The ability to economically source, transport and sell fresh (i.e. time-sensitive & easily spoilable) produce at scale is a deeply geographical competitive advantage involving a surprising amount of complexity. Shoprite (SHP) only managed this in Africa by actively building up local supply chains in each of its countries to support its own retail footprint. Likewise,…
Category: Small Caps & Other Stocks
South African-listed small caps and a range of select other interesting listed stocks.
How is EOH’s Turnaround Going
Following its dramatic fall from grace, EOH’s new management team have dug in deep, swept clean and driven a commendable operating turnaround. I have full respect for the excellent job they have done here. It is not an easy task to turn a service firm around. Service firms tend to trade based on reputation (services…
Who’s bidding for Long4Life?
Long4Life (code: L4L) published surprisingly good H1:22 results and, importantly, beat many FY 19 high-water marks. The Group has done well over a difficult period. Founder and CEO, Brian Joffe, has also decided to step backwards and into the Chairman’s role (article). Most importantly and probably key to the recent share price rally, the Group…
Questioning RAIN’s Valuation
Empowered investment company, African Rainbow Capital (code: AIL), reported its FY 21 results last week. The Group reported a +16.3% rise in their so-called Intrinsic Portfolio Value to R12.3bn, albeit once the recent dilutive capital raise is excluded, the Group saw its Intrinsic NAV (INAV) fall -8.1% y/y. Plenty has been written about this HoldCo’s…
Master Drilling: Cylinders Starting to Fire
Logically, as shallow, easily mined minerals are exploited, the world’s remaining minerals are getting deeper underground. While these tailwinds are fantastic for those well-positioned businesses that offer solutions to underground miners, the multi-year commodity and mining hiatus has been a tough period for all involved. This is clearly noticeable when looking at the Fochville-based, global…
ADvTech Update Highlights Quality
Listed educational group, ADvTech Ltd (code: ADH) put out a commendable trading statement for their H1:21E period. The Group—that owns Crawford International, Varsity College, & Rosebank College, amongst others—sees all its divisions delivering an increase in operating profit. Perhaps more importantly, if one-offs are excluded, the ADvTech’s profits are expected to be between 28% to…
Is Levi Strauss the next Nike?
The pandemic has accelerated the casualisation of the workplace, since all one has to do is look smart from the waist up in a Zoom meeting: Keith McLachlan from Integral Asset Management. Hear the interview here: LINK
Underappreciated Gold Mine
Of all the JSE-listed gold miners, I get the sense that Pan African Resources Plc (PAN) is just simply underappreciated. Why? Probably because it is relatively small. Yet, size is not necessarily correlated with quality, and the gold junior stacks up well against even the majors. Despite Pan African Resources’ modest R7.5bn market cap, the…
Ready. Set. Huda-GO!
ORIGINALLY APPEARING ON MONEYWEB Hudaco’s H1:21 results look spectacular when compared to H1:20 numbers, but H1:20 was mired in hard lockdown creating a distorted picture. H1:19 is far more comparative as a “normal” trading period. Against H1:19, Hudaco’s H1:21 revenues grew +6.5% p/p, margins expanded seeing Gross Profit rise +9.0% p/p, operating leverage rallied Operating…
Distell’s Worth to Heineken
Previously, I highlighted that Distell Group’s (code: DGH) was on a winning wicket coming out of this pandemic (Distell: Quietly Winning). Subsequently, Distell broke the news that Heineken has approached the Group regarding the acquisition of the majority of Distell’s business (see official SENS here). For the purposes of this article, let us ignore the…
Who Eats Whom
The current debate of whether inflation is transitionary or structural has a sub-argument that references rising soft commodity prices, food inflation and struggling consumers and argues that food producers will be caught in the middle. This narrative makes some sense, rising input costs cannot be fully passed onto struggling end-consumers and someone is going to…
How Much Could EasyEquities Be Worth?
A combination of boredom, lack of dopamine alternatives, stimulus cheques and the gamification of markets led the USA-based online stockbroker, Robinhood, from relative obscurity into a multi-billion dollar empire. This slick operation has amassed an estimated 20 million brokerage accounts and attracted a last-recorded $20bn fair value (even though shares have reportedly traded on the…
Safer than Houses: Stor-Age Property
About five years ago I pointed out that the local commercial property sector (i.e. REITs) in South Africa was heading for trouble (see Part I and Part II). I would have preferred to be wrong but—and in no small part helped by the pandemic—this has played out as expected and almost every single REIT on…
Profiting Off Delistings
All shares prices on all stock markets around the world are minority valuations. They reflect what markets think an investment without control is worth. The moment an investor takes control of a company, though, they can—effectively—access the cash flows of that business. And, for this reason, that control is worth something. Therefore, bids to take…
JSE-listed Preference Shares
Preference shares are an underappreciated asset class, particularly for income-seeking private investors who are less constrained than institutions when it comes to liquidity. But what are preference shares? Preference shares are shares with special rights attaching to them. Each preference share is unique but most have the following characteristics: Dividends: Preference shares typically pay a…
Trellidor: Building up to a Rally
Originally published over here. Cashbuild (CSB) recently indicated that their sales till end of December 2020 had jumped +24% y/y. Massmart too has indicated a strong second-half recovery in their Builders Warehouse sales with Spar’s BuildIT outfit echoing the same sentiment. While these are great results, they are not unique. Building materials, DIY and home…
Afrocentric vs. Discovery
ORIGINAL ARTICLE APPEARS HERE. Having listed on the JSE in 1999, Discovery Ltd (DSY) has been a phenomenal success generating early investors multiples of their money. The Group administers the Discovery Medical Aid (a separate legal entity to the listed company) and, through data mining, clever incentives and cross-selling, the Group has won huge medical…
Redefine Properties: Is this REIT-listic?
Late on Friday, Redefine Properties (RDF) published its long-awaited dividend announcement for the year-ended August 2020. You can find the full announcement here: LINK. A Real Estate Investment Trust (i.e. “REIT”) has some special privileges and they come with some onerous requirements. If you don’t satisfy the requirements of being a REIT, you lose the…
Finding value in SA’s small- and mid-cap sector
Diversification across sectors is the best hedge against bad luck, stresses Keith McLachlan in a Moneyweb interview. Find the full interview over here: LINK.
Small & Mid Cap Snap Back
Click on the embedded video below to play it.
Ascendis Health: Why I Sold
OLD ARTICLE – Original posted on March 29, 2017 I have been following Ascendis Health since it listed and, while I was sceptical at first, I warmed to the company as I saw management executing their stated strategy. If you see here, I even use them as an example of how acquisitive growth can work: How…
EOH: The Cracks Appearing
OLD ARTICLE – Original posted on July 28, 2017 It may sound like I am picking on EOH Holdings (EOH), but I am not. My job is to look critically at companies and, where appropriate, disagree with the consensus view. Even if this is uncomfortable and hurts peoples feelings, it is important that I do…
Master Drilling: Illustrating Value
OLD ARTICLE – Original posted on March 22, 2018 I have written about Master Drilling (MDI) previously and I refer you back to these articles for some of the narrative: Master Drilling: Hidden Gem Master Drilling: The Big Mistake You will notice a consistent theme: I like them. The Group recently put out some soft…
Master Drilling: The Big Mistake
OLD ARTICLE – Original posted on August 26, 2016 Previously I wrote the following article on Master Drilling (Master Drilling: Unknown Gem). I will not rewrite the investment case that I noted in that article for Master Drilling as a world-class, niche industrial technology play with global, growing scale and sophistication. Pretty much all of that…
Master Drilling: Hidden Gem
OLD ARTICLE – Original posted on March 29, 2016 When I first encountered Master Drilling (MDI), I was mildly impressed and put them on the radar to follow closer. Over the subsequent three years, I began to become quite impressed with the business and its operations. Did you know that Master Drilling (run out South…
Santova: Growing & Undervalued
OLD ARTICLE – Original posted on October 11, 2017 Santova (SNV) is a non-asset based supply chain manager with more than 65% of its earnings coming from outside of South Africa, including the majority of hard currency in this. Santova put out a H1:18 trading statement yesterday that can be summarised as follows: H1:18 EPS and…
Warning Signs: Retailers, Shopping Centres & Retail REITs (Part 2 of 2)
OLD ARTICLE – Original posted on November 24, 2016 See Part 1 over here: Warning Signs: Retailers, Shopping Centres & Retail REITs (Part 1 of 2). There are three harmonious parts to a Real Estate Investment Trust (REIT): Income: These are predominantly rentals from tenant renting space from the REIT. The lower the vacancy rate…
Warning Signs: Retailers, Shopping Centres & Retail REITs (Part 1 of 2)
OLD ARTICLE – Original posted on November 22, 2016 Following an exchange with Byron Lotter on Twitter (see here) after what I believe (and the market believes) was a very poor trading update from Woolies (WHL). But Woolies is not alone in this regard. Here are the key listed retailers, their like-for-like same-store growth, inflation…