| | | | | | | | | | | | | | | Tuesday 6 July 2021 | | | | Good morning Voornaam,
They say the only certainties in life are death and taxes. I disagree.
For example, another certainty is Stor-Age releasing regular directors' dealings announcements. Personally, I really like the company and I hold it in my portfolio, but there have been no fewer than ten such announcements just this year. Almost all of them relate to the share purchase and option scheme in place, with the proceeds of sale used to settle loan obligations in the scheme.
Stor-Age's share price is flat this year although there's been plenty of volatility along the way. I thankfully got in at R11.28, so a current price of R13.70 works for me. Nevertheless, either the directors believe the company is overvalued or this scheme wasn't designed with market optics in mind, because multiple SENS announcements regarding sales of shares by directors doesn't look good.
The Steinhoff rollercoaster ride continued yesterday. As expected after the announcement late on Friday regarding legal findings against Steinhoff related to an important resolution in the financial settlement process, the share price plummeted yesterday by over 16%.
It's still anyone's guess what could happen with Steinhoff. A creditor settlement is crucial to saving the group. Much of the fighting is among the creditors, with certain individuals in line to receive far more than others at the moment. While the latest court decision has probably sent Steinhoff back to the drawing board, the greatest impact may end up being on the other creditors rather than equity holders.
However, the risks are huge. I hold Steinhoff in my speculative portfolio. That's a nice way of saying I gambled some money on it recently.
The lead story this morning is the Chinese tech clampdown, with Tencent as the latest victim. After a weekend of sour news for Chinese sentiment (read about the Didi app nightmare here), I knew the Chinese tech stocks would have a blue Monday. What I didn't expect was a double-whammy, with a proposed merger of two of Tencent's gaming investments blocked by the Chinese authorities.
Other stories include a trading update from Liberty and a sad bit of news from Chrometco, which has placed one of its operations in business rescue and the others in care and maintenance. With lower chrome prices and higher logistics costs, the company simply couldn't afford another lockdown. There's also an update on CSG Holdings, a JSE small cap that has shown remarkable resilience in the pandemic.
In case you missed it yesterday, the latest Magic Markets episode is a fantastic discussion on the practical elements of ESG. I was joined by my co-host Mohammed Nalla and special guest Tracey Davies of Just Share, who is passionate about ESG matters and the poor behaviour of some South African corporates. If you want to get to grips with how ESG really works, Episode 32 of Magic Markets is a must-listen.
For a further read on ESG, check out the opinion piece by Selabe Kute in which he adds his voice to the ever-relevant topic of unemployment in South Africa.
As announced yesterday, the author of the best letter to the editor each week will receive a R250 EasyEquities voucher. If it's really good, we might even publish it in InceConnect! To enter, send your letter to [email protected] with the subject line: My Ince Insights.
Good luck in the markets today!
The Finance Ghost
| | | | | | | | | | | | | | | | | | | | | | | | | Local and Offshore Market News | | | | | | | The Chinese tech mousetrap
Tencent. Alibaba. The cheese is the growth potential in a huge market. The trap is the Chinese regulatory ecosystem. Read More |
| | | | | | | Liberty is still finding its way
Although earnings are still heading in the right direction, a 20% improvement on a substantial loss is still a loss. Read More |
| | | | | | | Chrometco is running out of road
Chrometco's businesses are either headed for business rescue or care and maintenance, as the group becomes a casualty of the latest lockdown. Read More |
| | | | | | | CSG has shown plenty of grit
Despite the pandemic, CSG Holdings posted another year of operating profit. This small cap has shown surprising resilience. Read More |
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