| Good morning Voornaam, There's a specific sports tournament underway that I tried to watch the highlights package of yesterday, only to be scuppered by the DStv App freezing on my TV three times in a row. I took this as a sign that I shouldn't watch any more of it whatsoever for fear of ruining the whole thing. If you know, you know.
Fresh out the oven:
Ghost Bites: Growthpoint is suffering a drop in earnings this year, but there are many nuances to the portfolio. Argent and Hudaco released earnings in the industrials sector. FirstRand took a knock from a UK provision. Life Healthcare did a deal for RM2. RMB Holdings needs Atterbury to keep performing. Renergen needs helium. Together with the important Little Bites, you can get all the details in Ghost Bites>>>
Investec No Ordinary Wednesday podcast: The market may be unpredictable, but your investment strategy doesn’t have to be. Investec Investment Management experts share their insights on what approaches are winning, common mistakes investors make, and why staying the course is important. Enjoy it here>>> Magic Markets: A real-world due diligence is great for any portfolio. On the latest show, we discussed my recent experience with electric vehicles, visiting Sephora stores (part of LVMH) and playing at Topgolf, along with much more. Listen to the show and read the transcript here>>> DealMakers: Today is Friday, which means we benefit from the excellent DealMakers summaries on local M&A, local corporate finance and deals in the rest of Africa. Ther's also a piece on the importance of company valuations and multi-jurisdictional mergers in Africa.
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| In case you missed it:
Dominique Olivier: Sometimes, businesses are here for a good time rather than a long time. For insights into trends that end and what that means for businesses (EskomSePush, anyone?) you can read this article>>> Twelve B Energy Fund II: The fund is closing on 30 June. The solar investment trend in South Africa remains an imperative, as Tivon Loubser explains in this article. If you want to invest in the fund, be sure to contact them this week. Get full details here>>> Unlock the Stock: Oceana Group recently presented on Unlock the Stock for the first time. To get to grips with this fishing group and the strong recent performance, watch the insightful presentation and Q&A here>>> Ghost Stories with Kingsley Williams of Satrix: There is only one free lunch in investing. Aside from the benefits of diversification, we discussed many other elements of investing. You can enjoy it here>>>
Ghost Stories with Michael Field of Fedgroup: There are different ways to think about portfolio construction and how important elements like yield and inflation protection can be brought in. Learn more here>>>
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| Learn all about Oceana Group |
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| Oceana Group recently reported record first-half performance. To understand it properly and to assess the group's prospects, you can watch the presentation and Q&A on Unlock the Stock. The recording is available here. |
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Local company news:
Growthpoint has a vast portfolio that exposes the fund to broader macroeconomic trends. Although there are pockets of absolute excellence, like the V&A Waterfront, there are also the broader challenges of negative reversions on leases and pressures in certain parts of the country. This is why earnings are still expected to be down this year.
Moving on to another giant, FirstRand, we find strong growth in the core business. Sadly, this was blunted by a provision in the UK business.
In the industrials space, Argent and Hudaco both released numbers. At the former, it's all about international growth. At the latter, certain businesses in the consumer durables side of things dragged down the numbers.
Over at Life Healthcare, there's a deal to sub-license RM2. Life will receive a solid up-front payment and various other payments over time.
At RMB Holdings, Atterbury is performing well and is clearly the bulk of the portfolio. There isn't a great story to tell beyond that part of the portfolio, sadly.
And finally, Renergen needs helium sooner rather than later. The LNG side of the business is a distraction more than anything else, incapable of preventing the current cash burn.
All these stories, plus the Little Bites, are available in Ghost Bites at this link>>>
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| Trends that end: businesses with short shelf lives |
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| What happens when a business finds itself offering a solution that no longer seems to have a problem? Can it adapt, or will it die?
With the sudden disappearance of loadshedding, Dominique Olivier dug into this concept. Read it here>>> |
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| The only free lunch in investing |
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| With volatility as the theme in markets in a year of elections, it’s important to keep your head as an equity investor. Take a long-term view and let the market do its job. Easier said than done, of course.
Kingsley Williams joined me to share practical tips and important insights into investing. The podcast and full transcript are available here. |
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International business news:
There's a bloodbath in a couple of big names in the US, like Nike which fell over 12% based on the consumer giant warning of a drop in sales of 10% in the current quarter. It blames sales in China and other challenges across the globe. This is far worse than analysts expected, leading to the major decline in the share price. When you pay a high multiple for a business, there is no margin for error.
Still, that's mild compared to Walgreens (a pharmacy chain) which plunged over 22% based on earnings that fell short of expectations. The earnings outlook for the full year has been significantly decreased, with the inflationary trends of the last couple of years finally catching up with consumers.
Valuations matter so much when you are investing, which is exactly why I'm proud of the work we do in Magic Markets Premium. Of course we don't always get it right, but we really do empower you to become a better stock picker. We covered Darden Restaurants this week. To get access to this research and the rest of the vast library, subscribe to the platform here. |
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| Macroeconomic Update The GNU stalemate has put the rand on the back foot, currently trading around 1.5% weaker at R18.50 against the dollar.
The rand isn't being helped by dollar strength ahead of the key PCE price index date release today.
Key indicators: USD/ZAR R18.50; US 10-year 4.30%; Gold $2,321; Platinum ZAR R18,388; Brent Crude $86.82
This macroeconomic update is based on TreasuryONE's morning update. |
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