50%, as they are still just guessing at this stage. The words “at least” are very dangerous.
The US tariff uncertainty has added to a situation where there’s a global slowdown in demand in key markets. I’ll say it again – those who are being greedy at the moment in the Barloworld deal are taking fat chances in my opinion. Current global conditions aren’t great for cyclicals.
Hyprop had no problem raising over R800 million (JSE: HYP)
The question is now whether they will make a serious bid for MAS
In response to a very cheeky bid put on the table by the joint venture partner (PK Investments) of MAS, Hyprop came out recently with a plan to raise equity as a pre-cursor to a potential offer for MAS that would be more appealing than the offer by PK Investments. Look, putting a better offer on the table than the PK Investments offer isn’t much of a challenge, as it really was the strangest thing I’ve seen in ages.
The market seems to be happy with Hyprop even contemplating such a move, as an accelerated bookbuild saw the company raise R808 million at a really great price. They issued the shares at R42.50 per share, which is a premium of 0.3% to the 30-day VWAP. Despite this strong pricing, the book was oversubscribed!
The funds will be used to reduce debt and for a variety of growth initiatives, with the possibility being that the MAS deal is one of them. The MAS market cap is over R14 billion, so it wouldn’t be a full cash deal anyway – it would be a share-for-share deal with a cash alternative.
We now wait and see what Hyprop will do.
Momentum is pushing hard on margins (JSE: MTM)
A business of this size needs to keep grinding away
When you get to the size of a business like Momentum, there are few quick wins. Instead, you have to work diligently over time to do the right stuff and find growth along the way, while making sure that margins are protected – and even enhanced! A lot of it comes down to margin mix and how the underlying business shifts over time.
For the nine months to March 2025, headline earnings was pretty consistent across the three quarters. This is despite the first two quarters enjoying substantial positive market-related variances.
Top-line sales aren’t where the good news is to be found, with present value of new business premiums (PVNBP) down 4% year-on-year for the nine months. Momentum Corporate took the biggest knock here, down 29%. The largest area is Momentum Investments and this unit grew PVNBP by 1%.
Value of new business (VNB) was up though, albeit to a lesser extent than in the first two quarters. This is due to a favourable shift in margin mix in the group.
Expenses grew slightly above inflation, with IT investment as one of the usual suspects for that pressure. They expect to unlock the benefits from their optimisation efforts in FY26.
The balance sheet is healthy and the Prudential Authority gave Momentum approval for a R1 billion share buyback programme that commenced in May.
Momentum’s share price has had an incredible run, up nearly 60% over 12 months.
Raubex: results are out and the whistleblower investigation is behind them (JSE: RBX)
There was no evidence of unlawful or unethical conduct
On the 9th of May, Raubex announced that the board had received an anonymous whistleblower report that warranted an investigation. The share price was at R45.70 before the announcement and got as low as R40.90 before the latest updates. That’s a pretty nasty 10.5% drawdown.
With the news that the whistleblower allegations didn’t lead to anything being found, along with the financials having now been released, the share price is back up to R45.20 – almost where it started. I’m sure some punters made money in this process!
The results for the year ended February 2025 saw a meaty revenue increase of 21.0%. Despite operating profit being up just 1.3%, HEPS increased by 25.9%. That’s an oddly-shaped income statement. Helpfully, cash generated from operations was up 31.8% and the final dividend was 13% higher. I would keep an eye on the debt-to-equity ratio, which increased from 26.0% to 31.7% thanks to a 32.2% increase in borrowings.
The pressure on operating margin (which at group level deteriorated from 8.8% to 7.4%) was mainly suffered in Bauba Resources. This is found in the Material Handling and Mining division, which saw operating profit margin plummet from 14.6% to 1.7%. They attribute this to the unfortunate deterioration in the chrome price at the same time that designed feed capacity at the chrome ore wash plant and crushing circuit was achieved.
Thankfully, there were offsetting impacts elsewhere. Construction Materials saw operating margin jump from 4.8% to 10.6%, driven by strong contract demand for bitumen and asphalt volumes. It’s a coincidence that revenue growth in that segment was also 10.6%.
In Roads and Earthworks, operating profit margin increased from 5.8% to 8.6%, driven by significant revenue growth of 19.9% and a well-executed strategy during the year.
The Infrastructure division saw operating margin decreased from 9.5% to 8.9%, but they did manage impressive revenue growth of 27.4%. They attribute this to new contracts in South Africa and solid results in Western Australia.
So, the chrome exposure is proving to be problematic at the moment, with the rest of the group enjoying a positive overall outlook. Raubex remains exposed to the whims of government spending though, so that’s a risk that shouldn’t be ignored.
Sabvest is investing in the pet sector (JSE: SBP)
Let’s face it – it feels like there are more pets than kids these days
With the birth rate going through the floor, fur babies just might be a better investment than human babies. Sabvest is clearly seeing opportunity in this space, as their 39.31%-held portfolio company Valemount Trading is making serious strides in this space and Sabvest has committed a funding line of up to R200 million to make it possible.
Historically, Valemount has supplied retailers, pet stores and co-ops with primarily birdseed and feeder products. They do have other products in the range and they provide logistical services to independent pet product suppliers through nationwide distribution centres.
In the current period, they’ve relocated to a new R160 million production facility in Modderfontein. They’ve made some interesting acquisitions, including dog and cat biscuit manufacturer Ourebi Trading, premium dog food business Complete Pet Foods and regional birdseed supplier Commix. They’ve also entered into discussions to potentially acquire a UK-based cat food business.
Sabvest sees this as a major growth investment and they are looking to increase their exposure over time. Interesting!
Per-share numbers at Sirius suffered from recent capital raises, but the fund marches on (JSE: SRE)
This isn’t an uncommon situation in the property sector
Property funds that are on a growth trajectory tend to raise capital quite often. Sirius Real Estate is one of the best examples of this, with the market only too happy to keep giving this management team equity capital. And why not? Sirius has been doing a great job of actively managing its property portfolio.
But all these extra shares running around do create a problem: growth on a per-share basis suffers because of the lag in deploying the new capital. This comes through strongly in the results for the year ended March 2025, where great numbers like a 6.3% like-for-like increase in the rent roll and an 11.8% increase in funds from operations (FFO) were diluted by all the extra shares.
FFO per share actually fell by 5.7% and the total dividend per share for the year was just 1.7% higher.
As busy as they’ve been with acquisitions (six in each of Germany and the UK), they are sitting with a whopping €571 million in cash and a loan-to-value ratio of 31.4%.
Sirius is poised to do deals. They just have to find them!
Solid earnings growth at Sygnia, but a modest payout ratio (JSE: SYG)
These businesses are usually seen as cash cows
For the six months to March 2025, Sygnia achieved growth in assets under management and administration of 18.8%. That’s an impressive result!
As we dig deeper, we find strong net inflows of R43.1 billion, while a further R12.4 billion increase came from positive market moves. Another point to note is that the institutional assets under management delivered the biggest growth. For context, institutional assets under management come to R326.7 billion vs. R78.7 billion in retail assets under management.
Now, the challenge is that the institutional business is at much lower margins than retail, hence why revenue was only up by 11.6%. That’s still solid of course, driving growth in diluted HEPS of 13.0%.
Oddly, the interim dividend per share is only 8.9% higher. The payout ratio has dropped from 89% to 87.6% – a minor decrease, but still noticeable. There’s no obvious indication why they’ve taken this route.
Telkom dials up the earnings (JSE: TKG)
It’s been a much better time for the telecoms sector
You aren’t imagining it – the telecoms sector has been a far happier place recently. Telkom is just further proof, although much of this improvement is thanks to the restructuring efforts they’ve been through.
In an updated trading statement for the year ended March 2024, Telkom has indicated growth in HEPS from continuing operations of between 55% and 65%. This is a better metric than looking at total operations, which include Swiftnet, in which case HEPS is up by between 40% and 50%.
But perhaps the best metric of the lot is adjusted HEPS from continuing operations, which splits out vast restructuring costs and the impact of converting the Telkom retirement fund to a defined contribution fund. In other words, this metric gets closer to how the actual operations are performing. Growth on this basis is 95% to 105%, which means that HEPS essentially doubled!
Detailed results are due for release on 10 June.
Nibbles:
- Director dealings:
- The CEO of Investec (JSE: INP | JSE: INL) sold shares worth just over R20 million.
- An associate of the CFO of Standard Bank (JSE: SBK) sold shares worth R10.6 million, adding to the extensive selling of shares in the bank that we’ve seen in recent months.
- The company secretary of SA Corporate Real Estate (JSE: SAC) sold shares worth R352k.
- A non-executive director of KAP (JSE: KAP) bought shares worth R99k.
- A director of Spear REIT (JSE: SEA) bought shares worth R52k.
- Emira Property Fund (JSE: EMI) has bought even more shares in SA Corporate Real Estate (JSE: SAC). In April, they had a stake of around 12.8% based on my maths and a cryptic announcement about “Cervantes Investments” acquiring a stake of that size. Emira has acquired a further 99.4 million shares for R284 million, which looks like a further 3.8% in the company. If that’s true, I expect to see an announcement about them going through the 15% level. Stay tuned!
- The demerger by Anglo American (JSE: AGL) of Valterra Platinum (JSE: VAL) – previously Anglo American Platinum – is now effective. Anglo American holds 19.9% in the company and will hold this for at least 90 days, as they need to achieve a responsible separation without flooding the market with shares for sale.
- Tsogo Sun (JSE: TSG) announced that CFO Gregory Lunga has resigned as executive director. Chris du Toit, an existing director of the company, will serve in that role on an interim basis.
- The nerves continue for investors in Kore Potash (JSE: KP2), with the company continuing to draft non-binding term sheets with the Summit Consortium. They plan to make an announcement as soon as negotiations are complete. Importantly, Kore Potash is keeping its options open in terms of potential funding partners.
- Clientèle (JSE: CLI) announced that the acquisition of Emerald Life has become unconditional.
- AECI (JSE: AFE) has confirmed that Ian Kramer has been appointed as the permanent CFO of the group. He’s been in an acting role since December 2024.
- Afrimat (JSE: AFT) announced a couple of heavy-hitting non-executive director appointments. Jacques Breytenbach was the CFO of London-listed Petra Diamonds until 2024. Pierre Joubert was an Executive Vice President of Ivanhoe Mines, with extensive experience in Africa. There are a couple of retirements of non-execs as well, so the company is having no difficulties in attracting talented directors.
- Numeral (JSE: XII) has received approval from the Stock Exchange of Mauritius (its primary regulator) for the financials for the year ended February 2025 to only be released by the end of June.
- African Dawn Capital (JSE: ADW) has been delayed in getting financials out for the year ended February 2025. They expect to release them by the end of June, along with the annual report by the end of July.
