| Monday 14 March 2022 Good morning Voornaam,
I usually ignore announcements related to institutional investors moving through a 5% shareholding milestone in listed companies. Funds come and go, with movements influenced by their broader portfolio strategies. I couldn't resist this one though: the Massachusetts Institute of Technology (yes, that MIT) has acquired an 8.2% interest in Calgro M3. I'm not sure what is going on here, but it's an irresistible story to keep an eye on. Mondi has given an important update on its operations in Russia. Although the group operates in more than 30 countries, Russia is an outsized market with 12% of revenue in 2021 and 20% of group EBITDA. To make it worse, Mondi also has a paper bag plant in the west of Ukraine (at least better than in the east). The Russian operation is primarily an integrated pulp, packaging paper and uncoated fine paper mill which also provides energy for the surrounding district, as is legally required by the Russian authorities. It is becoming difficult to operate the mine due to supply chain constraints and Mondi is assessing its options. Mondi has also pledged EUR1 million to food programmes for those impacted by the conflict. In case you're feeling flush today and need a little perspective, Neal Froneman (CEO of Sibanye-Stillwater) has retained performance shares with a value of over R100 million that were granted in March 2019 under a share incentive plan. With labour action underway at Sibanye, I'm sure the unions will make full use of that announcement. To give you even more appreciation of this number, he had to sell R22 million worth of shares just to help cover the tax liability. There are many very successful people working in corporates for their entire lives and ending off in divisional executive role s who can't build a pension of R22 million over their lifetimes. I have it on good authority that many doctors don't even get to that number. Food for thought, isn't it? Net1 is in the process of acquiring a 100% stake in Connect Group. The company has announced that competition authorities in South Africa, Botswana and Namibia have approved the deal. Naturally, the local authorities have included conditions relating to B-BBEE. Net1 is required to establish an employee share ownership scheme that could see employees of the merged entity receiving up to a 5% stake in Net1 within 24 months. Aligning your employees with your business is usually a good idea, although this is another example of the Competition Commission making full use of its mandate to consider matters well beyond competition. The inevitable result is that deals in South Africa are being priced to taken into account this risk. Lighthouse Properties has released results for the year ended December 2021 and declared a final dividend with a scrip option (i.e. shares instead of cash) of 1.61 EUR cents per share and a cash option of 1.449 EUR cents per share. Following the acquisition of a Spanish shopping centre funded with a French loan secured by a portfolio of French malls, the loan-to-value ratio has increased from 13.6% at 31 December 2021 (the numbers just reported) to around 25%. The Spanish mall has been acquired on a forward yield of 6.4%. SA Corporate Real Estate released a trading statement for the year ended 31 December 2021. This announcement provides more evidence that the property sector is recovering strongly. Distributable income is 6% higher than the prior period. More importantly, the group can return to a normalised payout ratio, which means an increase of between 17% and 28% in the distribution to be paid to shareholders (between 21 and 23 cents per share). At the midpoint, that's a yield of 9% on Friday's closing price. Fortress REIT has released its interim results presentation for the six months to December 2021, a busy period in which the fund sold 11 properties. A further 11 are held for sale. NEPI Rockcastle is a third of the asset base at R15.3 billion asset exposure, with SA logistics (R10 billion) and SA retail (R9.9 billion) as the next largest exposures. The latest loan-to-value ratio is 38.8%. Advanced Health is investing R50.5 million in Presmed Australia, taking Advanced Health's stake in the company to 60.57%. This is being funded with a shareholder loan to Advanced Health from Eenhede Konsultante (controlled by the chairman of the board and majority shareholder). In case you're wondering, BDO has previously opined that the loan agreement is more favourable to Advanced Health shareholders than market related terms and conditions. Certain directors of Advanced Health are also direct shareholders in Presmed Australia and opted to increase their direct stakes as part of Presmed's capital raise. Wesizwe Platinum has released financials for the year ended December 2021. The company is developing the Bakubung Platinum Mine, so the HEPS number doesn't reflect the long-term potential of the group. For what it's worth, HEPS fell by 147% to a loss of 1.48 cents per share. Although mining services group DRA Global has around 4,700 employees and 19 offices worldwide, there's sadly no liquidity in the stock on the JSE. It can go for weeks without trading. Perhaps this situation will change in future, which is why I'm noting that the CEO is stepping down after 6 years in the role (including the period as interim CEO). A new interim CEO has been appointed internally. Today's feature articles are on a major announcement from EOH regarding the disposal of certain IP companies in the group, as well as Standard Bank's results for the year ended December 2021. In the latest episode of Magic Markets, Petri Redelinghuys from Herenya Capital Advisors joined us to discuss the importance of having strong opinions, loosely held. This is a great term and one to remember in your trading and investment strategies. Listen to the show here. Fi nally, Chris Gilmour brings us an update on the macroeconomic and political news that is moving the markets.
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