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* Ghost Bites * Ghost Global * Podcasts * Partners * TreasuryONE * Satrix * Trive * DealMakers * Library * Sponsored * Sponsored * Chris Gilmour * Advertisers * Ad placement + specs * About the Ghost * Testimonials * Contact Us * Ghost Bites * Ghost Global * Podcasts * Partners * TreasuryONE * Satrix * Trive * DealMakers * Library * Sponsored * Sponsored * Chris Gilmour * Advertisers * Ad placement + specs * About the Ghost * Testimonials * Contact Us GHOST BITES (ENX | MTN | OCTODEC | RFG HOLDINGS | SAPPI | TREMATON) Exit Press Enter Recent Posts Construction Energy and Commodities Property Unlock the Stock * 2887 Views * 24 Feb 2022 UNLOCK THE STOCK: AFRIMAT AND SPEAR REIT Afrimat’s track record is spectacular. Spear REIT is a highly respected property fund. On Unlock the Stock, you can learn about both companies. Agriculture and Food Producers * 2621 Views * 1 Mar 2022 RCL IS FAR MORE THAN JUST A CHICKEN BUSINESS RCL is far more than just a chicken business these days, which isn’t a bad thing. Diversified Industrials * 2335 Views * 1 Mar 2022 BIDVEST: STRONG TRADING PROFIT GROWTH IN EVERY DIVISION Bidvest closed 3.8% higher after releasing results for the six months to December 2021. Financial Services * 2179 Views * 1 Mar 2022 LIBERTY TWO DEGREES: REVERSIONS CONTINUE TO BITE Liberty Two Degrees holds stakes in some of the most iconic properties in the country Technology and Telecoms * 2198 Views * 2 Mar 2022 ALVIVA: 20% REVENUE GROWTH EXCL. TARSUS After teasing the market with a trading statement, Alviva has now released all the details of the interim results for the six months ended December 2021. Financial Services * 2138 Views * 2 Mar 2022 PSG GROUP AND THE GREAT VALUE UNLOCK This is one of the biggest news stories on the JSE that we’ve seen in a while Financial Services * 3038 Views * 2 Mar 2022 JSE LIMITED: A CASH COW IN A SHRINKING FIELD You may not be aware of this, but the JSE Limited is listed on the JSE. You’re right in thinking that this sounds like the financial version of the movie Inception Technology and Telecoms * 2193 Views * 3 Mar 2022 CAPITAL APPRECIATION ON THE DEAL TRAIN The company has announced the acquisitions of three technology companies in South Africa and a 20% stake in a company in the Netherlands. Consumer and Retail * 2318 Views * 3 Mar 2022 WOOLWORTHS WON’T MISS 2021 as released results for the 26 weeks to 26 December 2021. The share price rallied 6% despite a fair share of negative commentary on Twitter. Consumer and Retail * 2256 Views * 3 Mar 2022 CASHBUILD’S NEGATIVE SALES MOMENTUM CONTINUES Cashbuild released its interim results for the six months ended 26 December 2021 Ghost Bites * 1096 Views * The Finance Ghost * 11 May 2023 * Ghost Bites -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- A MANDATORY OFFER FOR ENX GROUP IS ON THE TABLE (JSE: ENX) Don’t get excited: there’s no premium here If you followed the Takeover Regulation Panel’s investigation into various transactions involving enX, Extract Group, Zarclear Holdings and African Phoenix, then you’ll know that part of the settlement is that African Phoenix and its concert parties need to make a mandatory offer to all enX shareholders. enX currently trades at R6.40 and the offer price is R6.41 per share, so there’s no real excitement here. Where this could be useful is for holders of large blocks of shares who would otherwise not be able to sell at the prevailing price due to liquidity constraints. The concert parties hold 48.80% in the company and shareholders holding 19.6% have given an irrevocable undertaking not to accept the offer. There’s a difference between concert parties for an offer and parties acting as a voting bloc. It’s likely that the concert parties will collectively move through a 50% holding, which would normally be relevant to the Competition Commission. I assume that the parties don’t have a formal voting agreement that would trigger a merger filing. I am sure that African Phoenix is pretty tired of regulators as it is! enX also released a trading statement for the six months ended February 2023, reflecting an increase in HEPS from continuing operations of between 26% and 38%. Total HEPS is down between 51% and 55%. Interestingly, revenue from continuing operations is up 20% and profit before tax is expected to be between 20% and 24% higher, so margins have expanded slightly. -------------------------------------------------------------------------------- THERE ARE BAD SIGNS AT MTN (JSE: MTN) I’m glad I sold at the start of this year Telecoms companies don’t do well during load shedding. Battery backup power is incredibly expensive and consumer activity in general is subdued. Increased security costs don’t help either. To compound MTN’s problems, the macroeconomic picture in key African subsidiaries is back to being messy. Due to difficulties in upstreaming cash, MTN Group is opting for scrip dividend alternatives from MTN Nigeria and potentially MTN Ghana as well. This increases the stake in those companies (as not all minority shareholders in those countries choose the scrip option) but does nothing to bring cash to where it is needed most: the mothership to reduce debt. For now at least, there is also cash being upstreamed from subsidiaries. Whether or not it can continue remains to be seen. Speaking of debt, group leverage of 0.3x is well with the limit of covenants. The holding company debt is what really counts, as MTN cannot move cash around in the group at the moment without major costs and problems. This has increased to 0.9x from 0.8x at the end of December. This is within target for now and the balance sheet looks alright, but you only need to look back a few years to see what can go wrong. Moving to financial performance in Q1, I could only shake my head at MTN noting 90 days of load shedding during the quarter. In other words, there was load shedding basically every day vs. 14 days in Q1 2022. I assume that people making WhatsApp calls over fibre rather than voice calls on their network contributed to voice revenue falling by 16%, with overall service revenue up by 1.3%. An average prepaid subscriber uses 2.7GB per month and a contract subscriber uses 13.8GB per month. South African EBITDA margin contracted by 370 basis points, so EBITDA fell by 6.5%. They hope for a recovery in the second half of the year based on improved network resilience during load shedding. EBITDA pressure is being felt elsewhere as well, like Nigeria down 130 basis points, Southern and East Africa down 10 basis points and West and Central Africa down 170 basis points. EBITDA margin increased by 560 basis points in Middle East and North Africa but that’s by no means the most important region in the group. In strategic news, the company is considering an exit of three operations in West Africa over the medium-term. These include the bustling economies of Guinea-Bissau, Guinea-Conakry and Liberia. They contribute just 0.7% to EBITDA, so I don’t think anyone will miss them. It’s not obvious to me that things will improve anytime soon. -------------------------------------------------------------------------------- OCTODEC FLAGS A SIGNIFICANT JUMP IN ITS DIVIDEND (JSE: OCT) This REIT is unusual on our market, focusing on urban residential property If you can imagine buy-to-let at scale, you’re on the right track when it comes to Octodec. The company has released a trading statement for the six months to February 2023 that reflects an increase of between 8% and 12% in distributable income per share. With better operating conditions, the cash payout ratio has increased as the distribution is expected to be between 16% and 24% higher. This is an interim distribution of between 58 cents and 62 cents. For reference, the share price is trading at R9.82. -------------------------------------------------------------------------------- MONEY FOR JAM AT RFG HOLDINGS (JSE: RFG) There have been improvements across several food categories in the group There are very few good news stories on the local market. Closing over 14% higher on Thursday, RFG Holdings flew the flag on an otherwise dark day. Of course, it’s the export business that did particularly well, with the local business growing thanks to inflation outpacing the drop in sales volumes as consumers tightened their belts. Literally. The weakening of the rand contributed to a better international operating profit margin, so RFG is making a case for itself as a rand hedge that nobody talks about. International selling prices are also key, so it’s certainly not a pure-play view on the currency. Locally, there were success stories in the Today acquisition (pies), fruit juice, dry foods and meat categories. The HEPS increase of 35% to 40% is made even more impressive by the different reporting calendars, we are looking at a 26-week period vs. a 27-week period. In other words, this was achieved despite an extra trading week in the comparable period. -------------------------------------------------------------------------------- SAPPI RALLIED 6.4%, BUT NOT BECAUSE OF THESE RESULTS (JSE: SAP) On a day that was strong for rand hedges, Sappi reported a big drop in profits Cyclical business are wild things and you’ll struggle to find a more cyclical business than Sappi. The market fell away from the company in the latest quarter, with “downstream inventory destocking” – a fancy way of saying that customers significantly slowed down on orders. This led to production curtailment and associated pressure on margins. Just how badly can profit drop in these businesses, I hear you ask? Year-on-year sales revenue fell by 22% this quarter and EBITDA crashed by 50%. HEPS fell by 67%. See? Badly. The good news is that net debt was 32% lower at $1.225 billion, with $1 billion as the stated objective. I therefore find it rather strange that the group recently executed share repurchases of $23 million, representing 1.62% of shares in issue. I appreciate that the share price has lost a third of its value in the past year and that buybacks make sense when the price has come off, but reading this announcement makes me feel like reducing debt should be the only focus. -------------------------------------------------------------------------------- TREMATON REPORTS A DOUBLE-DIGIT DROP IN INAV (JSE: TMT) If you read carefully, you’ll see the real reason for the drop Trematon holds a fascinating portfolio of investments, ranging from Club Mykonos in Langebaan to Generation schools. With such a varied set of interests, the right measure to evaluate performance is intrinsic net asset value (INAV) per share, commonly used by investment holding companies. As at February 2023, this measure has decreased by between 10% and 11% year-on-year. The INAV is between 418 cents and 422 cents. Importantly, 40 cents of the drop (i.e. most of it) is because of a capital distribution in December 2022. In other words, the value of this Western Cape focused investment portfolio is largely flat year-on-year. The share price is trading at R2.43 per share, a discount to INAV of around 42%. -------------------------------------------------------------------------------- LITTLE BITES: * Director dealings: * Here’s arguably the most important one of the week: Sabvest (JSE: SBP) has bought R770k worth of shares in Transaction Capital (JSE: TCP) at an average price of around R7.70. In case you don’t know, Sabvest is the investment holding company of respected investor Chris Seabrooke who sits on the board. I would’ve liked to see a much larger purchase, though! * There’s a nice payday for a director of AfroCentric (JSE: ACT), whose associates have accepted the partial offer from Sanlam to the tune of nearly R142 million. * A director of DRDGOLD (JSE: DRD) has sold shares worth nearly R3.4 million. * Des de Beer seems to have found the loud pedal with his share purchases, buying R21.5 million worth of shares in (you guessed it) Lighthouse Properties (JSE: LTE). * A director of KAL Group (JSE: KAL) has bought shares worth R99k. * Newpark REIT (JSE: NRL) has a bid-offer spread the size of the moon, with bids at R4.50 and offers at R6.25. When you see the dividend, you’ll understand the offer price. For the year ended February 2023, the total dividend was 67.19 cents per share of which the final dividend was 42.19 cents per share. At the current market price of R4.50, this tiny property fund with a R450 million market cap is on a trailing yield of 14.9%! * Montauk Renewables (JSE: MKR) is one of those oddball listings on the JSE where the company doesn’t even bother writing a SENS announcement to accompany quarterly results. They simply provide the link to the filing in the US. I therefore won’t give this much airtime, other than to point out a loss before tax of $15.8 million vs. a loss of $1.4 million in the comparable quarter. * Kibo Energy (JSE: KBO) is holding an extraordinary general meeting to get authority to increase the authorised share capital of the company as part of a transaction to issue warrants and “reprofile” the institutional investor bridge loan facility. If you’re a shareholder here, I suggest you read carefully and make sure you understand what is being proposed by management.. * Due to a conflict of interest as the auditor of both Grand Parade Investments (JSE: GPL) and Sun International (JSE: SUI), Deloitte and Grand Parade have mutually agreed to part ways. Moore Cape Town is the happy winner here, recommended as the new auditor of Grand Parade. Shareholders will be asked to approve this at the company AGM. INVEST IN SHARES SEARCH BY KEY WORDS * Afrocentric * DRDGOLD * enX Group * Grand Parade Investments * KAL Group * Kibo Energy * Lighthouse Properties * Montauk Renewables * MTN * Newpark REIT * Octodec * RFG Holdings * Sabvest * Sappi * Transaction Capital * Trematon Previous Posts South African M&A Analysis Q1 2023 LEAVE YOUR COMMENT Save my name, email, and website in this browser for the next time I comment. MOST RECENT ARTICLES * Ghost Bites (enX | MTN | Octodec | RFG Holdings | Sappi | Trematon) * South African M&A Analysis Q1 2023 * Who’s doing what this week in the South African M&A space? * Weekly corporate finance activity by SA exchange-listed companies * Who’s doing what in the African M&A space? A CA(SA) by profession and anonymous by choice, The Finance Ghost focuses on making market news and investment concepts accessible, understandable and (most importantly) – fun! GHOST MAIL IS FREE TO READ Join 50,000 other investors who rely on Ghost Mail for JSE and global market information. Twitter feed is not available at the moment. Disclaimer | POPIA | Privacy Policy | Cookie Policy | Site Map We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent. 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