Ghost Wrap #55 (Mr Price | Southern Sun vs. City Lodge | Sirius Real Estate | African Rainbow Capital | Sibanye-Stillwater)
Unlock the Stock: Afrimat and Spear REIT
Afrimat’s track record is spectacular. Spear REIT is a highly respected property fund. On Unlock the Stock, you can learn about both companies.
RCL is far more than just a chicken business
RCL is far more than just a chicken business these days, which isn’t a bad thing.
Bidvest: strong trading profit growth in every division
Bidvest closed 3.8% higher after releasing results for the six months to December 2021.
Liberty Two Degrees: reversions continue to bite
Liberty Two Degrees holds stakes in some of the most iconic properties in the country
Alviva: 20% revenue growth excl. Tarsus
After teasing the market with a trading statement, Alviva has now released all the details of the interim results for the six months ended December 2021.
PSG Group and the Great Value Unlock
This is one of the biggest news stories on the JSE that we’ve seen in a while
JSE Limited: a cash cow in a shrinking field
You may not be aware of this, but the JSE Limited is listed on the JSE. You’re right in thinking that this sounds like the financial version of the movie Inception
Capital Appreciation on the deal train
The company has announced the acquisitions of three technology companies in South Africa and a 20% stake in a company in the Netherlands.
Woolworths won’t miss 2021
as released results for the 26 weeks to 26 December 2021. The share price rallied 6% despite a fair share of negative commentary on Twitter.
Cashbuild’s negative sales momentum continues
Cashbuild released its interim results for the six months ended 26 December 2021
The Ghost Wrap podcast is proudly brought to you by Mazars, a leading international audit, tax and advisory firm with a national footprint within South Africa. Visit the Mazars website for more information.
In this episode of Ghost Wrap, I recapped five important stories on the local market:
- Mr Price released results that I felt were rather poor, yet the market took the stock over 8% higher by the close on the day of release. Either I’m wrong, or the market is wrong. Listen to my reasoning and decide for yourself.
- Southern Sun and City Lodge are enjoying a resurgence in demand for hotel rooms, with the former doing as well as I expected and the latter surprising me to the upside.
- Sirius Real Estate executed a successful capital raise on the market, demonstrating that investors are highly supportive of the strategy.
- African Rainbow Capital has made sure once and for all that I’ll never touch the company with my money, as the latest capital raise is highly painful for minority shareholders.
- Sibanye-Stillwater incurred the wrath of investors with the news of a convertible bond capital raise, but did the market overreact to this news?
Comments (4)
Rowan
27 Nov 2023Hi GM
I bought the dip of Sibanye & still have 30 years ahead. But haven’t had time to explore the dilution, what does it mean exactly?
If I hold 200 shares before the rights offer, what does it mean after?
Thanks & great podcast
Rowan
Reinardt
28 Nov 2023Hi Rowan
I might be able to answer your question.
The Sibanye´s cap raise is not a rights offer, but a convertible bond cap raise. Which means the bond can be converted into equities in 5 years time. The conversion is set for 32% higher than what was the current share price. The amount raised is $500mil, which is approx. 15% of the current market cap, so would have a significant dilution effect, if the conversion is far below the 2028 share price.
The marker didn´t really like this, as this, as this can keep a damper in share price growth for the next 5 years. Furthermore the funding is raised in a high interest rate environment and locked in for 5 years, when interest rates are expected to start to decrease in Q2/Q3 of 2024.
However, the conversion would only realistically happen if the share price is above 32% higher than the current share price. On the flip side, as always, raising more capital can help Sibanye increase their earnings over the next few years.
Hope this helps.
Rowan
28 Nov 2023Hi Reinardt
Thank your for your feedback on this topic.
A lot of information to grasp & understand. Always good to keep learning. I wander if Ssw will still be paying dividends during this time. Happy investing.
The Finance Ghost
29 Nov 2023Hi Rowan and Reinardt – apologies for such a delayed response. Juggling many things. I think Reinardt gave a great answer there. And yes, not the simplest thing to understand. But to read about these types of capital raises and understand them is brilliant. Essentially, for Sibanye to raise debt at a decent rate, there needs to be a potential equity kicker. You can do some reading up on mezzanine finance, which is a mix of debt and equity. This convertible instrument falls firmly into mezzanine finance territory!