| Thursday 03 March 2022 Good morning Voornaam,
Labat has announced the acquisition of an 80% stake in a business known as Sweetwater, a SAHPRA-approved medical cannabis cultivation facility in Kenton-on-Sea in the Eastern Cape. One of the remaining minority shareholders also has a stake in BioData (Pty) Ltd, a company in which Labat holds 70%. The sellers are laughing all the way to the bankie.
Labat has offtake agreements in Europe and there is apparently international demand for high quality THC flowers from South Africa. Labat intends to expand the production at Sweetwater from 500kg per year to 1.8 tons per year. There will clearly be a lot of capex required to achieve this over and above the R10 million purchase price of the 80% stake. Sweetwater's net asset value is R6.7 million and net profit before tax for the nine months to November was R2.46 million. On an annualised basis, assuming a 28% tax rate and recognising that the purchase price of R10 million was only for an 80% stake, the P/E multiple is around 5.3x.
Sibanye-Stillwater released a strongly worded statement in response to the media campaign launched by Appian Capital. Appian is making noise about a lawsuit over the termination of the Santa Rita deal, which Sibanye walked away from in January due to geotechnical events at the underlying operations. Sibanye is confident that if Appian launches legal proceedings in the English High Court, they will be defended successfully. This is an unwelcome distraction for the company.
Vivo Energy (currently under offer that is subject to regulatory approvals) released its results for the year ended December 2021. The company distributes and retails Shell and Engen-branded fuels and lubricants. Revenue grew 22%, EBITDA increased 23% and attributable net income shot up by 70%.
AECI released its results for the year ended December 2021, reflecting 8% growth in revenue and 27% growth in HEPS. A final cash dividend of 505 cents has been declared, taking the total FY21 dividend to 685 cents (a yield of 6% on yesterday's closing price). The group generated 41% of its revenue outside of South Africa.
Mustek has released results for the six months ended December 2021. Revenue increased 12.5%, gross profit margin improved from 13.9% to 16.2% and the net impact is a 17.3% jump in HEPS to 237.09 cents. The gross margin expansion stems from supply shortages of IT hardware and the resultant pricing power for suppliers. The group expects this to continue well into 2023. The share price closed 2.99% higher for the day at R15.14 per share.
Tech microcap Silverbridge has received an unsolicited offer from Rox Equity Partners, a UK-based private equity house. The cash offer is R1.525 per share, an 18% premium to the prevailing price. Silverbridge has appointed an independent committee of the board to consider the offer and will release a further announcement in due course.
Bowler Metcalf has concluded a formal agreement to acquire Skye Plastics (a rigids manufacturer with a 28-year track record) for R32.6 million. This deal accelerates Bowler's expansion into the medical and agricultural packaging sectors.
DCT, a subsidiary of Alviva, is repurchasing 20.96% of its shares from Ledibogo, its B-BBEE partner that subscribed for shares using loans from DCT. Ledibogo has not managed to repay the loans due to lack of dividends from DCT. This repurchase unwinds part of the structure, as Ledibogo will hold 29.93% of the shares in DCT after the deal. DCT will retain its B-BBEE status thanks to flow-through ownership from Alviva.
It looks like the trend of preference share repurchases and delistings has found its way to FirstRand, which has released a cautionary announcement regarding a potential offer to the holders of FirstRand's B variable rate non-cumulative non-redeemable preference shares. That's quite a mouthful. This type of funding isn't as attractive as it used to be under new banking regulations (the Basel III framework), so preference shares are slowly disappearing from the market. The intention is to repurchase at par value (R100 per preference share), a 12.8% premium to the 30-day VWAP as these shares have been trading at a discount to par.
You may not be familiar with Raven Property Group, a JSE-listed property group that invests in Russian warehouses. Obviously, the company's life has been turned upside down by latest events. There's no trade in this share on the market, so the price doesn't reflect what is going on. 64% of secured debt is denominated in roubles and there is an interest rate hedge in place, which protects the company from the Central Bank of Russia rate hike. The company faces huge uncertainty over access to cash flows in Russia and the impact of sanctions.
The CEO of WBHO has bought R1m worth of shares, an enormous show of faith at a time when the company is dealing with painful financial losses in Australia.
In today's bumper edition, I've written on Woolworths' horrible recent period, Murray & Roberts' swing to profitability, Cashbuild's tough sales momentum and Capit al Appreciation's dealmaking spree.
If you fancy something to listen to today, be sure to listen to Episode 64 of Magic Markets. We talked about a number of relevant themes in the markets.
That's it for today. Have a good one!
The Finance Ghost
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Local and Offshore Market News |
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