Ghost Bites (Grindrod | Kibo Energy | Ninety One | Trustco)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:

Grindrod’s investment in the Port of Maputo is telling a great story (JSE: GND)

And with the trajectory of South African infrastructure, that story could easily continue

Grindrod holds an indirect 24.7% stake in the Maputo Port Development company. The exciting news is that volumes handled by the port came in at a record level of 31.2 million tons in 2023, growing more than 16% vs. the previous year.

Of the 31.2 million tons, 25 million were made up of various ores. It’s also worth noting that 61% of volumes were handled by road and 39% by rail, representing a significant increase vs. the previous year in terms of rail use.

We can only dream as South Africa, with our headlines filled with a story about two Transnet coal trains crashing on the coal export line.

Kibo Energy: still full of dreams, but not funding (JSE: KBO)

Trading at just one cent a share, is anything ever going to happen here?

Kibo Energy really needs to catch a break. The company puts a lot of effort into regularly telling its story to the market. The problem is that the story is full of words like “concept stage” and “advanced project development” rather than anything to do with tangible cash flows. To add to this difficulty in convincing anyone to get excited, they make basic errors like getting the percentage shareholding in Mast Energy Developments wrong in the first version of the announcement.

When a company is trading at literally one cent a share, it can mathematically only double in price or go to zero from here. This is why speculative punters love a good penny stock. One piece of good news from Kibo could see ridiculous percentage returns. Of course, you can easily lose everything here.

The announcement highlights a potential joint venture with a multinational food and beverage producer to build and operate a pilot plant to produce bio-coal. If the pilot plant works and financing can be obtained (and those are big “ifs”) then the client would look to transition from fossil coal to bio-coal.

The other major news in the announcement is that conditional preliminary approval has been obtained for development funding for an existing waste-to-energy project. This is subject to due diligence and is from a development banking institution in Southern Africa. Although this is still far from guaranteed, perhaps this could be the catalyst for the share price to move off the one cent mark?

There are a number of other projects in the group, several of which are one step away from something exciting happening. That seems to always be the case though, which is why many punters have run out of patience. The lack of closure around the Proventure payment for the joint venture with Mast Energy Developments has been damaging to the company’s reputation in my opinion.

Ninety One reports a slight uptick in AUM (JSE: N91 | JSE: NY1)

Well, provided you look over three months rather than year-on-year

Ninety One announced its assets under management as at 31 December 2023, coming in at £124.2 billion. Although that is higher than £123.1 billion at the end of September 2023, it’s still well below the level seen a year ago at the end of December 2022 (£132.4 billion).

Remember, assets under management is impacted by two things: client flows and asset prices in the market. The former is more under the control of an asset manager than the latter.

Trustco is working on two deals with Riskowitz Value Fund (JSE: TTO)

A cautionary announcement has been issued

Trustco released a cautionary announcement dealing with two potential transactions with the Riskowitz Value Fund.

The first is a potential equity investment of up to NAD950 million by that fund. Oddly, the company notes that one of the value adding activities that this would unlock is further share buybacks. No, I have no idea why a company would issue shares for cash in order to do more buybacks, unless the issue for cash is at a much higher price (and why would that realistically happen?)

The second potential transaction is for Trustco to increase its stake in Legal Shield Holdings by 11.35%, taking the stake to 91.35%. The seller would be Riskowitz Value Fund, so there are a couple of negotiations underway at the moment.

Little Bites:

• Director dealings:
  • The CEO of Marshall Monteagle Plc (JSE: MMP) bought R9.8 million worth of shares in an off-market transaction.
  • The controlling family of Acsion (JSE: ACS) has bought more shares, this time worth R22.6k.

• Although I don’t usually mention asset managers increasing or decreasing their stakes in companies (as they do this all the time), I do think it is relevant that Allan Gray has bought shares in Pick n Pay (JSE: PIK) and taken its stake to 10.1139%. I guess they believe in what Sean Summers is doing!

• RMB Holdings (JSE: RMH) has obtained approval from the SARB for the special dividend to be paid at the end of January.

• The soap opera that is the PSV Holdings (JSE: PSV) business rescue continues. DNG keeps saying that it wants to proceed with a formal offer backed by proof of funds. The business rescue practitioners seem to be tired of waiting and want to follow a liquidation process. The liquidation application is set to proceed on 22 January and DNG will oppose that application.

• And if you think PSV is full of drama, then wait till you look into Afristrat Investment Holdings (JSE: ATI). The company is so bad that business rescue isn’t even an option as there is no reasonable prospect of it being saved. The directors are simply waiting for the outcome of a liquidation application before acting on the conclusions in their assessment of the company.

INVEST IN SHARES