No win for Balwin

Good morning Voornaam,

Fresh out the oven:

Ghost Bites: Balwin is really struggling in this environment, with sales way down. Numbers were released by Adcorp, Altron (you'll need to concentrate for this one), Astral Foods, Deneb, Famous Brands, Frontier Transport and Netcare. Impala Platinum announced a B-BBEE deal. Get it all in Ghost Bites>>>

With elections around the corner, managing your behavioural bias is so important. In other words: don't panic! Kingsley Williams of Satrix elaborates in this article>>>

When it comes to startups, those in Silicon Valley tend to trade at higher multiples than global peers. Why is this? In an article I wrote for bizval, I explore this topic. Also remember to register for the bizval webinar this Thursday 23rd May, where I join the team in presenting on how platform businesses move into profitability. Register to attend here.

In case you missed it:

​Ghost Wrap: You need barely four minutes to get up to speed on KAL Group, AB InBev, Redefine, RFG Holdings and Calgro M3, brought to you by Mazars. Listen to it here>>>

​This is a massive election year, with over 60 nations going to the polls. On the latest Investec No Ordinary Wednesday podcast, Investec Wealth & Investment Chief Investment Strategist Chris Holdsworth shared his insights on the election outcomes that matter most to markets. Listen to the show here>>>​

The new Magic Markets episode covers the exceptional share price performance at Chipotle Mexican Grill and Wingstop, brought to you by Future Forex and available here with a full transcript as well.

Hermès: Birkin Mad This brand new piece by Dominique Olivier has everything from five-star meltdowns in Paris to supermodels and straw baskets. This is the Birkin bag, the iconic piece by ultra-luxury company Hermès that shows how these businesses really work. Read it here>>>

LISTEN: Chasing Returns from the Sun

Local company news:

Balwin is a company that I've been bearish on since I became a purple ghost. The business model isn't great for the economic conditions found in South Africa, leading to pressure on revenue and thus gross margin as well. The latest results look particularly painful.
Adcorp is also finding it tricky in South Africa, particularly in the professional services division. Diversification is helping them through it. Having a bunch of different businesses isn't always a great idea though, as Altron will demonstrate to you once you've worked through their continuing and total operations.
Famous Brands is another group with diversified operations, ranging from appealing to worrying. The latest results reflect a 5% decrease in HEPS.
Astral Foods focuses on getting only a few things right, with vastly improved conditions in the latest period. It's not every day that you'll see a 441% increase in HEPS.
Netcare has managed to grow earnings, but the dividend has been maintained at the same level as the comparative period. I suspect that a cautious payout ratio is being driven by the balance sheet.
Within the HCI stable, Deneb and Frontier Transport have released encouraging numbers.
Finally, Impala Platinum has announced a B-BBEE deal to meet the merger approval condition related to the acquisition of Royal Bafokeng Platinum.
Get all the details in Ghost Bites at this link>>>

LISTEN: Investing in Private Credit
(Reginald Labuschagne, Sanlam Private Wealth |
Harris Gorre, Grovepoint Investment Management)

READ AND LISTEN: The Global Accelerator

International business news:

Peloton is having to take various painful steps to improve the balance sheet, including the issuance of convertible senior notes, a five-year term loan and a revolving credit facility. Much of this will be used to refinance existing debt. Of course, the last thing you want to do is raise debt when the business is broken, as lenders see you coming a mile away and price accordingly.
This is part of a broader plan to try and save this sinking ship, with 15% of the workforce being laid off in response to a poor revenue trend relative to costs.
This week, we are covering payments giant Mastercard in Magic Markets Premium. To get access to this research and the rest of the vast library, subscribe to the platform here.

Macroeconomic Update

The dollar managed to recoup some recent losses, as traders await tomorrow's FOMC minutes. The markets will also be watching ECB President Lagarde and her speech later this morning. The recent R18.10 - R18.30 range remains intact for the rand against the dollar.
Gold reached a fresh record high yesterday of $2,449.89 on the back of geopolitical uncertainty in the Middle East after the death of the Iranian President. It then pulled back as the dollar firmed. Copper also hit a record high yesterday of $11,101.50 per ton based on expectations of higher demand and constrained supply.
Key indicators: USD/ZAR R18.20; US 10-year 4.44%; Gold $2,414; Platinum ZAR R18,792; Brent Crude $83.22
This macroeconomic update is based on TreasuryONE's morning update.