British American Tobacco unlocked a casual R25 billion in cash in one morning (JSE: BTI)
This is where capital markets shine
British American Tobacco confirmed on Tuesday that they would be selling down a small part of their stake in Indian group ITC. They did this in 2024 as well, raising plenty of cash in the process. History has repeated itself, with a successful block trade of 2.5% in ITC for £1.05 billion (around R25 billion) on Wednesday. This shows you just how deep capital markets can be.
Aside from reducing debt, they will also put an additional £200 million towards share buybacks, taking the total share buyback programme in 2025 to £1.1 billion.
This is a classic capital allocation shift, which isn’t a surprise given that British American Tobacco has to focus on maximising shareholder returns right now from sources other than meaningful revenue growth.
Burstone remains focused on driving fee revenue (JSE: BTN)
The decrease in distributable income per share is in line with guidance
Burstone Group is following a rather interesting strategy. Perhaps driven by their underlying DNA from the Investec days, they understand that return on capital is the ultimate driver of value. Increasing the returns without investing capital is therefore a desirable strategy, with the group putting together various investment platforms that they manage on behalf of co-investors. This earns fee revenue without requiring major balance sheet investments.
For the year ended March, fee revenue grew by 40%. It now contributes 10.7% of distributable earnings, up from 7.3% a year before. Third party assets under management increased 2.6x over the past year. This is the crux of the investment thesis at Burstone, with partnerships being put in place with massive global investors like Blackstone.
They are also putting together a South African fund with a cornerstone investor. Due diligence has been completed, with only investment approval processes remaining. Burstone will look to seed this platform with up to R5 billion of its South African assets.
As great as this all is, distributable income per share fell by 3%, in line with guidance. The group upped the payout ratio to 90%, which means that the cash dividend per share actually increased by 3.1%. They can’t increase the ratio every year of course, so earnings growth needs to come through. They expect growth of between 2% and 4% in the coming year.
The balance sheet is worth a nod, with the loan-to-value ratio down from 44% to 37%, or 36.3% if you allow for the proceeds on properties that are currently being transferred.
Due to substantial fair value and other adjustments, the NAV per share has dropped by 23.8% to R11.78. The current share price is R8.80.
Decent numbers and a new CEO at Emira Property Fund (JSE: EMI)
This is one of the more diversified funds you’ll find on the JSE
Emira Property Fund has exposure to South Africa, Poland and the US. They also hold a mix of office, retail, industrial and even residential properties. If you’re looking for a highly focused REIT, this isn’t the one for you.
The year ended March 2025 was one of asset disposals in the local portfolio, with R2.8 billion sold and transferred and another R628 million under contract for sale. This has helped to reduce debt, which is useful when rates are stubbornly high. Emira is also investing further in Poland.
The year saw a significant increase in NAV per share of 20.9%, driven by fair value gains on the Polish investment and higher property valuations. The dividend per share for the year is 5.9% higher.
And in case you’re wondering, the office sector is still struggling. Despite having mainly P- and A-grade offices, they suffered negative reversions of -9.3% (worse than -6.3% in the comparable period). At least vacancies came down from 10.9% to 8.4%.
I must point out that reversions were also negative in the retail and industrial portfolios, reflecting the level of diversification in the portfolio and the overall macroeconomic backdrop. To get positive reversions at the moment, you need to have a focused portfolio in the right places.
As part of the release of results, the company announced that non-executive director James Day will be appointed as CEO with effect from 1 July 2025.
They’ve struck gold at Goldrush (JSE: GRSP)
The company is part of the consortium that has been awarded the National Lottery Licence
Here’s some exciting news for Goldrush shareholders: the company is part of the consortium that has been awarded the licence to operate the Fourth National Lottery and Sports Pools for South Africa for 8 years. This is a big deal.
Goldrush as the listed company owns a 59.4% stake in Goldrush Group, which in turn is a 50% shareholder in Sizekhaya, the entity that has been awarded the licence. This interest in Sizekhaya will decrease to 40% once shares in the consortium have been issued to a government entity, as is the law.
The operator of the National Lottery promotes and sells tickets and makes payments to winners, while transferring the mandated portion of ticket sales to the National Lotteries Distribution Trust Fund.
This is obviously lucrative for Goldrush, with the share price up 46% year-to-date.
HCI expects a modest uptick in HEPS (JSE: HCI)
They are having a tough time at the moment
The Hosken Consolidated Investments (HCI) portfolio isn’t exactly a land of milk and honey right now. The share price is down 25% over the past year, reflecting problematic underlying exposures like the casino investments.
The oil and gas business is also still bleeding, with IOG and African Energy Corp incurring a loss of R262 million in the year ended March 2025. That’s better than R483 million in the prior year, but is still significant.
They expect HEPS to be in the range of -1.8% to +8.2% vs. the prior year.
HomeChoice to change its name to Weaver Fintech (JSE: HIL)
This is a sign of strategic intent and focus
What’s in a name? Shakespeare had his own views on these things. When it comes to markets though, some companies get really smart with this stuff (think of Ferrari and the stock ticker $RACE) and others don’t give it too much thought.
In the case of HomeChoice, the listed company name was past its sell-by date. HomeChoice is so much more than a catalog retailer these days, so I think it makes sense to shake off that moniker. Instead, they will be called Weaver Fintech Ltd going forward, adopting the name of the underlying financial services business that they have been busy building.
So, no prizes for guessing where their best growth opportunity is then!
Jubilee Metals gave a general update on Zambia (JSE: JBL)
They have plenty going on there
After extensive trials at Jubilee Metals’ Roan Concentrator, production commences this week under the long-term feedstock supply agreement. This seems to have inspired the company to give the market a broader update on the Zambian business.
They are proud of their technical outcome at Roan, as they are able to process material that the CEO notes is “deemed as waste or too complex by many operators” – and of course this gives them access to copper, which is the commodity that everyone is chasing at the moment.
The Munkoyo mining operation is targeting a step-up in output in coming months, with the run-of-mine (ROM) transported to Sable for refining. They are also planning an on-site processing plant.
The combined increase in copper production at Roan and Munkoyo means that they need to expand the Sable Refinery. They expect to be done with this expansion by the first quarter of 2026.
The Project G mine is much earlier in its journey. They are currently working on upgrading the resource (i.e. just getting a better understanding of what is there) and designing an open-pit expansion.
In terms of funding transactions, Jubilee previously announced that they’ve sold a portion of the resources at the surface of the Large Waste Project. The deal is worth $6.75 million, payable in tranches as the material is lifted. $600k has already been received. They are busy with negotiations with various potential funding parties regarding targeting modular processing units at the Large Waste Project, with such a structure preferred to the previous discussions with an Abu Dhabi investment firm.
As further capital raising activity, Jubilee sold one of its waste assets outside of its large copper tailings for $12.3 million, payable in tranches over 20 months. And although a much smaller source of funding, the issuance of £200k in shares to the former chairperson in lieu of cash fees (and as part of a performance bonus) also helps.
So, there’s plenty going on here. It’s incredible how Jubilee went from the talk of the town in 2022 to now trading at roughly a quarter of where it was in that period:
A bidding war is officially underway for MAS (JSE: MSP)
The offer from their joint venture partner has been improved
As I wrote at the time, the initial offer put on the table by MAS’ joint venture partner PK Investments was a bit daft. It was below the traded price of the shares and included the additional complicated of an inward listed preference share, which I can almost guarantee would have as much liquidity as the Sahara Desert.
In fact, the deal created the opportunity for Hyprop to have a sniff around MAS, while using it as an excuse to send their advisors off to raise some cash from the market in anticipation of a potential offer. Hmmm.
Now, with PK having been given a PK (I’m sorry, I can’t help myself) from the market in the form of nobody taking that offer seriously, they have increased the cash offer from EUR0.85 per share to EUR1.10 per share. The maximum cash amount has increased from EUR40 million to EUR80 million.
They are also working on “improvements” to the share instruments that would be inward listed. I just can’t see them finding much support for anything other than an all-cash deal.
Renergen has released the circular to regularise the ASP Isotopes loan (JSE: REN)
The Takeover Regulation Panel wasn’t happy with the terms
As a first step in getting the deal with ASP Isotopes across the line, Renergen needs to make some changes to the loan terms related to the amounts advanced by ASP Isotopes to keep the lights on at Renergen.
The original terms of the loan made reference to capital raising activities and the pending offer from ASP Isotopes. The Takeover Regulation Panel (TRP) sees this as coercive behaviour, with the worry being that shareholders of Renergen are essentially being forced into a corner to support the scheme. The parties disagree with the TRP’s assessment, but they also need to get a deal done here, so they’ve decided to rather amend the terms of the funding and move on.
This is why a circular has been sent to shareholders dealing with the resolutions required to amend the loan terms and ratify the funding arrangements. The actual scheme circular for the takeover will come further down the line, assuming they get over this first hurdle.
A flat dividend at Reunert (JSE: RLO)
And that’s the highlight of this story
Reunert released results for the six months to March 2025. Revenue fell 5%, operating profit was down 16% and HEPS decreased by 20%, so there’s little in the way of good news here. The only highlight is that the interim dividend stayed flat at 90 cents per share. This is really just a case of kicking the can down the road, as companies try hard to avoid cutting the dividend.
There were a number of reasons for the poor results. The battery storage market is right up there among the largest headaches, with the disappearance of load shedding leaving many energy businesses stranded. Reunert has decided to dispose of Blue Nova Energy. Deciding to sell something and actually selling it are two different things.
At least one of the issues sounds more like a timing thing than anything else, being the deferment of the fuze contract into the second half of the year. That’s encouraging, but it doesn’t offset the other issues like weak power cable sales.
Another notable point is that there was a COVID insurance claim in the comparable period, which impacts the year-on-year comparability of results as this is obviously a non-recurring item.
It’s all to play for in the second half of the year, with management giving a bullish outlook. This confidence is informing the decision to keep the interim dividend steady. The share price is down 20% year-to-date, so the market doesn’t seem to be feeling quite as positive.
Tiger’s roar grows louder (JSE: TBS)
The turnaround is being executed beautifully
Tiger Brands has enjoyed a ~70% increase in the share price over the past 12 months. The turnaround is clearly working, as further evidenced by results for the six months to March 2025.
Revenue growth of 2% may not sound like much, but it works when combined with all the efforts made in improving the efficiencies of the underlying portfolio. Tiger is a different business these days, boasting a 23% reduction in SKUs (the number of different products) and a jump in operating margin from 7.5% to 9.6%. This was good for a 30% increase in operating income and 34% in HEPS!
Efficiencies lead to better return on capital, with Tiger’s ROIC increasing from 13.8% to 15.7%.
As you dig into the underlying segments in the excellent results presentation, you find encouraging signs like higher operating margin of 7.8% in Milling and Baking (vs. 5.7% the year before). The jump in Grains is even more impressive, with operating margin improving dramatically from 0.8% to 6.4% despite flat revenue!
In many ways, the Grains business is reflective of the broader theme at Tiger Brands of this recovery: turning modest revenue growth into meaningful growth in profits.
As the cherry on top, there’s a special dividend of R12.16 per share. It’s interesting that they chose this route instead of a large share buyback programme. With Tiger trading at an elevated valuation based on the turnaround progress, is this perhaps a sign that things have gotten a bit too hot in the share price kitchen?
The clouds have covered Tsogo Sun (JSE: TSG)
Casino assets aren’t what you want right now
Tsogo Sun has released a pretty ugly set of results for the year ended March 2025. Income was down 3% and costs were up 1%, so adjusted EBITDA fell 11% and HEPS took a 16% knock. The final dividend per share was down 25%, showing that management doesn’t have tons of confidence right now.
And why should they? Tsogo Sun is stuck with a portfolio of assets that was fantastic many years ago when people were still enjoying casinos, but things have changed. Combined with a net debt to EBITDA ratio of 2.09x (not insignificant), they are sitting with plenty of risk here.
The business still makes money, as evidenced by an adjusted EBITDA margin of 31.1%. Margins are under pressure though and it’s quite difficult to see how that will improve. One of the potential catalysts for growth would be if Tsogo Sun can get the approvals for investment in casino assets in the Western Cape, as there’s just one casino serving the Cape Metropole.
Perhaps worst of all, Tsogo Sun is disappointed with its online division’s performance. This is the only growth area in the business and they are still only break-even on adjusted EBITDA level, having suffered a R27 million write-off based on cash management and reconciliation issues.
I quite enjoyed this comment at the end of the management report:
Look, when you have to cut your dividend in order to reduce debt, I’m really not sure how it can be seen as anything other than negative. If the business was performing well, they would be able to reduce debt AND pay higher dividends.
Nibbles:
- Director dealings:
- I see that Standard Bank (JSE: SBK) execs are hitting the sell button again. This time, two prescribed officers sold shares worth a total of R23.6 million.
- The Chief People Officer (yes, that’s the official title) of AngloGold Ashanti (JSE: ANG) sold shares worth a substantial $1.2 million. Some of this was related to a share award, but the total amount is higher than even the full value of the award, let alone the taxable portion.
- A prescribed officer of Barloworld (JSE: BAW) sold an entire share award worth R1.3 million,
- A director of a major subsidiary of Altron (JSE: AEL) and the company secretary of the listed company bought shares worth a total of nearly R700k.
- The executive chairman of Southern Palladium (JSE: SDL) bought shares worth around R225k.
- An independent non-executive director of Stefanutti Stocks (JSE: SSK) bought shares worth R165k and a director bought shares worth R125.7k. Given how speculative this company is at the moment, that’s a positive signal.
- Junior mining houses frequently give presentations at mining conferences, as they need to ensure that their projects are on the radar of potential investors. Southern Palladium (JSE: SDL) presented at the Junior Mining Indaba in Johannesburg and you’ll find the presentation here.
