FEATURED: Nedbank’s FY25 earnings growth was subdued, but they’ve taken major corporate steps (JSE: NED)
Can they meaningfully increase the growth rate?
Nedbank managed to increase diluted HEPS and the full-year dividend by 3% in the year ended December 2025. This means they are keeping up with inflation, which is the bare minimum performance you would hope to see (even though it isn’t always easy). Net asset value (NAV) per share did slightly better, up 4%.
Return on equity was 15.4%, but would’ve been 15.8% excluding the painful once-off Transnet settlement.
This may sound like a timid result, but there’s a lot of corporate activity sitting underneath these numbers that is designed to boost growth in years to come.
For example, they sold the 21% stake in ETI and made an offer to acquire a controlling stake in NCBA, marking a substantial shift in strategic thinking in Africa. They also acquired 100% of iKhokha, an interesting play in the South African market.
There’s a lot of work to do here, particularly as the cost-to-income ratio went the wrong way in a period of subdued revenue growth. But credit where credit is due: they’ve made some big moves in the past year.
Nedbank is a strong supporter of my work in Ghost Mail and they’ve placed their results on the platform here. This includes the detailed operational review by CEO Jason Quinn. I suggest you give it a read!
FEATURED: Sea Harvest just enjoyed the best year in its history (JSE: SHG)
When fishing goes well, it goes really well
I’m excited to tell you that a podcast with the CEO and CFO of Sea Harvest will be coming your way this week, so that will packed with details on the strategy and performance of the company. You should also check out this piece from the company that gives you additional insight into the numbers.
The high-level story is pretty simple, really: it was an incredible year for the company. Revenue was up 20%, operating margin increased from 8% to 15% and HEPS casually increased by 442%. You won’t see numbers like these very often.
Hake is the most important product in the group, so a combination of better catch rates and higher hake pricing will always do good things for the numbers. With significant operating leverage in the model (it costs the same to send a boat out to sea regardless of how much it catches), the good times can be really good.
With net debt to EBITDA dropping from 2.5x to 1.3x, they clearly used 2025 as a great opportunity to materially reduce debt. There’s more of that to come, with Sea Harvest having already announced the disposal of Ladismith Cheese for R840 million.
The only blemish was in abalone, where weak demand in Hong Kong and China led to losses in that segment. Thankfully, the performance was so good elsewhere that it more than made up for this.
FEATURED: I wouldn’t want to be competing with Shoprite right now (JSE: SHP)
Years of the right strategic moves eventually add up to this
Retail is a very tough space at the moment. If you don’t believe me, you can look at Shoprite’s difficult share price performance despite being one of the best retailers (if not the best retailer) on the continent. And in a podcast coming your way this week with CEO Pieter Engelbrecht, you’ll learn much more about how they’ve gotten to that enviable position.
But in the 26 weeks to 28 December 2025, Shoprite had to contend with an environment that is almost devoid of inflation. This makes life very difficult for retailers – even the best ones. And it makes it almost impossible for retailers with inherent weaknesses, so my bearishness on Shoprite’s competitors is only getting worse.
Sales from continuing operations increased by 7.2%. For a company the size of Shoprite, that means an incremental R9.2 billion in sales. That’s an extraordinary amount of additional sales to be going through the tills!
And through the apps, mind you. Omnichannel is flying at Shoprite, with R11.9 billion in sales through Sixty60. In the group context of R136.8 billion, that’s a material contribution.
The most impressive thing about this result is that it was achieved with selling price inflation of only 0.7% on average. During the festive season, it was actually a deflationary environment – and that’s at group level, not just in Usave! This really puts the like-for-like sales growth of 1.9% in Supermarkets RSA in context.
One of the new disclosures in this set of results is focused on gross margin. I suspect that competitors are going to get the fright of their lives when they see gross margin in Supermarkets RSA of 25.3%. And when you consider that Shoprite is primarily a value retailer rather than a premium player (like Woolworths Food), that margin is even better.
Trading profit increased by 5.9%, so there was some pressure on trading profit margin. It’s extremely hard to avoid this in an environment of low product inflation, as many of the costs faced by Shoprite are increasing at a higher rate than their sales.
I will say it for the 100th time: the squeeze is on in grocery retail. The scariest gorilla in the room can’t even get margins to go in the right directiion in an environment where the SARB keeps rates stubbornly high. In that context, what do you think is happening right now at competitors who have franchise models that don’t benefit from having a single view of inventory across the group?
Look out for the podcast this week. It’s going to give you an entirely new perspective on grocery retail. In the meantime, let me know your views in the poll below:
Aspen’s numbers require you to take a deeper view (JSE: APN)
Underneath all the noise, there’s an encouraging story
Aspen released results for the six months to December 2025. With revenue down 4% and HEPS down 35%, they aren’t pretty.
There are plenty of distortions here related to the mRNA contractual dispute in the prior period and the subsequent settlement payment. This leaves the latest interim results with a tough base for comparison, as a R1.5 billion contract simply isn’t there anymore.
Normalised EBITDA is thus down 13%, a number that the market has already digested thanks to Aspen giving detailed guidance in that regard.
Now for the good news, with Commercial Pharmaceuticals achieving normalised EBITDA growth of 11% at constant rates. This is the most flattering view, as EBITDA as reported actually only increased by 6%. Still, the GLP-1 drugs are finding strong support in South Africa, which is no surprise to anyone given their global adoption.
The Manufacturing business managed positive EBITDA of R208 million, assisted by the settlement proceeds. They’ve had to implement major cost reductions here, with the full benefit expected to be realised in FY27. That number is a whopping 84% reduction vs. the prior year.
An area of focus has been cash flow, with major strides made in working capital. This helped bring debt down from R31.2 billion to R28.6 billion – but that’s still a net debt to EBITDA ratio of 3.4x, which is too high.
Fear not: at the end of 2025, Aspen announced the divestment of Aspen APAC. The price is nearly AUD 2.4 billion, a number that will get rid of most of the debt.
In terms of the outlook, they expect Commercial Pharmaceuticals to generate mid-single digit organic revenue growth and double-digit normalised EBITDA growth, both in constant currency. The normalised EBITDA in Manufacturing is expected to be in line with the prior year, as the operational improvements offset the mRNA contract loss in the second half.
EBITDA in the second half is expected to be in line with the first half, which would lead to double-digit growth in normalised headline earnings for the full year. This is because the mRNA contract contribution is in the first half of the prior period, creating a much tougher base for comparison for the interim period vs. the full year.
Brimstone’s HEPS may look good, but intrinsic NAV is what counts (JSE: BRT)
Thankfully, the discount to INAV has significantly decreased
Brimstone released results for the year ended December 2025. Although HEPS jumped by 98%, it’s very important to understand that this isn’t the right metric for an investment holding company. Instead, the market tends to work off intrinsic net asset value (INAV) per share. Brimstone knows this at heart, which is why there’s a page on the website dedicated to intrinsic value.
INAV per share fell by 11% in this period, although the share price is up 25% over 12 months. This means that the discount to INAV has decreased over the past year. The INAV per share is R9.88 and the share price is R6.00. The discount will always be there in the South African market, but it’s not materially different these days to what you’ll see at many other investment holding companies.
The market will put a smaller discount on cash than on underlying investments, so the perverse irony is that local investors actually rewarded Brimstone for selling R633.4 million worth of Oceana (JSE: OCE) shares and reducing debt by R520 million, even though this sale happened at a time when the Oceana price was under pressure.
Brimstone’s stake in Oceana now sits at 16% and is worth under R1.2 billion. This is a major swing in the shape of Brimstone’s exposure, as the Oceana investment is now smaller than the 44.2% stake in Sea Harvest (JSE: SHG), valued at R1.5 billion.
There’s plenty of other stuff in Brimstone, with FPG Property Fund (valued at R421 million after CGT) as the next largest investment. In my view, the long tail of investments is simply too long, making it difficult for investors to really get a sense of where the focus areas are. It would be good to see further asset disposals for debt reduction – and perhaps even additional share buybacks at this juicy discount to INAV.
Caxton and CTP Publishers and Printers: truly a tale of two segments (JSE: CAT)
Newspapers are surely in their death throes
Caxton’s results for the six months to December 2025 are nowhere near as bad as the underlying narrative would suggest. The company is facing challenges everywhere at the moment, yet revenue was down only 0.5% and HEPS dipped by 1.6%.
There’s an interim dividend of 100 cents per share, but it’s really just a special dividend by another name after the SARB gave Caxton the runaround on actually approving the dividend.
The segmental performance varies dramatically. And when I read the commentary, it’s very hard for me to believe that the share price is going to maintain the 20% rally achieved over the past year, even if the Price/Earnings multiple is in the single digits.
Let’s start with the division at Caxton that appears to have a long-term future: Packaging and Stationery. You can then brace yourself for Publishing, Printing and Distribution.
Even within the “good” division, we start with bad news. Caxton is exposed to the alcohol beverage market in the form of label printing. Volumes are under pressure in this space, with consumers drinking less by the day. For context, despite my best efforts, the bottled wine market declined by double digits!
They are also exposed to the cigarette industry, with the closure of the British American Tobacco operation in Heidelberg expected to impact less than 5% of segmental turnover (still a material amount). I’m happy to say that I’ve been of no help there.
Now for the highlight: the quick-service restaurant sector is driving volumes, specifically as consumers turn to value meals. Packaging is packaging, regardless of how fancy the protein inside happens to be. Oh yes, and there are other green shoots in the general beverage and hygiene markets for the plastic businesses at Caxton.
There we go. Those were the highlights. Blink and you missed them!
To finish off that division, the stationery side suffered a very difficult wholesale market. If schools are struggling to fill classrooms, then I can’t see why stationery businesses would buck that trend.
Despite all this pain, the segment grew revenue by 1.9% and operating profit by 4%. They turned water into wine here – and printed labels for the bottle along the way.
We now move on to Publishing, Printing and Distribution, where things look worse.
Caxton’s local newspaper business is in serious trouble, but I can’t believe that anyone is surprised by this. The days of stay-at-home moms spending two hours trawling through a combination of local school pics and stories of a person turning 100 are long over. That barely even happens on Facebook anymore, where our feeds are just a constant stream of algorithm-approved content. Also, how many stay-at-home moms do you know…?
Advertisers go where the eyeballs are – and the eyeballs (especially the valuable ones) are nowhere near local newspapers. The only thing that surprises me about a 9% decline in revenue in newspaper advertising is that the number isn’t much worse. With two of the local grocery groups in serious trouble, how long do you think supermarket advertising can keep local newspapers afloat?
Digital advertising revenue was up 23%, so Caxton is making some progress in the shift to digital. But with everything going on in AI and how this affects digital businesses, that world is highly uncertain at the moment.
A very unlucky additional issue is that the Department of Basic Education Foundation Phase curriculum rewrite keeps getting pushed out. It’s now expected to happen in 2026 for implementation in 2027. I wouldn’t hold my breath – this is the government we are talking about.
The division decreased operating costs by 7%, so they are doing what they can to manage the decline. Still, revenue was down 3.7% and operating profit fell by nearly 20%.
I’m not one to invest in groups where a big chunk of the business appears to be in terminal decline.
The market liked Discovery’s numbers (JSE: DSY)
It was one of very few shares in the green on the JSE on Tuesday
Share price moves always need to be viewed in context. The JSE had a very ugly day on Tuesday, with the All-Share Index shedding 5.5%. Discovery finished 0.5% higher on the day after releasing results. It’s not every day that you create ~6% of outperformance in a single day!
But it’s also not every day that a company of Discovery’s size reports normalised HEPS growth of 26%. They really did well in the six months to December 2025, with the dividend adding to the party with a 28% increase.
Return on equity increased from 15.4% to 17.4%, putting Discovery ahead of some of the local banks.
Vitality grew normalised profit from operations by 41%, reflecting the growth opportunity for this technology on the global stage. Needless to say, Discovery talks about the value of AI in this space. They do have an absolutely immense dataset, so I believe it!
Discovery Health grew normalised profit from operations by 5%, so even the legacy business is still growing ahead of inflation. Discovery Life achieved 15%, while Discovery Insure was up 34%. Discovery Invest only managed 1%, a weak (but still green) performance in the context of the other segments.
Discovery Bank is undoubtedly one of the big stories, achieving R75 million in normalised profit from operations. The bank is now solidly profitable, with investors looking for a sharp climb up the J-curve now that they are washing their own faces. There’s been an enormous capital investment in that business that needs to earn a return.
Discovery’s share price is up 24% in the past year. That’s an impressive return for a company that hasn’t had the benefit of any of the major recent macro trends that have boosted big names on the JSE (like commodity prices, or currencies in Africa). They’ve achieved this through strong execution both locally and abroad.
iOCO has achieved strong earnings growth (JSE: IOC)
And they are still repurchasing shares in the market
iOCO has released a trading statement for the six months to 31 January 2026. It tells a positive story, with HEPS expected to increase by between 42% and 58%. This implies a range of 27 cents to 30 cents for the interim period. If you annualise that, the current share price of R4.30 doesn’t look terribly demanding.
The results have been attributed to cost rationalisation, disciplined capital allocation (share repurchases have helped) and the benefits of a decentralised operating model.
The share repurchases are continuing. In February, they bought R12.3 million worth of shares in the market.
Optasia’s business is meeting its growth targets (JSE: OPA)
But earnings have been impacted by once-off listing costs
Optasia (officially called Channel VAS Investments) has released a trading update for the year ended December 2025. This is important, as the company is in the early stages of its life as a listed company. They need to hit the numbers that they promised to investors.
This appears to be happening, with revenue growth of 73% to 78% (the target was more than 50%), while normalised net income is up by between 54% and 59% (the target was 45%). That’s a big tick in the box.
Due to the substantial IPO costs though, HEPS will only increase by between 7% and 12%. To go through such an expensive listing and still grow overall earnings in that period is pretty good in my books.
Detailed results are due for release on 16 March.
Several WBHO metrics went the wrong way (JSE: WBO)
The market ran for the hills over the course of the day
On a risk-off day on the JSE, being a construction stock is an extreme sport. People are going to hit the SELL button when they are worried. And when you happen to release numbers on the same day that are less than inspiring, you’re firmly in the cross-hairs. WBHO’s share price fell 16.5% on the day.
HEPS from total operations actually increased by 1.3% to R10.86, but that was one of the few positive trajectories among the key numbers. Revenue from continuing operations dipped 4%, operating profit from continuing operations fell 3% and the order book decreased by 3%.
In fact, the only reason for the increase in HEPS is that there was a reduction in the weighted average number of shares. Although the pie got smaller at WBHO in the latest period, the number of guests at the table decreased by a faster rate and each person got slightly more pie.
But that doesn’t mean that they went home feeling good about the dinner party.
If you need to feel good about life in South Africa, the outlook statement actually paints a prettier picture for the land of sunshine and braais vs. the UK, where WBHO is finding it tough to grow.
Weaver Fintech flags significant earnings growth (JSE: WVR)
I’m very happy with how this is working out for me
I bought Weaver straight after their first Unlock the Stock experience. I had wanted to own the stock, but I needed to meet the management team and make sure that I was happy. In case you’ve ever wondered whether I eat my own cooking on the platforms that I’m involved in, there’s your answer – it’s as much my research process as it is yours.
So far, so good. The share price is up 150%(!) over 12 months and the market is waking up to the Buy Now Pay Later (BNPL) opportunity.
In a trading statement for the year ended December 2025, Weaver has noted that HEPS increased by between 35% and 35%.
The management team will be on Unlock the Stock once more on 12th March. Attendance is free, but you must register here.
Nibbles:
- Raubex (JSE: RBX) has renewed the cautionary announcement related to the evaluation of strategic options in respect of Bauba Resources. There is no certainty at this stage of a transaction happening. Personally, I think offloading that asset and simplifying the group is a worthwhile exercise.
- South Ocean Holdings (JSE: SOH) somehow managed to use the wrong number to calculate the headline loss per share in the 12 months to December 2024 and the 6 months to June 2025. It’s not a small difference, either. HEPS for the year to June 2024 should’ve been 22.56 cents, not 16.59 cents. And for the six months to June 2025, the headline loss per share should’ve been -9.31 cents, not -15.20 cents.
