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Equity Snapshot - 21 May 2013

Reunert H1 HEPS down 15%: A dividend of 95 cents per ordinary share declared. Normalised headline earnings per share declined by 14% from 298 cents to 257 cents. Revenue reduced by 8% to R5,3 billion from R5,7 billion. This decrease was predominantly in the CBI-electric and Nashua segments.

Operating profit was 21% lower at R583 million. This decline was experienced across all segments and is attributable primarily to the prevailing

difficult business environment. Basic earnings reduced by 14% to R421 million. Headline earnings per share decreased by 15% to 258 cents compared to 304 cents.

Alexander Forbes considers offers: For insurance arm Guardrisk. JOHANNESBURG - South African financial services firm Alexander Forbes said on Monday it is considering possible deals to sell off stakes in its short-term and life insurance unit, Guardrisk. "Alexander Forbes Equity Holdings Proprietary (EquityCo) has, over a number of months, received expressions of interest in Guardrisk Holdings, a subsidiary of EquityCo, from several parties. The EquityCo Board has now mandated the Group executive to explore and consider these approaches formally," it stated on SENS.

Sibanye leads gold stock sell-off: SA industry enduring something of a perfect storm - Wibberley. Sibanye Gold (JSE:SGL) Ltd. led losses among South African gold producers as work stoppages at the country’s platinum mines stoked investor concern that renewed labor unrest will curb output. The stock fell to a record low, the worst performer on the 166-member FTSE/JSE (JSE:JSE) Africa All-Share Index, which today rose 1% to a record. Harmony Gold Mining Co., Africa’s third- largest producer, extended its decline as the biggest loser on the gauge this year. AngloGold Ashanti (JSE:ANG) Ltd., the world’s third- biggest gold miner, slid to its lowest since April 18. Mineworkers on May 14 began a strike that shut Lonmin plc's (JSE:LON) Marikana platinum mine, where about 34 workers were killed in an Aug. 16 clash with police, igniting concern the unrest will spread. Strain is also being placed on South Africa’s power system as Eskom, which generates about 95% of the nation’s electricity, deferred upkeep on some aging plants to the current winter months.

Hospital inflation to remain below CPI – Netcare: Prospects for private healthcare industry remain positive - analyst. JOHANNESBURG – The healthcare group Netcare (JSE:NTC) expects hospital inflation to remain below consumer price inflation (CPI), despite nursing an inflation of over 7%. Speaking to Moneyweb on the sidelines of the group’s interim results presentation in Sandton, Dr Richard Friedland, group chief executive officer of Netcare, said the group has been able to contain costs – in relation to consumer price inflation but also in terms of other services and products in the market. “So I don’t expect any surprises in the second half (of the financial year),” he said.

Tradehold expects jump in earnings: Full results expected on the 30 May 2013. Shareholders are advised that headline earnings per share for the year ended 28 February 2013 are expected to be 6,4 pence per share, compared to the loss of 2,1 pence per share in respect of the comparative period. Earnings per share for the year ended 28 February 2013 are expected to be 4,7 pence per share, compared to the loss of 2,1 pence per share in respect of the comparative period.

Monster tornado kills at least 51 in Oklahoma town: Two dozen school children missing. A 2-mile-wide (3-km-wide) tornado tore through the Oklahoma City suburb of Moore on Monday, killing at least 51 people while destroying entire tracts of homes, piling cars atop one another, and trapping two dozen school children beneath rubble. Twenty of the 51 confirmed deaths were children, the Oklahoma medical examiner said, and at least 45 of the 230 people injured were children, according to area hospitals. It was the deadliest U.S. tornado since one killed 161 people in Joplin, Missouri, two years ago. President Barack Obama declared a major disaster area in Oklahoma, ordering federal aid to supplement state and local efforts.

Power system still very tight: Eskom: Public urged to save 10% of their usual electricity usage. South Africa's power system remains under pressure as Eskom continues with its planned maintenance programme, the power utility said on Monday. Eskom urged the public to save 10 percent of their usual electricity usage, especially during peak times between 5pm and 9pm, in its bi-weekly system status bulletin. "This will make it significantly easier to manage the power system during this challenging time, while also enabling us to do planned maintenance to ensure the reliability of our plant."

Rand extends slide: As the threat of further strikes undermined investor confidence. South Africa's rand continued its slide against the dollar on Monday as the threat of further strikes in the mining sector undermined investor confidence in Africa's biggest economy. The rand was at 9.4786 to the dollar at 1540 GMT, down 0.8 percent from its close in New York on Friday, after reaching a new four-year low of 9.4875 earlier in the session. South Africa's National Union of Mineworkers said on Sunday that it would seek pay rises of up to 60 percent from gold and coal producers, raising fears of a difficult round of wage talks in the mining sector.

Source: 28E Capital (Pty) Ltd.

Equity Snapshot - 20 May 2013

Vodacom FY HEPS up 23%: Final dividend per share of 430 cents declared. Salient features: Group revenue up 4.5%. Excluding the sale of Gateway Carrier Services and foreign currency impact, revenue was up 5.3%* and service revenue was up 2.9%*. Group data revenue up 22.2%; active data customers increased 22.5% to 18.5 million as we continued to drive smartphone penetration. International operations maintained strong momentum; service revenue was up 22.3%* supported by customer growth and increased adoption of data and financial services.

Pioneer Food H1 HEPS up 38%: Dividend of 46 cents per share declared.

• Revenue up 11% to R10 billion
• Interim gross dividend per listed ordinary share 46 cents (2012: 44 cents) up 5%
• Operating profit (before items of a capital nature) up 11% to R517 million
• Adjusted operating profit (before items of a capital nature)* down 7% to R582 million
• Earnings per share up 39% to 181 cents
• Headline earnings per share up 38% to 182 cents
• Adjusted headline earnings* down 0.1% to R393 million
• Adjusted headline earnings per share* down 0.6% to 218 cents
• Net asset value per share up 8% to 3 538 cents

African Bank H1 HEPS down 26%: Dividend per share of 25 cents declared

Features:

• Headline earnings decline by 26% to R1 015 million (H1 2012: R1 370 million)
• Headline earnings per share of 125,7 cents (H1 2012: 170,4 cents)
• Return on equity of 13,9% (H1 2012: 20,3%)
• Economic loss of R47 million (H1 2012: Economic profit of R390 million)
• Ordinary dividends per share of 25 cents (H1 2012: 85 cents)

Barloworld H1 HEPS up 31%: Interim dividend of 96 cents per share up 20%

• Revenue up 11% to R31.3 billion
• Operating profit up 14% to R1 463 million
• Profit before exceptional items up 20% to R995 million
• HEPS up 31% to 321 cents (H112: 245 cents) 
• Interim dividend of 96 cents per share up 20%

NUM seeks hikes of up to 60% for entry-level miners: Raising the prospect of fresh strikes as firms battle higher costs and falling prices. South Africa's National Union of Mineworkers said it would seek pay rises of up to 60 percent from gold and coal producers, raising the prospect of fresh strikes as firms battle higher costs and falling prices in an already heated labour climate. Africa's biggest economy is hoping to avoid the 2012 wildcat strike action at platinum and gold mines that cost billions in lost revenue and production and killed over 50 people. Mineworkers are mobilizing to assert themselves, with the NUM fighting a challenge to its once near monopoly in the shafts from the Association of Mineworkers and Construction Union (AMCU), which has poached tens of thousands of platinum miners from it in a violent struggle for members.

South African mines cannot afford pay rises – Impala: Mining industry can ill afford to offer wage rises so it may well face fresh strikes. South Africa's mining industry can ill afford to offer wage rises during talks that are about to start with a new and unpredictable union, so it may well face fresh strikes, Impala Platinum (JSE:IMP) said on Friday. South African mining companies are due to embark on one of their toughest periods of wage talks in the next one or two weeks, with increasingly radicalised unions. The world's biggest platinum producing country is hoping to avoid the 2012 wildcat strike action that cost billions in lost revenue and production. Mining companies are hurting from a nearly 20 percent drop in platinum prices in the last two years, as the supply disruptions failed to offset weakness in demand for the metal used chiefly in motor vehicle catalysts.

Finbond FY HEPS up 338.5%: A solid performance by the newly-licenced bank. Finbond reports revenue from continuing operations  increased 8%  to  R212.7 million (Feb 2012: R 197 million), for the year ended February 28 2013.05.17. The Group is primarily a financial services provider with significant business interests in the microfinance environment. It reports micro credit segment revenue increased 30.2% to R 207 million from R159million in the previous comparable period.

Other key highlights:

• Headline earnings per share increased 338.5% to 3.1c (Feb 2012: loss 1.3c)
• Share price increased 1885.7% to R 1.39 (Feb 2012: R 0.07)
• Profit for the period attributable to owners of the company increased 53.3% to R 20.7 million. (Feb 2012: R 13.5 million)
• Value of loans advanced increased 7.9% to R 407.8 million (Feb 2012: R 378 million)
• Cash received from customers increased 5% to R 563.2 million (Feb 2012: R 536.2 million)
• Total Assets Increased 16.6% to R 556.3m (Feb 2012: R 477.1 million)
• Net Tangible Asset Value increased 31.3% to R 244.5 million (Feb 2012: 186.3 million)
• Received formal consent from the Registrar of Banks to establish and register a mutual bank, namely Finbond Mutual Bank,
• Became a member of the Banking Association of South Africa (BASA)
• Raised R 164million in fixed term retail deposits in the first five months of operation as a Mutual Bank.

The Registrar of Banks issued Finbond Mutual Bank with a banking license in July 2012, reportedly the first banking licence issued to a local company by the South African Reserve Bank in more than ten years. Finbond is one of three major micro lenders that have evolved into banks, the other two being Capitec and African bank.

AMCU threatens to bring SA to "standstill": We said we are going to bring the economy to a standstill - Mathunjwa. RUSTENBURG - The leader of South Africa's biggest platinum mining union threatened on Friday to bring Africa's No. 1 economy "to a standstill" and demanded a meeting with President Jacob Zuma, ramping up the rhetoric in an 18-month labour crisis. The rand, which tumbled to a four-year low against the dollar on Thursday on fears of a strike at Anglo American Platinum (Amplats), extended its slide on concerns about further disruptions to an already struggling economy. The currency fell as low as 9.4334, its lowest since April 2009 when emerging markets were still reeling from the effects of the global financial crisis. Joseph Mathunjwa, head of the Association of Mineworkers and Construction Union (AMCU), said Zuma's ruling African National Congress (ANC) was ignoring violence against its members in the platinum belt near the northwest city of Rustenburg.

Source: 28E Capital (Pty) Ltd

Equity Snapshot - 17 May 2013

Another rate cut? Really?: Market optimistic, but economists are sceptical. JOHANNESBURG – After a boring couple of months on the interest rate front, market speculation has recently been rife that another cut might be on the cards. The Monetary Policy Committee (MPC) is scheduled to announce its interest rate decision next week and might feel some pressure to follow in the footsteps of other central banks who have decided to loosen monetary policy. While some have also flagged the recent contraction in manufacturing output as sufficient reason for a cut, others have stressed that the negative growth was largely the result of the holidays in March this year. However, economists are sceptical about whether there is a real possibility of another rate cut and if a breather in this regard will have the desired effect.

China and the middle-income trap: How likely is a major slowdown in China & what will it mean? Growth in China is slowing. Its industrial output is falling, GDP growth has been coming in below expectations, and things are generally cooling off in the once super-hot economy. Part of this is cyclical – economies go through phases just like anything else – and of course, China has been feeling the chill emanating from the recession-riddled Eurozone. But observers fear that part of it may be secular, that China may be entering a new phase marked by slowdown and stagnation; in short, that it may be falling into the middle-income trap (MIT). The MIT occurs when a country’s growth slows and plateaus as the country reaches middle-income status. The world is littered with nations that enjoyed a period of rapid growth and saw per capita incomes rise from subsistence levels to middling levels, only to see growth sputter and incomes stagnate. Generally, countries get stuck on the technological ladder – wages are too high to qualify them as a low-cost manufacturing destination, but skills and innovation are not high enough to make the leap to a high-tech economy.

Amplats says miners report for morning shift: Despite earlier calls for a strike by some union leaders. Miners at South Africa's Anglo American Platinum(JSE:AMS) reported for work on Friday, a company spokeswoman said, despite earlier calls for a strike by some union leaders. Amplats spokeswoman Mpumi Sithole said all workers had reported for the morning shift and there had been no trouble.

Tongaat expects yearly earnings to rise: By more than 14%, JOHANNESBURG - South Africa's Tongaat Hulett said on Thursday it expected headlines earnings per share for the year to rise more than 14%, lifted in part by increased sugar production. The agri-processing company said in a trading statement sugar production rose by 9% to 1.25 million tons with major increases in Zimbabwe - the latest sign of an agricultural recovery in the country. 

Manufacturing not yet out of the doldrums: Local consumption key to growth – Manufacturing Circle. JOHANNESBURG - The basis for a sustainable manufacturing industry depends on the local market and South African producers source 80% of their input sources domestically. In addition, manufacturers consider government’s local procurement programme as being important for boosting the sector, but they say it seems little is being done by the state to meet manufacturers halfway.

Richemont chairman Rupert to take sabbatical: I just want to be the master of my own time for a while - Rupert. Cie. Financiere Richemont SA Chairman and controlling shareholder Johann Rupert will take a year off, leaving management of the world’s second-biggest luxury-goods company to a team of executives including Cartier’s former CEO.

Glencore Xstrata chairman ousted in surprise coup: John Bond was voted out at the group's first annual shareholders' meeting. Glencore Xstrata Chairman John Bond surprised investors on Thursday by announcing he had been voted out of the top job at the miner and trader at the group's first annual shareholders' meeting. Bond gave no explanation, but as the meeting began in Zug, Switzerland, he handed responsibility for chairing the gathering to former BP boss Tony Hayward, the company's senior independent director.

Bill Gates is richest man in the world once again: First time the former Microsoft boss has held the title since 2007. Microsoft co-founder Bill Gates has regained the title of world's richest person with a fortune valued at 72.7 billion dollars on Bloomberg's billionaire index, Bloomberg news service reported Thursday. It is the first time the former Microsoft chief executive has held the title since 2007. He took the title away from Mexican telecommunications billionaire Carlos Slim.

Source: 28E Capital (Pty) Ltd

SA Retail Sales Update

• Retail sales growth slowed in March to 2.8% y/y, from 3.9% y/y (revised from 3.8% y/y), but grew at a slightly faster pace than the 2.4% y/y expected by market consensus.
• On a seasonally adjusted basis, month on month retail sales fell 0.9%. Compared to the first quarter of last  year, retail sales increased 3.0% in Q1.13.
• Virtually all of the main categories of retailers registered an increase in sales growth in March with the largest contribution of 1.4%, to headline retail sales of 2.8% y/y, stemming from general dealers. The only category in which sales volumes fell was in household furniture, appliance and equipment and this deducted 0.3% from headline sales.
• Developments in the retail space in Q1.13 suggest that household finances have been under some strain on the back of rising inflation during Q1.13 coupled with deleveraging by consumers. While current growth in unsecured credit, at 27% y/y, is fairly strong, the rate has been slowing since the start of the year. Moreover, there is a potential for a further gradual slowing in unsecured credit growth as regulators and lenders have adopted a more cautious stance. This is likely already contributing to dampening retail sales growth somewhat.
• In terms of the implications for monetary policy, it is likely that the SARB will keep interest rates unchanged at next week’s MPC meeting. It can be expected that the SARB will continue to highlight the risks to growth prospects but until there is a meaningful deterioration in both domestic and offshore economic conditions it is likely that the SARB will hold off on further interest rate cuts at this stage.
• There are a number of considerations which support a no change interest rate verdict. Since the beginning of the year, the rand has depreciated and should this trajectory be sustained, the impact will feed through to inflation with a lag of 12 – 18 months. With interest rates at historic lows a rate cut of 25bpt would only be beneficial at the margin. With a number of developed and emerging market economies resuming monetary easing, a similar move by the SARB could undermine the carry trade and impact bond flows. This would be undesirable in light of the deficits on the trade and current accounts, which are being primarily financed by portfolio flows that can easily be reversed. 

Source: Investec

Equity Snapshot - 16 May 2013

Wayne Hook - CEO, Spar: Tops liquor stores star performer for Spar. “I think everyone is scrapping for market share, stores are opening all over the show and so ja, I think it’s all round tough trading at the moment. But for us we still believe in our independent retail model, the guys [are] out there with their livelihoods on the line and really doing a good job for us despite the tough times.”

PPC revenue up 8%: Interim dividend of 38 cents per share declared.

• Improvement in South African and Zimbabwean cement sales 
• Cash generated from operations up 20% 
• Normalised earnings per share increased by 4% 
• Tangible progress with our rest of Africa expansion strategy 
• Technical issues at Dwaalboom resolved
• Interim dividend of 38 cents per share (2012: 38 cents per share)

Richemont FY HEPS up 30%: The Board has proposed a dividend of CHF 1.00 per share.

• Sales increased by 14 % to Euro 10 150 million and by 9 % on a constant currency basis
• Solid growth across segments, regions and channels
• Operating profit increased by 18 % to Euro 2 426 million
• Operating margin gained 80 basis points to reach 23.9 %
• Profit for the year rose by 30 % to Euro 2 005 million
• Cash flow from operations of Euro 1 944 million
• Proposed dividend of CHF 1.00 per share

Sovereign Food FY HEPS up 10%: Dividend per share of 19 cents declared.

• Headline earnings per share up 10% to 74,5 cents
• EBITDA margin of 9,2%
• Dividend per share of 19,0 cents declared
• Net asset value per share up 10% to 808 cents

Lonmin workers return to work: There are channels to be followed - Mathunjwa. Striking workers at the Lonmin platinum mine in Marikana in the North West resolved to return to work immediately on Wednesday. Association of Mineworkers and Construction Union (Amcu) president Joseph Mathunjwa held a meeting with the workers and told them to return to work. "There are channels to be followed... go back to work so that your enemies will not take advantage of this situation," Mathunjwa told the workers gathered at nearby Wonderkop stadium. Miners would start reporting for work for the 6pm shift on Wenesday night, he said.

Great Basin's Dippenaar reunites with Village's Swanepoel: JOHANNESBURG (MINEWEB) - Bernard Swanepoel and Ferdi Dippenaar, the pair behind the creation and growth of Harmony Gold as a major gold miner during the late 1990’s, have joined up again with Dippenaar’s appointment as the managing director of Village Main Reef’s gold assets, a company where Swanepoel is the current CEO. The reunification would see Swanepoel and Dippenaar working side-by-side in executive capacities for the first time since the latter left Harmony in 2005 to pursue his own interests and listed Great Basin Gold – one of SA mining’s biggest failures in recent times – the year thereafter.

Source: 28E Capital (Pty) Ltd

Equity Snapshot - 15 May 2013

A brief glance at Afrimat: Its results, the Infrasors acquisition and where management is taking the company. Afrimat released its annual 13 results last week, reporting revenue up 34% to R1.3bn (FY 12: R1bn) and headline earnings per share growth of 23% to 76.9cps (FY 12: 62.6cps). The Group produced excellent cash generation and still has a very comfortable balance sheet. The Clinker Group’s results were consolidated for the full FY 13 period adding revenues of R285m (FY 12: Rnil) and PAT of R47m (FY 12: Rnil) to the Group's results.

Gas game-changer for SA: Dames: Gas infrastructure is also cost-effective - Dames. Gas can be a "game-changer" for South Africa in the power sector, Eskom CEO Brian Dames said on Tuesday. He said Eskom was particularly aware of the deficit in access to electricity, and that there was a growing role for gas in the country and in the sub-Saharan region. "It is a lot less carbon intensive than fossil fuels, and some of the cleanest fossil fuel," he told delegates at the African Utility Week conference in Cape Town.

Work at all shafts halted: Lonmin: Shares open 5% lower. JOHANNESBURG - Workers at the South African operations of platinum producer Lonmin (JSE:LON) have gone on a wildcat strike, the company said on Tuesday, halting work across its operations and reigniting fears of deadly unrest that hit the industry last year. The platinum belt city of Rustenburg is a potential flashpoint with tensions running high with job cuts and wage talks looming. One of Lonmin's operations were the hotspot of last year's strikes, where 34 workers were killed by police in a single day at its Marikana operation in August.

India’s on Life Healthcare’s radar: And plans to add 1 000 beds in SA over the next few years. South Africa’s second-largest private hospital owner by market value, Life Healthcare Group Holdings (JSE:LHC), will seek expansion opportunities in India and Africa to respond to slower profit growth. Net income increased 15% to R790 million in the six months through March, compared with a 25% gain a year earlier, the Johannesburg-based company said in a statement on Tuesday. Paid patient days rose 1.5%, compared with 6% in 2012. Life Healthcare will pay a half-year dividend of 54 cents a share, an increase of 20%.

Other highlights from the results:

• Paid patient days (PPDs): +1.5%
• Revenue: +7.0% to R5 638 million
• Operating profit: +12.7% to R1 361 million
• Normalised earnings per share: +14.5% to 71.3 cents

PIC would prefer SA buyer for Adcock: Following its non-binding proposals received last week. The Public Investment Corp., the biggest shareholder in takeover target Adcock Ingram, would prefer a South African company to buy the country’s largest supplier of hospital goods. “Shareholder returns have to be balanced with social returns and what is important for South Africa at large,” PIC Chief Investment Officer Dan Matjila said. “Health is an important priority in terms of its social impact and a local player would also help drive Adcock’s empowerment objectives.” PIC, which has a 14% stake in Adcock, oversees the pension funds of South African government workers. Adcock’s empowerment objectives refer to the country’s aim to ensure greater black ownership in all companies that had little or none under apartheid.

Cosatu to march against e-tolls, again: Vows to have 'a total shutdown. 'Cosatu has vowed to take to Gauteng's highways later this month and shut them down to protest against e-tolling and labour brokers. The union federation had held discussions with both the Gauteng and national governments in an attempt to persuade them to ban labour brokers and scrap e-tolls, Congress of SA Trade Unions Gauteng secretary Dumisani Dakile said on Tuesday. "We have also had discussions with the African National Congress in an attempt to deal with these two central issues, and these discussions have not yielded any positive outcomes thus far."He said many members of the ANC in state and government and members of society supported Cosatu in its campaign against these two issues.

IMF trims sub-Saharan Africa growth outlook to: To 5.7% in 2014.ACCRA - The IMF on Tuesday trimmed its growth outlook for sub-Saharan Africa to 5.4% in 2013 and 5.7%in 2014 but said economic activity was being supported by rising investment and booming extractive industries.The IMF had forecast sub-Saharan Africa's growth at 5.6% and 6.1% respectively in its World Economic Outlook in April."Sub-Saharan Africa will be among the fastest growing places in the world ... second only to developing Asia," Antoinette Sayeh, director of the IMF's Africa department, told journalists in Ghana's capital Accra.

SAA to take delivery of twenty airbus Planes: The aircraft form part of a broader fleet replacement plan - Gigaba. JOHANNESBURG - South Africa's national airline will start taking delivery of twenty Airbus A320 aircraft valued at R10bn in the next quarter, Public Enterprises Minister Malusi Gigaba said on Tuesday. "(The aircraft) form part of a broader fleet replacement plan that aims to address the fuel inefficiency of SAA's current long-haul fleet," Gigaba told parliament.

Source: 28E Capital (Pty) Ltd