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.
