| Tuesday 01 March 2022 Good morning Voornaam,
Harmony Gold shot up 14.6% yesterday as the world continued its flight to safe-haven assets (gold, not Bitcoin!) amidst the ongoing invasion of Ukraine. The group released results for the six months ended December 2021, reflecting a 2% increase in revenue (despite a 4% decrease in the average gold price received). All-in sustaining costs increased by 12%, driving a 26% drop in production profit and 69% decrease in net profit. The group has very little debt and has declared an interim dividend of 40 cents per share, 64% lower than the prior period's interim dividend.
Harmony believes that production will improve in the second half of the year as many of the production challenges from the first half have been solved. Despite this, guidance for costs per kilogram has been revised higher, which means the company needs the gold price to keep climbing. Even after the Ukraine-related rally, the share price is only up 5.6% this year.
Sea Harvest reported a 5% increase in revenue for the year ended December 2021, of which 42% was generated internationally (down from 46% the prior year). Gross profit margin fell from 34% to 31% but operating profit margin increased from 14% to 15% thanks to cost controls. Don't be fooled by the name - Sea Harvest also has substantial investments in cheese, convenience foods and bakery products! HEPS increased by 4% and a dividend of 56 cents per share was declared, a yield of 3.5% on yesterday's closing price.
Clientele Limited is one of those companies that is way off the radar despite having a market cap well over R3 billion. The share price hasn't been a firecracker, which explains the relative lack of coverage. In the six months to December 2021, diluted HEPS increased by a solid 15% and annualised return on equity was 39%. Perhaps they need to give Desmond Dube a break from the daytime TV ads and send him on an investm ent roadshow instead?
There's finally some news from Zeder on its portfolio and the plans to unlock value. The 42.2% stake in Kaap Agri will be unbundled to shareholders, which is a big move as that stake represents 21.8% of the sum-of-the-parts value of Zeder. Kaap Agri is also listed on the JSE, so Zeder shareholders can hold it directly. The unbundling qualifies for tax relief for local shareholders and doesn't require shareholder approval. The company is still trading under cautionary and has noted that the approaches made for the assets are "not vanilla in nature" which means they would be tricky to implement. Shareholders will need to continue treating this as an exercise in patience.
Impala Platinum has mopped up another 0.35% of the shares in issue of Royal Bafokeng Platinum, taking its stake to 35.66%. As a reminder, Impala Platinum has made a mandatory offer for all the shares in Royal Bafokeng, with a view pe nding from the Takeover Regulation Panel (TRP) on whether Northam Platinum also needs to make a mandatory offer.
Delta Property Fund has been a wonderful punt since its trading suspension was lifted in mid-2021, having rewarded shareholders with a return of over 72%. It is still nearly 93% down over the past 5 years. Full marks to the company for colourful language in the pre-close update, noting that the "dial on the vacancy dashboard has not gone in the direction we had anticipated" - many office-focused funds can say that!
RCL Foods has released its results for the six months to December 2021 and opted to include the release in InceConnect this morning. I've added some commentary as well, so look out for the banner below with the link to the article.
I've also written on Liberty Two Degrees' results for the year ended December 2021 as well as Bidvest's interim results in which every division increased trading profit by double digit growth rates.
If you missed it yesterday, be sure to listen to the latest episode of Magic Markets. With my co-host Mohammed Nalla, we discussed a range of topics like Barloworld, Bitcoin and the Tesla vs. Ford debate.
That's it for today. Good luck in these wild markets!
The Finance Ghost
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