| Thursday 14 October 2021 Good morning Voornaam,
There was a troubling release of data by Stats SA yesterday. Retail sales in August shrank 1.3% year-on-year, after a revised drop in July of 1.2%. With so much noise in the base from consumers rushing to the shops after the initial lockdown, it's probably more useful to compare month-on-month data. July fell 11.1% vs. June because of riots, with August only posting a 4.9% increase vs. July.
This means that the retail sector has certainly not recovered from the riots, which isn't surprising when one considers the extent of the damage. A further driver of the decrease could simply be that consumers have less cash to spend that before, with delays in rolling out the reinstated social relief of distress grants and TERS payments.
With load shedding back in our lives and unemployment rates through the roof, investors shouldn' t be blind to the pressures on South African consumers and thus retailers of non-essential goods.
Ascendis jumped more than 15% yesterday in response to a SENS announcement that the company has commenced the process to dispose of its Ascendis Pharma business segment. The share price has been on a wild ride this year, up only 1.3% year-to-date but with a trough to peak climb of around 85%!
Standard Bank's proposed buyout and delisting of Liberty is one step closer to completion, after Liberty shareholders voted almost unanimously in favour of the scheme resolutions required for the transaction. There are still other conditions to be met in such a high-profile deal in the financial services sector, but at least shareholders have sent a clear message of approval.
Life Healthcare released a voluntary trading update for the six months to September 2021, with reference made to oth er periods as well. As we learnt in the past 18 months, hospitals don't make much money during a pandemic. They are defensive stocks in situations other than a pandemic, which is spectacularly ironic.
Life expects group revenue for the year to September 2021 to be 11% - 13% higher, with an improvement in normalised EBITDA margin to 19% vs. 17.1% in the prior financial year. Net debt to normalised EBITDA has dropped to 1.9x from 2.96x a year ago, so the cash flow benefit of improved operations is derisking the balance sheet. The share price is up around 35% year to date but has gone sideways for the past three months.
My feature articles today look at Equites' positioning as an empowered logistics fund for sale-and-leaseback transactions a nd Famous Brands' return to profitability.
Cuma Dube is passionate about ESG and writes on the recognition by South African CEOs that stakeholders are demanding enhanced ESG reporting.
There's also an update on the latest forex rates by Currency Assist, a business that helps South Africans move money abroad. You can reach out to them here for international money transfers.
Have a wonderful Thursday!
The Finance Ghost
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