Tag: JSE

By Tom Head for The South African

Naspers, the holding group of Africa’s biggest pay-TV organisation MultiChoice, have decided to list the business on the Johannesburg Stock Exchange. The move comes as traditional media outlets consider ways to stem the momentum of streaming services like Netflix and Hulu.

The shares will go live on the JSE on 27 February 2019. Investors will be able put their money into MultiChoice if they believe it’s a sound financial investment; something that CEO Calvo Mawela firmly believes is already true:

“With strong financials, the flexibility of an ungeared balance sheet and deep local knowledge, we hope to deliver excellent returns to shareholders over time.”

MultiChoice to receive boost in its battle with Netflix et al
But how will this make it more competitive with the likes of Netflix? Well, put quite simply, opening up a more diverse range of investment will eventually improve the worth of MultiChoice. Naspers are now narrowing a discount between its own market value and the value of its stake in Chinese tech giant Tencent, according to MoneyWeb.

By floating the shares on the JSE, an increase in net worth will allow MultiChoice to spend more money on quality programming and any potential streaming developments of their own in the future.

What is the MultiChoice share price estimated to be worth?
Meanwhile, South African Market Insights (SAMI) told us that this is perhaps the best time for Naspers to make this move. While subscriber numbers are up, their total revenue growth has limped along at a slow pace. They also estimate that MultiChoice will be worth R211 a share when they go public.

“MultiChoice has seen strong subscriber numbers grow over the last three years – up by 29.4% – while revenue over the same period only grew by 1.4%. Their trading profit margins are in decline too.”

“But looking at the number of shares MultiChoice plans on issuing, it will give the company a valuation of R94.8 billion, which will make MultiChoice the 21st largest firm listed on the JSE at around R211 a share.”

What happens next?
MC have approximately 13 million subscribers in Mzansi. No company is too big to fail, but SAMI have warned that there will be a “feeding frenzy” when the shares are first made public, as investors scramble to get a slice of the pie at the earliest opportunity. We will only get a true reading of its popularity a few months after it has listed.

Pressure mounts on JSE as it retrenches staff

The JSE, Africa’s oldest and largest stock exchange, has announced the restructuring of its operations that will see it shed 14% of its workforce by the end of the year as it adapted to technological changes.

JSE chief executive, Nicky Newton-King, said in a statement on Friday that the company was restructuring against the backdrop of South Africa’s low economic rate, ratings downgrades and low business confidence and as exchanges were adapting to fast paced technological changes.

Newton-King said the cost cutting would see the technology expenditure cut by a minimum of R70million over two years.

It said the changes would also involve a reduction in the company’s full time staff complement by 60 people, resulting in annualised cost savings of nearly R170m, to be fully realised from 2019 onwards.

The JSE made R65m in annualised savings to date through a combination of removing vacancies and reducing discretionary spend, she said.

“If we want to create a building block for future growth we must take some early decisions and there are none tougher than those that involve our people,” she said.

“We looked at all avenues before considering this action. While we appreciate this will be a very difficult time for the affected employees, the newly aligned company will be in a strong position to serve its current and future clients more effectively,” said Newton-King. She said this was preparing the JSE to meet the challenges head-on.

“The fast moving nature of our business requires us to change the way in which we operate so that we are as nimble and as cost effective as possible.

“We cannot do so without significantly rethinking our cost base, our operating model and the way we are structured as a business,” she said.

She also said the restructuring would see the refreshing of the JSE’s IT operating structure to align to best practice.

“At the same time, our large dependency on IT requires that we look at using technology in a more agile manner to support the execution of our business strategy,” Newton-King said.

Geoff Cook, director and co-founder of JSE competitor ZAR X, South Africa’s first additional stock exchange in 60 years, said on Friday it was not surprising that the JSE was restructuring, owing to the high costs associated with its old-world exchange model.

“The JSE model attracts high infrastructure costs and its technology model is inefficient – the market disruption brought about by modern technology is forcing these changes for it to remain relevant,” said Cook.

Global law firm Baker McKenzie’s latest Cross Border Initial Public Offering Index said South Africa’s three domestic listings raised a total of $250m (R3.34billion) in the first half of 2017. This was the highest amount of capital raised by South African companies recorded during the first half of any year since 2012.

A total of 388 companies are listed on the JSE which has a capitalisation of R14.271bn.

Lumkile Mondi, a senior lecturer at the school of economic and business sciences at the University of the Witwatersrand, said the country’s economic problems made it difficult for the JSE to attract listings.

By Dineo Faku for IOL

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