| Friday 05 November 2021 Good morning Voornaam,
You've made it. The short election week is over, our country is still a democracy and the lights are (mostly) still on.
AVI continues to battle against a strong base of demands for snacks and all kinds of treats during lockdown. When people were stuck at home last year, they got very familiar with their pantry cupboards. AVI is proof that I'm not just speaking for myself here! Sales for the first quarter ended September 2021 are 1.6% lower than that strong base period. With strict cost controls, operating profit is up 2.1%.
Bowler Metcalf, a favourite of many small-cap enthusiasts, rallied over 6% on the news of a special dividend of 84 cents per share. You need a strong stomach to play in this space, as the share is up 11.4% this year and only 3% over the past 3 years. It sounds like a waste of time until you see the 52-week range and the opportunity if you bought at the bottom. With stocks like Bowler, it's all about timing the market.
Afrimat released interim financials for the six months ended August 2021. HEPS was up 60.5% thanks to favourable iron ore prices during the period. Operating margin increased from 22.7% to 24.1%. The group is in a net positive cash position after significantly reducing borrowings, which enables primarily self-funding of future projects. With the drop in recent iron ore prices though, the share price is down -20% over 90 days.
Truworths took a -3.5% knock after releasing a poor sales update. Group retail sales for the first quarter to 26 September decreased by -1.2% year-on-year. The bigger knock was felt in cash sales at -1.7% vs. account sales -0.8%.
Truworths Africa increased sales by 0.2% despite the civil unrest. With the riots excluded, SA sales were up 2.1%. Online retail contributed 3% of total sales. Notably, product inflation was -2.2% i.e. there was deflation, which is horrible for any retailer.
The UK business increased its sales in constant currency by 3.7%. A stronger rand in the current period ruined the reported result, with sales down -4.9% in reporting currency. Online sales were 45.5% of total retail sales after posting a decrease of -13.1% year-on-year. Trading space was deliberately decreased by -23.2% vs. the comparable period and is expected to be -12% lower for the full 2022 financial period.
MTN has continued its journey as an absolute gem on the JSE this year. The group is performing strongly in key regions and the substantial growth in data and FinTech revenue is highly encouraging for shareholders. My featu re article today is on MTN.
I haven't reminded you of this in a while, so today I'm taking the opportunity to do so. Every Tuesday morning, I send out a special mailer called Ghost Mail. I use that platform to focus on explaining investment concepts and practical examples of finance theory in action. It's the perfect accompaniment to InceConnect, helping to grow your knowledge and improving your understanding of what you read here. It's absolutely free and you can sign up here.
As is customary on a Friday, the team at DealMakers ends off our week with useful updates of all the corporate activity that took place.
With that, I wish you a lovely weekend!
The Finance Ghost
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Local and Offshore Market News |
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