Greencoat Renewables is coming to the JSE (JSE: GCT)
We are getting another new listing on the local market!
Here’s some exciting news: the JSE has granted approval for a fast-track secondary listing of Greencoat Renewables on our local market. This is an Irish renewable energy infrastructure company that invests in European renewable electricity generation and storage assets.
With a market cap of roughly €844 million, this is a substantial business. There are plenty of renewable energy enthusiasts in South Africa and this will give them something new to sink their teeth into.
To get to grips with the portfolio and its mix of wind, solar and battery storage assets, along with its focus on delivering dividends to investors, you can register for an upcoming Unlock the Stock session with the management team on 29th May at 12pm.
Hammerson boosts FY25 guidance based on recent activity (JSE: HMN)
They are singing a positive tune over there
With a share price that has delivered a 4% drop in GBP in the past year and a 1.7% drop in ZAR, Hammerson hasn’t exactly been a market darling. The property fund is trying to change that, with recent deal activity and a positive tone to the latest update.
They expect a gross revenue increase of 10% for 2025, which is way ahead of the 4% – 6% medium-term CAGR that they aim for. They have reaffirmed adjusted earnings guidance though, so the uptick in revenue doesn’t seem to be flowing through to shareholders yet.
One of the reasons for the increase is the acquisition of almost all the remaining ownership units related to Brent Cross, with the price representing a 16% discount to book value and a net initial yield of 8.6%. Combined with another recent deal, this means that they recycled the capital from the disposal of Value Retail (at an exit yield of 3.4%) into gaining control of assets at an average yield of 8.5%. That sounds solid.
Like-for-like sales growth isn’t quite as exciting, up just 1% for the first quarter. Remember that the UK is a structurally lower growth market than South Africa (and certainly the European regions that our local funds love), so you would expect to see modest growth.
The company has noted that there’s a real estate conference this week and that they will publish updated investor information.
Mahube Infrastructure’s earnings have taken a big knock (JSE: MHB)
This is due to the change in dividends from portfolio companies
Mahube Infrastructure released a trading statement for the year ended February 2024. HEPS is expected to decrease by between 32.87% and 39.26%, so that’s a significant drop.
They attribute this to lower dividends from the investee companies, at least to some extent because of special dividends in the prior period from refinancing of solar projects. Detailed results are due for release on 30 May.
MultiChoice is getting the right advice on dealing with the Competition Commission (JSE: MCG)
The Commission is recommending that the Canal+ deal be approved
The South African Competition Commission is a tough beast to deal with. They are pretty famous at this point for regulatory overreach, with the term “public interest” being used and sometimes abused to force greater levels of e.g. B-BBEE than would otherwise be the case.
Advisors are clearly learning from this and are trying to go on the front foot, advising clients to rather go in with a proposed package of public interest considerations vs. sitting back and waiting for the regulator to get creative. Believe me, nobody needs or wants creative regulators.
MultiChoice has shown the way here, having proposed various public interest commitments related to B-BBEE and SME participation in the audio-visual industry in South Africa, while supporting local content. This is another reminder of how broad the thinking is at competition regulators and how much of their work goes way beyond what anyone would traditionally think of as competitive factors i.e. whether consumers have sufficient choice.
The Competition Commission has accepted the proposed commitments and will recommend to the Competition Tribunal that the deal should be approved. Given all the financial difficulties being faced by MultiChoice right now, I think it’s pretty clear that a successful deal here is firmly in the public interest.
Tough numbers at Reunert (JSE: RLO)
Earnings are down even if you exclude the battery storage business
Reunert released a trading statement for the six months to March 2025. It’s not pretty, with an expectation for total HEPS to drop by between 19% and 24%.
Now, you may be hoping that things get better if you look at continuing operations, but that isn’t really the case. Even if you exclude the Blue Nova Energy battery storage business that they have decided to cut their losses on and sell, the drop in HEPS would be between 17% and 22%.
This tells you that there are troubles elsewhere in the business. Some of this is a timing issue, like a delayed contract in the Defense Cluster and lower cable sales based on a delayed energy infrastructure investment programme. Perhaps the most comforting news for investors is that a COVID business interruption claim in the base period was good for 32 cents worth of HEPS. That’s obviously a non-recurring source of income, so more than half of the drop in continuing HEPS of between 50 and 66 cents is attributable to the insurance claim.
Still, the share price closed 3.9% lower off the back of this news. Detailed interim results are due to be released on 28 May.
RFG dragged down by the international segment (JSE: RFG)
Margins are under pressure
RFG Holdings released results for the six months to March 2025. They struggled, as group revenue growth of 3.5% didn’t convert into profit growth. In fact, due to pressure on margins, HEPS came in 11.9% lower.
The trouble was in the international segment. While the regional segment grew revenue by 7.6% and only saw its operating margin dip by 90 basis points, the international segment suffered a 17.2% drop in revenue and a collapse in operating profit margin from 11.5% to just 0.1%! Ouch. This is what happens when there is severe selling price deflation coupled with a decline in volumes.
This means that literally all the operating profit in this period was from the regional business. Luckily, it’s by far the largest part of the business (even before international profits collapsed), so the impact on group earnings was painful but manageable. It also helped that average debt and interest rate levels were lower, leading to a significant decrease in net interest costs.
Looking to the second half of the year, they expect the regional segment to continue its momentum. The international segment is showing signs of improvement. This should support a better final dividend, with the interim dividend only representing a payout ratio of 33% (the group target is 50% – so this implies a catch-up later this year).
Despite this, the share price is up around 38% over 12 months and closed 3% higher after this earnings update. The market must be strongly believing in what the second half might bring.
Sanlam teams up with Tyme Bank (JSE: SLM)
The focus is on personal loans with an embedded credit life product
Sanlam just never sits still. It’s incredible how regularly they announce deals and major partnerships. This one is admittedly very close to home of course, as Tyme is part of the African Rainbow Capital stable, which in turn is run by ex-Sanlam execs.
One of Sanlam’s many businesses is called Sanlam Personal Loans. They give loans of between R5k and R300k for between 12 months and 6 years – a typical model in this space. It’s a big book, coming in at R5 billion as at December 2024.
As for Tyme Bank, they have 11 million retail and business customers, so that’s a substantial distribution channel.
The parties have decided to start a new joint venture. Sanlam will sell its loan generation business into the joint venture at an effective valuation of R63 million, as Tyme will buy a 50% stake in the joint venture for R31.5 million. Then, Sanlam will sell 50% of its retail credit loan book for R400 million plus the capital value. Finally, Tyme will pay R320 million for shares that give it 50% of the credit life results related to the loans in the joint venture.
Essentially, what they are doing here is building a lending business on Tyme Bank’s infrastructure, targeting the client base of both entities. They will of course take advantage of Sanlam’s experience in credit life insurance.
As this is a small related party transaction, it can only go ahead if there’s a fairness opinion backing it up. Deloitte have opined that the terms of the deal are fair.
There are a few regulatory hurdles to be overcome, including approval from the Prudential Authority and the Competition Commission. They hope to be done with the deal by the end of March 2026.
Spear REIT picks up a business park in Paarl (JSE: SEA)
There’s plenty of growth around Paarl, so this seems sensible
Although everyone talks about the semigration from Joburg to Cape Town, I don’t often see people refer to the rotation of capital from Cape Town into the winelands. The growth in Val de Vie and neighbouring estates is quite something to behold. Paarl is part of that broader growth story, attracting many families who either work remotely or have jobs in the winelands.
As more people move to these areas, it stands to reason that demand for commercial property will increase. It therefore makes sense to see Spear REIT announcing the acquisition of the Berg River Business Park in Paarl for just over R182 million. If you include transaction costs and immediately required capital expenditure, this increases to R187.5 million.
This is an industrial asset that they are acquiring on a purchase yield of 9.35%. The seller has guaranteed the rental for certain occupied units for 18 months and has also committed to guarantee electricity savings from a recent solar energy installation.
The weighted average lease duration is 5.27% and the weighted average escalation is 7.12%, which is solid. Spear’s investment thesis is built around focused exposure in the Western Cape and they are doing a good job of sticking to their knitting.
Southern Sun has much to be proud of (JSE: SSU)
This remains the best option in the sector
Southern Sun is doing really well. They play exactly where you want to be in the hospitality space: hotels in business centres that play to higher income tourists, business travellers and from time to time, locals. What you don’t want to own right now is old-school casinos. I also remain bearish on cheaper accommodation aimed at local business travellers.
For the year ended March 2025, occupancy grew by 220 basis points to 60.8%. This drove income growth of 9% and EBITDAR (not a typo) growth of 14%. Thanks to a reduction in debt and thus net finance costs, adjusted headline earnings per share climbed 34%. But the best growth rate was saved for the dividend, which casually doubled (that’s a 100% growth rate) to 25 cents per share. Mooi.
Speaking of mooi, the beautiful Western Cape continues to be extremely lucrative for hotel groups, with revenue up by 17% and EBITDAR up 26%. But here’s the real surprise: Gauteng grew even faster (revenue up 19% and EBITDAR 35%) albeit off a more depressed base, helped along by conferencing demand. Alas, KZN and Mozambique can’t say the same, with a lack of conferencing in Durban hurting the story. In Mozambique, political unrest has an incredible way of making people choose other destinations for a holiday. Strange, that.
Although the business is doing really well, it’s still not a simple thing to run. For example, they’ve closed Paradise Sun in the Seychelles for a full refurbishment to help reposition the hotel as a premium leisure resort for European travellers.
The group’s balance sheet is incredibly strong. Provided that South Africa can maintain a decent reputation on the global stage despite the best efforts of certain countries, they should keep doing well.
Nibbles:
- Director dealings:
- Des de Beer is back on the bid for Lighthouse Properties (JSE: LTE), buying R1.4 million in shares.
- Although this sale of shares is entirely to cover the tax on share-based payments, I’m still going to mention the extent of sales by directors of Northam Platinum (JSE: NPH) after the vesting of shares under an old plan. The sale comes to a total of R105 million – and remember, that’s just the taxable portion! Best of all, it’s just three directors. It’s a good life.
- Interestingly, with James Formby (ex-CEO of RMB) expected to replace Gareth Ackerman as chairman of Pick n Pay (JSE: PIK) from August, Formby is going to step down as chair of Boxer (JSE: BOX). Sean Summers is going to replace Formby as the chair of Boxer from February 2026. So, a few familiar names here playing musical chairs. An additional change worth noting is that Pooven Viranna will be the new independent non-executive director of Pick n Pay, replacing the role that Formby leaves vacant as he moves to chair the board there.
- Curro (JSE: COH) has had its credit rating affirmed with a positive outlook by GCR Ratings. They note that the maturity of the school portfolio and the associated cash flows were positive factors here. As I always remind you, the lens for debt is very different to that of equity investing. Debt investing is about managing downside risk, while equity investing is about chasing risk-adjusted upside.
- Capital Appreciation Limited (JSE: CTA) has been busy with share buybacks, having repurchased 3.26% of shares in issue based on the general authority given by shareholders for buybacks at the September 2024 meeting.
- Deutsche Konsum (JSE: DKR) probably isn’t in your portfolio. Just in case it is, I’ll mention that the company has appointed GPEP GmbH to take over the asset and property management for its portfolio. It’s not unusual for the day-to-day management of properties to be outsourced by funds. It all depends on their operating model.
