AngloGold cashes in while the gold price is strong (JSE: ANG)
Free cash flow is almost 1.5x higher year-on-year
AngloGold Ashanti released earnings for the quarter and nine months ended September. It won’t surprise you that they are very good, as the talk of the town this year has been the gold sector. Still, these numbers are quite incredible to read!
Credit where credit is due: they aren’t just relying on the gold price here. The group increased gold production by 17% in Q3, so they are taking full advantage of a situation where the average gold price received jumped by 40% year-on-year. They’ve also achieved only an inflationary increase in costs, so they are running efficiently. Cash from operations was up 94% year-on-year for Q3 and free cash flow was up by a ridiculous 2.4x!
If you look over nine months, free cash flow increased 141% – or 1.4x, seeing as percentages of over 100% can be confusing. Cash is basically raining down on them at the moment.
What are they doing with that cash? Aside from dividends and the usual capex, they’ve been doing deals in the Beatty District in Nevada to consolidate their position in the US. In October, the deal to acquire Augusta Gold Corp. was concluded.
Based on these numbers, FY25 guidance has been affirmed. With the share price having more than tripled this year, investors will look for a strong finish to the year.
AVI is off to a strong start in the new financial year (JSE: AVI)
As usual, they are turning modest revenue into great profits
AVI has a great reputation for running a tight ship and delivering profit growth to shareholders that is as tasty as their Bakers biscuits. Yes, I do think that they desperately need to get rid of footwear and apparel, but overall it’s a solid group.
At the AGM held on Tuesday, the chairman gave attendees an update on trading conditions. The company also published the update on SENS. For the four months to October, group revenue increased by 4.3% and operating profit was up by 15.8%. Unsurprisingly, the market reacted positively and the share price closed over 6% higher.
Further details were given around where this performance is coming from, with Entyce and Snackworks achieving revenue growth, consistent gross profit margins and better operating profits. Over at I&J, the catch rates are better and there’s been a significant improvement in profitability despite challenges in parts of the business like abalone.
The footwear and apparel portfolio is the headache (as usual). There’s some positivity at SPITZ around sales volumes, but Indigo (personal care) is struggling with a drop in revenue. Given the strong performance that most retailers are reporting in categories like health and beauty, that’s a particularly weak message.
There’s all to play for during the festive season, with the group needing to maximise the upcoming Black Friday and Christmas season. They highlight improved footwear availability at SPITZ vs. the prior year, so perhaps that will help.
It’s been a rough year at Barloworld (JSE: BAW)
The acquiring consortium will need to play the long game here
As a cyclical business, Barloworld has good years and bad years. This depends largely on the mining sector in specific regions, along with the general levels of investment in infrastructure.
This is in all likelihood the last set of numbers we will see from Barloworld on the public stage, as the offer by the consortium has been highly successful. Barloworld isn’t going out on a high, with HEPS expected to drop by between 20.3% and 22.3%. They attribute this to lower trading activities in Vostochnaya Technica in Russia, along with demand pressure across parts of Southern Africa.
As I said at the time when the offer came through: if I had a horse in this race, I would’ve taken the money and run. As things turned out, most shareholders shared my views.
It’s a big month for Copper 360 (JSE: CPR)
The circular for the capital raise will be released soon
Sometimes junior mining goes well. Sometimes it doesn’t. Copper 360 is an example of the latter, with the share price down more than 70% year-to-date. The group ran out of capital and needs more of it, with an announcement in early September giving the market an idea of the terms under which the company will raise R1.15 billion.
To get this right, there’s a claw-back offer of R140 million and a rights offer of up to R260 million. There’s also a raise of R750 million to reduce the company’s debt, with an automatic conversion of debt to equity if the full amount isn’t raised. In summary, R400 million in fresh equity capital and the rest is a reshuffling of the balance sheet.
The circular is going to be complicated and interesting. They expect to distribute it on 17 November.
Premier Group is creating a strong foundation for their proposed RFG Holdings deal (JSE: PMR | JSE: RFG)
The shape of this income statement is exactly what you want to see
In the manufacturing game – whether you make bread, industrial components or “widgets” as they love in accounting tests at varsity – it’s all about manufacturing efficiencies and turning modest revenue growth into excellent profit growth. Of course, everyone prefers high revenue growth, but if you rely on it for success then you’re setting yourself up for a bad time.
At Premier, the results for the six months to September are a masterclass on the ideal shape of an income statement. Revenue was up by 6.4%, which was good enough for operating profit to increase by 17%. Thanks to net finance costs dropping by 28.7% due to reduced debt, HEPS then jumped by 27.9%. That’s a delightful example of operating and financial leverage in action.
The revenue growth may look tame, but it’s actually pretty good when you consider it in the context of deflation in global grain prices. As we saw in the recent numbers at Shoprite (JSE: SHP), inflation in basic foodstuffs is either non-existent or negative at the moment. That’s great news for consumers and tricky for FMCG companies that need to manage inflationary pressures on their costs.
The cash also looks great, with cash from operations up by 34.7%. The company has stepped outside of its usual dividend policy to declare an interim dividend of 159 cents per share. They usually only do final dividends, but they need to clear out cash before the proposed deal with RFG Holdings goes ahead.
Speaking of that deal, the circular can’t be too far away based on the firm intention announcement having been released in mid-October. I worry about whether Premier is doing the right thing here, as diversification can sometimes dilute the investment thesis. Premier and RFG Holdings are both good businesses, but for different reasons and with very different underlying profit profiles and external dependencies. If the deal goes ahead, current RFG Holdings shareholders will have 22.5% of the enlarged group and current Premier shareholders will have the rest.
The market doesn’t seem concerned about the deal, with Premier’s share price continuing to push higher. It’s up more than 30% year-to-date!
Santam’s solid run continues (JSE: SNT)
They’ve carried on where they left off in the interim period
Santam released an update for the nine months to September 2025. It’s important for you to have the context of just how good the first six months were, with HEPS up 19% for that interim period. The short-term insurance sector is having a fantastic run, although the share price has been volatile as investors tend to be cautious of how maintainable the earnings are.
This is because one of two things usually happens: (1) there are major loss events that bring underwriting profits back down to earth, or (2) there are no major loss events and the forces of competition create more aggressive pricing and thus lower underwriting profits anyway.
But for now at least, Santam is thoroughly enjoying life under that yellow umbrella. Underwriting margin remains above the upper end of the 5% to 10% range, with results further boosted by double-digit growth in gross written and net earned premiums. They describe net income growth as being in line with the first half of the year – and that’s good news! They are even outperforming when it comes to investment returns on insurance funds in the conventional insurance business.
There are obviously a few areas that were a drag on earnings, one of which is the investment return on the group’s capital portfolio (i.e. not the insurance funds). This is mainly due to the strengthening of the rand, as Santam has significant investments in other regions (like India). If a strong rand is your biggest headache in any given period, you’re doing fine.
Strategically, they are working on the launch of a Santam syndicate with the Lloyd’s Council. The key next milestone is “permission to underwrite” – something they hope to achieve before the end of 2025.
The company (and shareholders) will hope for no major loss events in the final quarter of the year. If that’s the case, it will cap off an excellent period for Santam and the broader industry as well.
No fireworks at Stor-Age – just as shareholders like it (JSE: SSS)
This is one of the most dependable cash flow profiles you’ll find
Stor-Age is an excellent business, even if finding growth isn’t always easy. They have no key customer dependencies, but rather many individual and business clients who rent small spaces from them. Thanks to the churn in the portfolio, they can reprice the storage in line with market trends and inflation on an ongoing basis. They have no specific sector exposure, nor do they care about stuff like work from home vs. return to the office.
The market knows this, which is why the fund trades at or close to its net asset value (NAV) per share. The results for the six months to September 2025 reflect a NAV per share of R17.77 vs. the share price at R17.65. This puts Stor-Age in a fascinating position where the risk for investors is less about the business and more about the valuation, as the upside potential vs. risk of disappointment isn’t a great trade-off at this price.
Thankfully, disappointment isn’t something that you’ll see too often at Stor-Age. Distributable income was up 4.5% year-on-year and the interim dividend followed suit. This is essentially a blend of rental growth across SA (9.8%) and the UK (2.5%). The growth in dividend was accompanied by a 6.9% uplift in NAV per share.
The group currently has 63 properties in SA and 46 in the UK. By 2030, they aim to be at 90 and 70 respectively. The UK is where they need to be careful I think, as a lot of the shine has come off the UK as an investment destination. This is coming through in their recent UK numbers and the cautious outlook.
Guidance for FY26 distributable income per share growth is 5% to 6%. The payout ratio is expected to remain at 90% of distributable income. They are assuming a 25 basis points reduction in interest rates in both SA and the UK though, so there’s macroeconomic risk in this forecast.
Nibbles:
- Director dealings:
- Some questions need to be asked at Impala Platinum (JSE: IMP) about their governance. A prescribed officer (in charge of corporate affairs, no less!) engaged in various trades in shares between December 2021 and October 2024 – and not the smallest numbers around either, with sales amounting to R14.5 million and one purchase of R600k. Clearly the trades weren’t announced when they were supposed to be. Clearance to deal also wasn’t obtained! The announcement doesn’t bother to give an explanation or even an apology. What is the point of having rules for listed companies if they aren’t followed?
- Here’s a bullish signal from a director of Raubex (JSE: RBX): after the company released pretty ugly numbers, a director bought shares worth just over R1 million. The company’s narrative is one of a more positive outlook going forwards, so it’s good to see an insider putting money behind that story.
- An associate of the CEO of Grand Parade Investments (JSE: GPI) bought shares worth R266k.
- Despite Visual International (JSE: VIS) having recently raised capital in the market – without a working website, I might add – a director of the company sold shares worth R75k.
- enX (JSE: ENX) did a solid job of making the market aware of the performance for the year ended August when they released a trading update on 4 November. The group has now released detailed numbers that have the same key message: in terms of continuing operations, the group is struggling in their business that was built to address demand for power solutions in a load shedding environment. This is why profit before tax from continuing operations fell by 32%. The headline loss from continuing operations was 1 cent, which is at least better than the loss of 8 cents in the comparable period. enX has been on a mission to sell non-core assets and return cash to shareholders, but this takes the cream off the top and leaves the group with the businesses that aren’t so appealing.
- Here’s some good news at Mantengu (JSE: MTU): the company announced that Blue Ridge Platinum, a 70% subsidiary, entered into a chrome concentrate supply agreement with Monteagle International (UK). This relates to a minimum of 300,000 dry metric tonnes at a rate of 10,000 tonnes per month. The price per tonne at the time of the announcement is $280, but remember that commodity prices can vary significantly in either direction. Deliveries are expected to commence in the first half of calendar 2026 after a four-month capex programme for a new chrome plant.
- In today’s edition of corporate miracles, Shuka Minerals (JSE: SKA) has finally received the initial tranche of $300,000 from GMI for the acquisition of Leopard Exploration and Mining Limited. I cannot imagine the sigh of relief from various parties! The remaining ~$950k needs to be received before the end of November 2025. Let’s hope that whatever the issue was has been sorted out.
- I don’t think too many people will notice, but Deutsche Konsum (JSE: DKR) will be withdrawing its secondary listing from the JSE. If you can believe it, other than the scrip lender shareholder, they have one other shareholder on the JSE. One! That shareholder has 202 shares and has been unresponsive to attempted engagements by the company with an offer to buy the shares at a premium or transfer them to the Frankfurt Stock Exchange. There are provisions in the Financial Markets Act dealing with this, so the delisting will be executed in the public interest and the offer to the remaining shareholder will be open for 6 months.
