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| | Monday 26 July 2021 | |
| | Good morning Voornaam,
The theme this morning is to focus on the sectors that have been severely affected by the pandemic and associated lockdowns. I didn't plan it this way; it just so happens that Distell, Famous Brands and City Lodge all released announcements on Friday.
Distell gets the lead story this morning because there are incredible insights in that announcement regarding the cost of the alcohol bans to the South African economy. The company believes that 22% of alcohol volume is now in the hands of illegal syndicates. Similarly, retailers have commented this year that a significant percentage of cigarette sales have been lost to the illegal trade forever.
It's not all depressing, though. In true South African style, these companies have adapted and survived. The challenge is that SMEs in these sectors certainly cannot say the same. It's hard enough for small businesses to effectively compete against listed giants.
Against an environment of lockdowns and looting, it becomes impossible. I'm trying to block out the memory of load shedding rearing its ugly head last week. We don't need that negativity in our lives.
It didn't warrant a full story this morning, but I must highlight that Clicks suffered damage to 54 stores during the looting, representing 6% of the store base. 47 stores are still closed, in which there are 38 pharmacies. Of greater concern is the fact that 127 vaccination sites were forced to close last week and 15 remain closed.
Other noteworthy news included a trading statement by ArcelorMittal South Africa. The company has had the year of a lifetime, with headline earnings expected to swing from a loss last year of R2.39 per share to a profit of between R2.01 and R2.45 per share. The share price jumped another 11% as a result, taking the year-to-date performance to around 445%. No, that isn't a typo.
Pepkor Holdings also released a useful update, with sales for the nine months to June 2021 up by 13.9%. The bulk of the growth happened between March and June as sales grew 27.9%, but the Covid base effect is obviously at its worst there. The Building Company grew sales 25.9%. Pepkor is trying to sell the business to Cashbuild but the Competition Commission has recommended that the sale be blocked.
Finally, make sure you listen to the latest episode of Magic Markets (you'll find the link in the articles below). We discussed a range of interesting topics including ESG "washing", Bitcoin sentiment and general market moves.
There's also an update from Chris Gilmour on the important political and economic stories around the world.
Good luck in the markets this week!
The Finance Ghost
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| | Local and Offshore Market News | |
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| | Distell's cup runneth over
The gap between corporates and small businesses continues to widen, as Distell posted a strong result under the circumstances. Read More |
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| | Famous Brands' through-the-cycle update
The food franchise group has released an operational update that includes comparatives to 2019. They tell quite the story. Read More |
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| | City Lodge checks out of East Africa
City Lodge will sell its interests in Kenya and Tanzania, raising R460m for the group and cutting substantial operating losses. Read More |
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| | The Week Ahead
Strong earnings from US tech stocks driving the S&P 500 higher. Read More |
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| | MAGIC MARKETS PODCAST: Sell-offs and Sell-outs
ESG, Bitcoin, bond yields vs. share valuations and thoughts around when to sell winners. The latest episode of Magic Markets touches on all these topics. Read More |
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