Ghost Bites Vol 5 (22)

Sappi has released a great quarterly update, with revenue for the last six months up 45% year-on-year and EBITDA up a whopping 175%. There’s a base effect here from Covid of course, but the company has risen to the occasion with strong production numbers when it has really mattered. I’ve written a feature article on these numbers here.

Harmony Gold is under pressure. The Hidden Valley mine in Papua New Guinea knocked production numbers heavily and there are underlying challenges in the South African operations as well. On the plus side, net debt has been reduced over the past nine months and the group has reiterated full year guidance. Get all the important details in this feature article.

Deutsche Konsum REIT is a specialist property fund focused on regional retail centres in Germany. In the first half of the current financial year, rental income increased 10% and net profit increased 13%. Funds From Operations (FFO – a key measure in this sector) increased by 4%. More than 80% of income is inflation-linked which is obviously great in this environment. The fund has executed acquisitions of 15 retail centres for a total of EUR49.4 million in this six-month period. The net loan-to-value (LTV) ratio is 53.9% which is above the target of 50%, so the fund may look to deleverage i.e. pay down some debt. Guidance of FFO for the full year of between EUR40 million and EUR44 million has been reiterated.

Redefine Properties released a trading statement noting that distributable income per share for the first half of 2022 should be 26.33 cents per share, an increase of 0.6% year-on-year. This doesn’t warrant a trading statement as the percentage change is so low. The reason for the update is that the interim dividend is back in action, with a dividend per share for this period of 23.69 cents per share vs. no dividend in the comparable interim period.

Spear REIT has finalised the acquisition of 27 Junction Road, Parow for R65 million. Pepkor has been signed as a tenant for 10 years and 9 months. This is in line with the fund’s industrial strategy in the Western Cape.

enX Group has released a trading statement for the six months to February 2022. HEPS from continuing operations is between 79% and 100% higher than the prior comparable period. Total earnings (i.e. including discontinued operations) is difficult to work with for this period as there were disposals in both this period and the comparable period. Continuing operations give a better sense of how the group is performing, with revenue up 17% and operating profit up between 55% and 59%.

Afristrat Investment Holdings has lost a fortune on MyBucks – around R1.5 billion! In a detailed announcement, the company set out how amounts in the company were used inappropriately or in a manner not approved by the board. There are numerous examples of alleged control failures. Afristrat has instituted a civil claim of R250 million against the former executives and R800 million against MyBucks. Afristrat also confirmed that it cannot make any payments of interest or capital to noteholders. The company will propose to noteholders and preference shareholders that they convert to ordinary shares in Afristrat. The company will try raise R60 million in equity, of which R25 million is for long outstanding creditors, R15 million is for legal fees and R20 million is for growth in the underlying investments of the company. Afristrat’s largest shareholder (MHMK Group Limited) will underwrite R15 million of the R60 million. This is a perfect example of how things can go badly wrong for a listed company.

Pan African Resources has completed Phase 1 of its share buyback programme. The company dipped its toes in the water with a R50 million buyback vs. a current market cap of around R8.75 billion. With the share price down nearly 14% in the last month, the average price for the buyback is higher than the current traded price.

ISA Holdings, an IT security business, has updated its trading statement for the year ended February 2022. HEPS is expected to be between 10.06 cents and 10.89 cents, an increase of between 21.2% and 31.2% vs. the prior year. The share price is at R1.10 and has very low liquidity.

Raubex CEO Rudolf Fourie will retire at the end of July. Felicia Msiza has been appointed as the new CEO and the company has used this opportunity to also create a COO role which will be filled by Dirk Lourens, another internal appointment. Fourie has been with Raubex for 25 years and it is encouraging to see an internal succession plan playing out.

DRA Global has announced a sudden change of CFO. There’s an internal appointment as Acting CFO which gives some stability, but a seemingly unplanned change at executive director level is always a red flag for governance.

The Chair of Quilter Plc, Glyn Jones, has stepped down. Ruth Markland has been appointed into the role. In case you aren’t familiar with the company, Quilter was separately listed as part of the Old Mutual restructure (or “managed separation” according to the corporate PR specialists). Quilter is essentially a rebrand of Old Mutual’s UK wealth management business. The business operates in two segments (Affluent and High Net Worth) and has performed well in the past year financially.

If you are familiar with the JSE Listings Requirements (or just curious about them), then you may be interested in the consultation paper issued by the JSE with amendments designed to “cut red tape” for listed companies. You can find it at this link.

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