Ghost Bites (Renergen | Sasfin)

Listen to the latest episode of Ghost Wrap here, brought to you by Mazars:

The Renergen rollercoaster (JSE: REN)

The market is now overreacting to every piece of news

Renergen is a junior mining company, so the current profitability has very little bearing on the long-term investment thesis. Usually, the announcement of results barely moves the price. With so much recent focus on Renergen though, the market is now ready to jump into action at the smallest sign of news.

The share was down nearly 18% intraday on Friday before finishing the day 5.7% lower. That’s serious volatility and not on tiny volumes either, at least not by mid-cap standards.

The announcement that caused all this activity was a trading statement dealing with the six months to August 2023. Although increased production volumes from Phase 1 of the Virginia Gas Project have helped with revenue, the reality is that the startup stage is unlikely to be profitable.

There are other factors as well, like borrowing costs and a shift in the accounting of construction costs that are no longer being capitalised.

Long story short, the headline loss per share is expected to be between 28.9 cents and 30.9 cents. This is between 50% and 60% worse than the comparable period.

For reference, the share price closed at R14.43.

Perennial disappointment Sasfin strikes again (JSE: SFN)

A trading statement reveals that earnings have fallen for the year

In case you think I’m being harsh in my introduction to this section on Sasfin, here’s a really long-term chart to show you what Sasfin shareholders have been through:

As an investor, you don’t want the share price chart to look like an exciting mountain bike race profile.

Things aren’t getting any better, with HEPS down by between 15.72% and 31.12% for the year ended June 2023. This implies a range of 313 cents to 383 cents. The share price of R29.50 has been boosted by the deal with African Bank to dispose of two major business units at a much higher multiple than Sasfin has been trading at recently.

African Bank seems to have a plan for those assets being acquired. Does Sasfin have a plan for its remaining assets?

Little Bites:

• Director dealings:
  • The company secretary of Truworths (JSE: TRU) has sold shares worth R1.87 million. Although part of this is to settle the tax on vested shares, there’s also a note about rebalancing of his personal portfolio and that suggests that this is a sale that the market should take into account.
  • A director of a major subsidiary of Bell Equipment (JSE: BEL) has bought shares worth R249k.
  • Des de Beer must be feeling a bit tight, as his latest purchase of Lighthouse Properties (JSE: LTE) shares is only worth R38k.

• Astoria (JSE: ARA) has renewed the cautionary announcement related to a potential acquisition. No further details have been given.

• I am struggling to see anything at EOH (JSE: EOH) to get excited about. With key strategic shareholder Lebashe decreasing its stake from 20.06% to 19.04%, I guess I’m not the only one who thinks EOH is more likely to bore you to death than anything else over the next few years.

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