CMH repurchased almost 7.2% of shares outstanding (JSE: CMH)
It’s less than half of what they hoped for, but it’s still a good example of capital allocation discipline
CMH did a great job in 2025 of navigating a particularly difficult time in the automotive industry. It feels like the Chinese automotive dragon took a leaf out of Smaug’s book in The Hobbit and went crazy on the industry, with tons of new models and huge disruption seen in segments like affordable SUVs. Despite the pain being experienced by the legacy brands from Europe and elsewhere, CMH responded to the changes and carved out a decent market positioning.
So decent, in fact, that they felt confident to make an offer to shareholders to repurchase up to 15% of their holdings at R35.50 per share. Now, there was never really a chance of all shareholders saying yes for the full amount, but they managed to get acceptances to repurchase 7.19% of shares in issue.
This means that R191 million will be returned to shareholders. Over R172 million of that amount is being paid to directors and their associates!
Ethos Capital receives an improved offer for the residual assets (JSE: EPE)
Marketability discounts continue to hamper the use of NAV
Ethos Capital currently holds shares in Optasia (JSE: OPA) and a portfolio that they refer to as the “residual assets”. Of the total assets on the balance sheet of R1.95 billion excluding cash, the residual assets are carried at R901 million. In other words, dealing with the residual assets properly is very important to investors.
After the company received an unsolicited non-binding offer for the residual assets from RMB as the lead investor for a group of investors that will be finalised in due course, they went off and got feedback from shareholders to get an indication of support for a deal. They spoke to 82% of shareholders and got positive feedback from 70%. Interestingly, as an investment entity, they actually don’t need shareholder approval for the deal and there is no vote. They therefore canvassed support in an effort to go beyond the minimum governance requirements.
Based on the feedback and subsequent negotiations to improve the offer, the terms on the table reflect a value for the residual assets of R640 million. Your eyes aren’t deceiving you: that is indeed a 29% discount to the net asset value (NAV) on the balance sheet. Welcome to the world of marketability discounts and how useless the NAV actually is when you’re looking at a portfolio of assets. If you add on the value of the Optasia stake and the cash in the company, it works out to an implied premium of 10% to the closing price of Ethos shares on 11 December.
There are a couple of other enhancements, including an earn-out linked to the Vertice disposal (expected to be completed in April 2026) and an option for qualifying Ethos shareholders to reinvest in the company acquiring the residual assets should they wish to remain invested.
The board believes that this is the best way to monetise the residual assets, with the Optasia stake expected to be sold gradually once the six-month lock up period after the IPO has expired. They are therefore moving ahead with the deal, subject to several conditions precedent being met.
HCI sends out the circular for the property deal with SACTWU (JSE: HCI)
The HCI share price has changed so much since the initial announcement
You might recall that back in July, HCI announced that they would be offloading properties to SACTWU in a deal that is essentially a share buyback by another name. There was a subsequent announcement in September with further restructuring to try and address the impact on the B-BBEE credentials from the transaction, leading to a watering down of the deal.
There’s been one big change since those announcements: the HCI share price! Up almost 30% over 90 days, the share price is now down just 5.5% year-to-date. That’s very different context to this deal vs. where things were before.
Thankfully for HCI, the repurchase was locked in at R131 per share. That looked generous to SACTWU a few months ago, but it’s now well below the current price of R155.
HCI has released the circular to shareholders that details all the various transaction steps. Given the level of complexity involved, I was pleasantly surprised to see that the costs for the transaction are only R2.9 million!
Will Metair’s luck ever change? (JSE: MTA)
The EU has thrown the book at Rombat
There isn’t an unluckier company out there than Metair. Tracking the company’s progress is like replaying your worst Monday over and over again. If something can go wrong, it usually does.
The latest example in a long line of pain is the European Commission levying a fine of a whopping €20.2 million on Rombat for contravening EU competition law. Metair is on the hook for €11.6 million based on an assumption under EU law that the parent company exercised decisive influence over Rombat since the acquisition in 2012. Notably, the contravention of anti-trust rules was from 2004 to 2017.
The fine is payable over 51 months, although the first instalment is €4.2 million due within 3 months. Not exactly equal instalments!
Metair notes that the decisions made at Rombat that led to the fine were made well before it took over and weren’t identified in the due diligence process by external advisors. Unfortunately, this is a good example of the risks in M&A – particularly in a region with draconian regulators who are far more interested in compliance than jobs or their economy.
Naturally, Metair will assess all legal options. They also need to consider how this affects the South African debt package. This overhang was there for a long time, but I don’t think anyone expected it to be quite this bad.
The share price closed 9.3% lower on the day. It’s now down 55% year-to-date and 84% over three years. What a mess.
SA Corporate Real Estate flags at least 7% growth in the distribution per share (JSE: SAC)
But retail reversions have swung negative
The goal for REIT investors is to earn a yield and to see it grow at least in line with inflation. Chasing much higher growth rates is reserved for other equities, with property as more of a hybrid between fixed income and equity. In SA Corporate Real Estate’s pre-close update, they’ve indicated growth in the total distribution of between 4% and 5%, which means the distribution per share is expected to increase by at least 7%. That certainly does the job.
Digging into the portfolio is interesting, as this fund has some differences vs. what you’ll find elsewhere. For example, there’s a substantial residential component in the Afhco portfolio where they are expecting to sell almost 100 apartments a month.
But we begin with the retail portfolio with a focus on convenience retail. The vacancy rate has been consistent at around 2.3%. They made good progress in replacing poorly performing anchor tenancies in three malls, where Pick n Pay was replaced by Checkers in two such examples. Unfortunately, reversions in the retail portfolio swung into the red, coming in at negative 1.8% thanks to pressure from a single apparel tenant.
The industrial portfolio is fully let and has anticipated positive reversions of 3.7%, so that’s a faultless performance in that portfolio.
On the residential side, the vacancy rate is 3.7% and the anticipated residential rental increase is 3.0%. They had some negative reversions related to long-standing tenants, but things are positive overall.
In the portfolio in Zambia, the expected increase in distributable income is between 5% and 6%. They achieved positive reversions in the retail mall in that portfolio, measured in USD.
On the balance sheet, they refinanced facilities at lower margins, which means the weighted average cost of debt has come down. This is obviously very helpful for equity investors. When rates come down, the share of the underlying economics shifts from banks to equity investors (and vice versa). The loan-to-value is currently at 38.6% excluding new acquisitions, so the balance sheet is in solid shape overall. You may recall that they raised R450 million in equity through a private placement in mid-November.
Good news for the Stefanutti Stocks balance sheet (JSE: SSK)
Along with the Eskom proceeds, they’ve also closed important disposals
After a long journey to get to this point, Stefanutti Stocks has finally closed the sale of the businesses in Mozambique and Mauritius. All payments have been received, so this helps in further de-risking the balance sheet.
Along with the recent proceeds from the Eskom settlement, this has allowed the company to make a capital repayment of R550 million to Standard Bank. The outstanding amount owed on the facility has dropped sharply from R850 million to R300 million.
When risky stocks dig themselves out of a hole, it can be incredibly lucrative for the punts who took a chance. Stefanutti Stocks is up more than 200% over three years.
Valterra Platinum gets an investment grade credit rating from S&P (JSE: VAL)
This is a sign of how much better things are in the PGM sector
Valterra Platinum’s life as a separately listed company is going well at the moment, not least of all thanks to vastly improved conditions in the PGM sector. S&P has given the company an investment grade credit rating of BBB-, reflecting the rating agency’s expectation of Valterra being the top global producer of platinum and a top two global producer of PGMs.
One of the reasons given for the rating is the “moderate levels” of net debt and an expectation by S&P that the company will be in a net cash position from 2026. This informs a stable outlook, with an expectation of adjusted debt to EBITDA being below 1.5x and funds from operations being over 60% of debt for the next few years under various PGM price scenarios.
Of course, they also highlight regulatory risks in South Africa, referring to it as an “evolving regulatory environment…including empowerment-linked mining license renewals and fractious labor and community relations.” As always, the cost of borrowing for our local companies is strongly linked to how South Africa is viewed as an investment destination.
As for S&P’s views on the PGM market, they reference the slowing pace of the transition to electric vehicles, sustained growth in hybrid vehicle sales and even an improvement in jewellery demand, in some regard due to substitution of gold which is currently at a much higher price.
If you would like to read the entire S&P press release related to the rating, you’ll find it here.
Nibbles:
- Director dealings:
- I’m not sure what the backstory is, but a “restructuring of personal interests” has seen Simon Peile transfer Sygnia (JSE: SYG) shares worth R703 million to his wife and Sygnia CEO, Magda Wierzycka. That’s a big number!
- Here’s another example of what generational wealth looks like: the CEO of AngloGold Ashanti (JSE: ANG) sold shares worth around R54 million. It’s been a truly insane year in the gold sector. Separately, another director sold an entire share award worth R27.7 million (even though the announcement noted that it was “in part to fund tax liability” – sure, that’s technically true, but the reality is he sold the full award).
- A prescribed officer of Impala Platinum (JSE: IMP) sold shares worth R8 million.
- A non-executive director of Coronation (JSE: CML) sold shares worth R5.8 million.
- An executive director at Richemont (JSE: CFR) sold shares worth R3.8 million.
- A2 Investment Partners bought another R1.6 million worth of shares in Nampak (JSE: NPK). Due to the board representation, it comes through as director dealings.
- The COO of ASP Isotopes (JSE: ISO) bought shares worth roughly R940k.
- The company secretary of Vodacom (JSE: VOD) sold shares worth R269k.
- An independent non-executive director of Mantengu (JSE: MTU) bought shares worth R236k.
- A director of a major subsidiary of Stefanutti Stocks (JSE: SSK) bought shares worth R188k.
- An associate of the CEO of Grand Parade Investments (JSE: GPL) bought shares worth R183k.
- A director of Momentum (JSE: MTM) bought shares worth R182k.
- A director of NEPI Rockcastle (JSE: NRP) and two family members bought shares worth a total of R125k.
- The CEO of Spear REIT (JSE: SEA) bought another R66k worth of shares for his family.
- Here’s an unusual one: although there was no dealing in Vunani (JSE: VUN) shares, three executive directors of the company increased their holdings in Vunani due to a share buyback from a minority shareholder further up in the structure at Bambelela Capital, their investment vehicle that holds 49.2% of Vunani. I suspect that indirect holdings change pretty often on the JSE without an associated announcement like this one! Well done to them for this disclosure.
- As you would imagine, the directors at Copper 360 (JSE: CPR) participated to a large extent in the recent capital raise that included a clawback offer and a debt conversion. The numbers aren’t a fair reflection of cash changing hands though, as significant portions were due to debt converting to equity. The announcement doesn’t give the split for each director, so I’ll rather not include the values here. The point is that the directors supported the raise.
- Here’s another example of how property sector directors use their shares as security for loans. A director of Fortress Real Estate (JSE: FFB) has pledged shares worth R57 million as security for a loan of R25 million. This also gives you insight into the level of coverage that banks look for when using equity as security.
- ISA Holdings (JSE: ISA) has renewed the cautionary announcement related to a non-binding expression of interest received from a party that is interested in acquiring a controlling shareholding and delisting the company. At this stage, there is no firm intention to make an offer on the table.
- Attacq (JSE: ATT) has indicated that Peter de Villiers will be appointed as interim CFO. Raj Nana is departing with effect from 31 January 2026 and the company is unlikely to find a suitable replacement before then.
- There’s very little liquidity in the shares of Marshall Monteagle PLC (JSE: MMP), so I’ll just mention the results for the six months to September 2025 down here in the Nibbles. Revenue from continuing operations was up 16% and total HEPS jumped spectacularly from 6.2 US cents to 22.7 US cents. Cash was down 25% as they allocated capital from cash to global equities. The interim dividend of 2 US cents is in line with the prior period despite the jump in earnings. The NAV per share increased by 9.4%.
- Europa Metals (JSE: EUZ) is sitting on cash after selling the Toral project to Denarius Metals Corp. and then subsequently selling Denarius shares in the market. They still hold a chunk of Denarius shares and they are looking to acquire Marula Mining in a share-for-share deal. But what they can’t find is a suitable use for the cash from the Denarius shares sold thus far, so they’ve decided to rather return £1 million in capital to shareholders. That’s good discipline.
- Salungano Group (JSE: SLG) is making some progress in catching up on its financial reporting. They’ve now released results for the six months to September 2024. Although I’m not sure how helpful such old numbers will be to shareholders until newer numbers are available, they experienced a jump in revenue from R1.6 billion to R2.2 billion and a swing in normalised EBITDA from a loss of R81 million to profit of R272 million. HEPS was 21.56 cents vs. a loss of 90 cents in the comparable period.
- Not that anyone is going to miss this company on the market, but Sail Mining Group (JSE: SGP) is making an offer to shareholders to repurchase its shares at 7.2 cents. The shares have been suspended since July 2022. The price is a 20% premium to the last price at which it traded.
- The attempts to revive PSV Holdings (JSE: PSV) have been going on forever, with various discussions between the liquidator and a party looking to recapitalise the company. They might be out of time, as the JSE has sent them a letter advising of the intention to proceed to terminate the listing. The JSE is clearly running out of patience here.
