Bell Equipment’s earnings are dropping sharply (JSE: BEL)
This cannot be good news for the share price
Once upon a time, there was an offer of R53 per share on the table for Bell Equipment shareholders. During that period, I wasn’t shy to share my opinion that investors shouldn’t be too greedy, as it felt like the cycle was turning against Bell.
Today, it trades at R35.
I suspect that every single shareholder would take R53 and run for the hill at this point. Alas, there is no such offer on the table anymore.
The earnings are also headed firmly in the wrong direction, as evidenced by a trading statement that flags at least a 50% decline in HEPS for the six months to June 2026.
They blame a decrease in demand in certain markets, higher competition on the global stage (with an impact on pricing and thus margins), as well as the effect of tariffs in the US.
Ghost Bite: There’s a wonderful old saying in the markets: “Bulls make money. Bears make money. And the pigs? The pigs get slaughtered.” Greed is rarely rewarded by the markets. Trying to squeeze the last few bits out of that Bell offer a couple of years ago has backfired spectacularly for the shareholders who blocked the deal.
Mother Nature obliterated the macadamias business at Crookes Brothers (JSE: CKS)
Here’s a strong reminder of how tough agriculture actually is
Crookes Brothers released results for the year ended March 2026. As we already knew from trading statements, they are horrendous.
Revenue is only down by 7%, but they have swung from positive operating profit of R117 million to an operating loss of R210 million. This is before the fair value movement in biological assets, so we can’t even attribute this move to forecasts rather than reality.
Finance costs don’t go away just because the crops are having a tough time, so the movement looks even worse by the time we reach the bottom of the income statement. The loss for the year is R274 million vs. profit of R90 million in the prior year.
The headline numbers are far less severe, with a headline loss of R25.5 million vs. headline earnings of R65 million in the prior year.
When you see numbers like these, the main thing to check is the cash flow. Cash generated by operating activities was R60 million, significantly less than R101 million in the prior period. They were at least cash positive despite the earnings pressure.
Macadamias were the culprit this time around, with a 30% drop in revenue and a spectacular jump in operating losses from R35.6 million to R299 million. This was driven by a huge storm that uprooted 36% of the planted area. The situation in macadamias is so severe that Crookes Brothers has elected to cut their losses and exit this business.
For more context to this decision, they made operating profit of R147 million from sugar cane (up 2%) and R39 million from bananas (down 22%).
Unsurprisingly, there’s no dividend whatsoever for this financial year.
Ghost Bite: There’s nothing harder than primary agriculture. Nothing.
Relief for Merafe: the deal with Eskom is finalised (JSE: MRF)
Two smelters will be restarted
It’s been a long and difficult road for the ferrochrome industry (and any business that needs to operate a furnace). Energy costs have gone up tremendously, making these business models unsustainable without special tariffs from Eskom.
After much negotiation and no doubt lobbying of government as well, Merafe has gotten a tariff of 62c per kWh across the line with Eskom. It was approved by NERSA a few weeks ago and the detailed Ts & Cs have now been finalised with Eskom.
This allows Merafe to restart the Boshoek and Wonderkop smelters. The pricing framework lasts for three years, so Merafe at least has some visibility in its operations.
Ghost Bite: This is the right outcome for not just Merafe, but the broader value chain as well. This includes Afrimat (JSE: AFT), which was severely affected by the ferrochrome industry basically shutting down. Will Afrimat’s share price stop its decline after this news? I bought recently and I’m tempted to buy more, with Afrimat only slightly above its 52-week low.
Spear REIT’s financial year is off to a decent start (JSE: SEA)
They expect an acceleration over the rest of the year
Spear REIT has delivered an important operational update for the quarter ended May 2026. This represents the first quarter of the 2027 financial year.
Distributable income per share is up by 6.1%, so that represents real growth (i.e. growth in excess of inflation). Although they don’t declare a quarterly dividend, the company has indicated that a 95% payout ratio would still be in play here, so the distribution per share would be up by a similar percentage.
This puts them within their guidance of 6% – 8% growth, although not by much. Based on letting activity, they expect the growth rate to improve over the rest of the year vs. Q1. The guided range remains in place for FY27.
Spear’s performance in this quarter was driven by positive overall rental reversions, with the commercial portfolio (i.e. offices) as the unexpected winner in this regard. It really is all about location, location, location – and Spear is very good at finding those locations in the Western Cape. There’s been some pressure on vacancies, but Spear’s strategy is clearly working at the moment.
The loan-to-value (LTV) ratio is comically low at 8.3%, as Spear is waiting for several properties to transfer into the group after recent acquisitions. This LTV is certainly not representative of the balance sheet that Spear operates.
Ghost Bite: It helps that things seem to have improved in the Middle East, reducing some of those inflationary pressures on interest rates. Remember, REITs like low interest rates. If you want to understand why, you can check out this recent video from my YouTube channel:
Results of previous poll:
Nibbles:
- Director dealings:
- Two directors of Vodacom (JSE: VOD) sold shares worth R4.1 million. The sales were related to share awards, but the announcement doesn’t indicate the taxable vs. non-taxable portion. I therefore assume that this isn’t just for tax.
- A non-executive director of Richemont (JSE: CFR) bought shares worth R1.1 million.
- A director of KAP’s (JSE: KAP) subsidiary Safripol sold shares worth R607.5k. That’s not a good sign, as Safripol’s recent performance was boosted by the impact of the Middle East conflict on competing imports. If the simmering down of that conflict has put Safripol back where they were before, that’s a concern for KAP.
- The CEO of Choppies (JSE: CHP) bought shares worth R126k.
- Goldrush (JSE: GRSP) is under pressure from online gambling adoption in South Africa vs. the in-person options that underpin the company. Goldrush also has an online offering, but it’s not big enough to offset the brick-and-mortar operations. This is contributing to group HEPS falling by between 50.7% and 68.3% for the year ended March 2026. Detailed results should be out early this week.
- Brikor (JSE: BIK) is moving ahead with the scheme of arrangement to repurchase all the shares held in the company by investors other than Nikkel Trading. This is priced at 17 cents per share. To give you an idea of how small this company is, the total repurchase will be just R19.7 million! It doesn’t make any sense for them to be listed at this size.
- Clientèle (JSE: CLI) will be leaving our market this week. With the offer to shareholders having met all the required conditions (including maximum acceptances), the delisting of the company will be implemented on 30 June. Farewell to one of the most dependable dividend stocks on the JSE!
- Here’s a fun fact about the market: the JSE (JSE: JSE) is now repurchasing shares in itself via the JSE. Remember, the JSE is listed on its own market i.e. it uses its own product! They’ve repurchased 1.28% of shares in issue since the authority was granted by shareholders at the AGM in May.
- Wesizwe Platinum (JSE: WEZ) is planning a phased restart of operations at Bakubung Platinum Mine this week. This comes after a temporary shutdown to facilitate a Section 189 consultation process. The restart is subject to the conclusion of a memorandum of agreements with the trade unions.
- Labat Africa (JSE: LAB) has renewed the cautionary announcement related to the potential acquisition of the remaining 24.45% in Classic International Trading. The deal is still alive, with negotiations at an advanced stage. These things take time.
- There is literally no trade in the shares of Castleview Property Fund (JSE: CVW), with this company essentially acting as an investment holding company for a small group of property investors. They’ve mainly been building up stakes in other listed REITs, while selling off directly held properties. The net asset value per share increased by 9% in the year ended March 2026. The distribution per share jumped by 74%, but that’s obviously not an indication of maintainable growth.
- Marshall Monteagle (JSE: MMP) is also in the limited trade bucket, although the stock does at least change hands from time to time. This investment company has a broad portfolio of South African property, international stocks and various financing and trading companies. For the year ended March 2026, HEPS increased by more than 10x! Most of this is thanks to the disposal of investments and the associated gains.
- Telemasters (JSE: TLM) has such little liquidity in its stock that it “trades by appointment” (as the saying goes). A trading statement tells us that HEPS managed to increase by more than 700% for the year ended June 2026! This is accompanied by a dividend of 0.3 cents per share for the quarter ending June 2026.
- With Brandon Craig taking the top job at BHP (JSE: BHG) on 1 July 2026, there are other organisational changes coming. For example, the President Americas role is being split into President North America and President South America. It’s not uncommon to see changes to leadership structures when a new CEO comes in.
- PPC (JSE: PPC) has announced the replacement for Brenda Berlin, who is retiring as CFO with effect from 30 June 2026. Veliswa Rozani will take her place, bringing extensive experience from the motor retail industry among others. She will join PPC on 1 October 2026, with PPC chief strategy officer Paulo Marques appointed as acting CFO for three months to plug the gap.
- Araxi (JSE: AXX) announced that The Capital Appreciation Empowerment Trust has sold 40 million shares to settle its debt, leaving it with an unencumbered holding of 35 million shares. This is technically the sign of a successful B-BBEE deal, although it does of course reduce the shareholding when shares are sold to settle debt. The trust’s beneficial interest in Araxi has declined to 2.71%. Because of accounting rules and Araxi consolidating the trust, it actually gets treated as a disposal of treasury shares.
