Tag: shares

Caxton shows strong growth

Caxton & CTP Publishers & Printers is hardly tapping vibrant niches with its core business in printing and publishing on the one hand and packaging on the other. But these operations are profitable, churn cash flow and are lean and mean. In fact, Caxton’s share price has doubled over a year.

  • As printing and publishing opportunities crimp, Caxton will look at reinforcing and expanding its packaging niche
  • At the end of the financial year to June the printing and publishing operations generated about R2.94bn — or 66% of group revenue — while the packaging (and stationery) hub generated R2.3bn, or 44% of revenue.
  • At operating profit level (after depreciation and amortisation), printing and publishing managed R336m, the packaging segment R275m
  • These operations generated net cash flows of R568m — equivalent to more than 150c a share
  • At the end of the financial year, Caxton was sitting on nearly R2bn of free cash, equivalent to almost 540c a share
  • Nearly 70% of Caxton’s share price is cash
  • During the reporting period, Caxton made an additional R656m investment in listed packaging business Mpact, where it now has an influential 31.6% shareholding
  • Its investment in Mpact is now worth close to R1.4bn, or equivalent to 376c a share
  • Caxton’s cash pile and its investment in Mpact is alone worth over 900c a share
  • Caxton can extend its commanding position in printing and publishing as smaller operations fall by the wayside, and making decent earnings for years to come
  • The packaging niche will be reinforced, and probably supersede the printing and publishing operations as the bigger earnings contributor
  • Caxton’s smaller “sideline” investments have panned out rather well — the group banked a substantial profit on selling its stakes in Octotel and RSAWeb
  • Officially, Caxton sets its NAV at R17 a share, which means the share price now offers a discount of about 53%. That’s a hard NAV number, with only R85m accounted for as a goodwill

SA shares hit record high despite domestic gloom

By Ntando Thukwana for Business Insider SA

On Monday, the JSE’s all share index rocketed to levels never seen before, even as South Africa’s economy continues to be roiled by the coronavirus pandemic.

Monday’s rally was in large part thanks to a 7% gain in Naspers, which is one of the biggest shares on the bourse. Via its subsidiary Prosus, Naspers owns a 31% stake in the Chinese tech behemoth Tencent.

Investors in Asia have been piling into Tencent ahead of the Hong Kong listing of short-video service Kuaishou Technology, a TikTok competitor. The company is backed by Tencent, and could raise more than $5 billion, which could make it the world’s biggest tech listing since Uber, reports Bloomberg. The SA market also received a boost from Monday’s 11% rally in Woolworths, which reported stronger-than-expected sales. On Tuesday, the local market started to retreat, but Woolworths’ share price continued its rise.

The JSE is now 11% higher than at the start of 2020, before the pandemic, hard lockdowns and job losses wreaked havoc on the local economy.

Currently, the country is struggling to contain a massive second Covid wave, while failing to secure the necessary vaccines, and its retreat back into Level 3 is causing immense economic strain.

So why the rally on the local market?

Nick Kunze, a senior portfolio manager at Sanlam Private Wealth, says the JSE is benefiting from new optimism among global investors, particularly about the impact of US president Joe Biden’s proposed new $1.9 trillion pandemic relief package that is expected to be passed by Congress this week.

The more optimistic tone on the US market and elsewhere has made investors more confident, and willing to take on more risk – particularly on emerging market investments.

“All of a sudden, because of this increased risk taking (…) emerging markets are suddenly in favour,” says Edgar Mafoko, portfolio manager at FNB Wealth and Investment.

So far this year, foreigners have bought almost R10.6 billion more in South African shares than they have sold, JSE data show. In the same period last year, they were already the net sellers of R4 billion in SA shares.

In recent weeks, investors have finally starting buying long-shunned shares in companies that are focused on South Africa.

Mafoko says Woolies’ strong trading update – along with other “very good results” from local retailers helped to restore confidence.

“The consumer isn’t in as bad a space as we thought.” But he warned that there is still much gloom ahead for the local economy, with the impact of increased unemployment that will probably only still come through later on in the year.

“Our fundamentals haven’t changed locally. Economically it’s going to be a very gloomy year. We’re expecting disappointment after disappointment,” he said.

Mafoko expects that Naspers and Prosus should continue to remain strong this year, and expects more gains from platinum and gold mining shares, on the back of China’s continued economic recovery which is driving an increased demand for commodities.

 

By Sandile Mchunu for IOL

Mondi’s share price tumbled by more than 4percent on the JSE yesterday the global packaging and paper group reported that its underlying earnings before interest, tax, depreciation and amortisation (Ebitda) fell by more than 20percent for the third quarter to end September, despite the group saying it was well-positioned for when the economic recovery takes place.

The share later closed at R343.86.

The group reported underlying Ebitda of R306-million (R5.9-billion), down from 383m reported in the same quarter last year.

However, when compared to the second quarter to end June, underlying Ebitda was down by 13percent.

Mondi said good volume growth in uncoated fine paper and fibre-based packaging products and ongoing strong cost control were more than offset by the effect of planned maintenance shutdowns, negative currency effects and lower average selling prices during the quarter.

Mondi postponed most planned maintenance shut-downs to the second half of the year to protect its people from the Covid-19 outbreak and minimise execution risk.

However, it said planned maintenance shut-downs with an estimated impact on underlying Ebitda of around 35m were carried out during the quarter. “Based on prevailing market prices, we continue to estimate that the impact of planned mill maintenance shut-downs on underlying Ebitda for 2020 will be around 100m, with the fourth-quarter impact expected to be around 55m,” the group said.

Chief executive Andrew King said the decisive action they took in the early stages of the Covid-19 pandemic helped to protect their people, maintain supply of essential products and services and deliver a resilient performance. “I am pleased that sustainable packaging continues to be a focus for our customers. We continue to make good progress leveraging our award-winning innovation capabilities and customer-centric approach to optimising packaging design using ‘paper where possible, plastic when useful’,” King said.

The group’s major capital investment projects were progressing according to plan, with the 67m capital investment project to convert a containerboard machine at ttí in the Czech Republic to become fully dedicated to the production of speciality kraft paper for shopping bag applications was scheduled to be commissioned during the fourth quarter.

The group said this additional capacity of 75000 tons further supported its retail customers in their efforts to replace unnecessary plastic.

Mondi paid an interim dividend to shareholders of 237m during the quarter and said its financial position remained strong, with liquidity of around 970m.

Looking ahead the group said the macro-economic outlook continued to be uncertain, however, it was confident that it would continue to demonstrate its resilience while remaining well-positioned for when the recovery takes place.

 

By Jackie Cameron for BizNews

Chinese stock market darling Tencent has been a significant force behind the Naspers share price. The Tencent holding was moved to Prosus, which became Europe’s biggest listed consumer internet firm when it floated on the Amsterdam stock exchange at a valuation of more than €100bn in September. Prosus is controlled by Naspers. Prosus recently cautioned that not all of its operations had coped well with Covid-19. Tencent, however, has benefited from an uptake in gaming as people have self-isolated in lockdowns. BizNews Premium partner the Wall Street Journal reported that Tencent Holdings’ first-quarter profit was fuelled by strong demand for mobile games as homebound Chinese consumers turned to online entertainment during the coronavirus pandemic. Tencent, the world’s biggest video game company by revenue, said its January-March net profit grew 6% to 28.9 billion yuan ($4.08bn) from the same period last year. Revenue rose 26% to 108.1 billion yuan. Both beat analyst estimates, according to FactSet.

Tencent experiences $305bn rebound

Tencent surged toward a record Tuesday after a $305bn rally since its 2018 low.

The stock rose as much as 5.1% Tuesday, putting Tencent on pace for its highest-ever close. Shares, poised to have their best month since January 2012, have surged nearly 50% from March’s bottom to send Tencent’s market value above HK$4.7trn ($606bn).

After doubling in 2017, shares were almost halved at one point the following year as gaming approvals dried up and a slowing economy in China cooled advertising demand. But gaming has been a strong point in 2020 for Tencent in the wake of Covid-19 lockdowns. Analysts’ average stock target has risen 13% the past six weeks while Chinese investors have been holding a record amount of the company’s equity, according to data compiled by Bloomberg.

Source: EWN

Tiger Brands employs more than 11 200 people in South Africa, excluding seasonal staff, a company spokesperson said.

South African food producer Tiger Brands said on Monday it is looking at “significant” job cuts and won’t pay an interim dividend as its business is hit by supply disruptions and margin pressures due to the impact of the coronavirus.

The owner of Jungle Oats and Tastic rice said first-half headline earnings fell 35% and it expects coronavirus-related costs of about R500-million ($28-million) to hit profit in the second half due to rand weakness, global supply chain disruptions and additional costs incurred during a lockdown in South Africa to curb the spread of the virus.

As a result the company has started looking at cost-cutting measures, including possibly “significant” job cuts, Chief executive Noel Doyle told reporters in a media call.

“Not just in headcount but right across our whole offering and of course we have to look at a couple of the categories where we have been incurring significant losses,” he said.

Tiger Brands employs more than 11,200 people in South Africa, excluding seasonal staff, a company spokesperson said.

Tiger Brands said it had decided not to declare an interim dividend in order to preserve cash, adding that it would re-consider an annual dividend at the end of the year depending on the group’s trading performance.

Headline earnings per share from continuing operations fell to 501 cents in the six months ended March 31, the company said, from 773 cents in the same period last year. Pretax profit from continuing operations fell 65% to R673 million.

“The group’s overall performance reflects the difficult trading environment and the challenges faced, particularly within grains, groceries, Value Added Meat Products (VAMP) and exports,” Tiger Brands said in a statement.

Group revenue from continuing operations increased by 2% to R15.7 billion. However, group operating income dropped by 29%, with operating profit margins declining to 7%, impacted by lower volumes, raw material and conversion costs rising ahead of inflation and increased marketing investment, it said.

“These costs, together with the effect of government regulations on pricing during the national disaster period, may have an impact in excess of R500-million on profitability (in the second half),” the company said.

By Lucinda Shen for Fortune

As of Monday’s market close, those who bought into Uber at its IPO are down roughly $1.4 billion.

But very early investors, and now, the bankers that helped take the company to market are in the green. Uber shelled out $106.2 million to a bevy of underwriters led by Morgan Stanley, per filings with the Securities and Exchange Commission. The group also includes Goldman Sachs, BofA Merrill Lynch, Barclays, Citigroup, and Allen & Company.

That comes as shares of Uber fell another 11% Monday—pulling its valuation down to $62 billion and representing a collective $1.4 billion loss for those who bought in at the company’s $45 IPO price. Assuming that Uber drivers took up all shares offered to them at the IPO price, they are collectively looking at paper losses of about $43.2 million.

On Friday, Uber CEO Dara Khosrowshahi sought to calm his employees regarding Uber’s stock price.

“Like all periods of transition, there are ups and downs,” he wrote in a note to workers.”Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since.”

In particular—Facebook’s IPO may echo strongly with that of Uber’s. That IPO too involved Morgan Stanley in the lead role. Following a lackluster first day of trading, the bank’s fees, as well as trades stemming from its role as the lead in the deal, were heavily scrutinized. A Massachusetts regulator later fined Morgan Stanley $5 million over the IPO, arguing the underwriter had selectively disclosed information to certain clients over others.

It remains to be seen whether similar investigations will follow Uber’s IPO. But for now, count the banks as one of the few parties that have profited from this deal.

Death by Amazon

By Rebecca Ungarino for Market Insider

A new “Death by Amazon” index released by the investment-research firm CFRA tracks the stocks its analysts believe could be short-seller targets given their vulnerabilities to competition from Amazon.

The index is full of home goods and electronics retailers like Party City and Bed Bath & Beyond, some of which have seen their entire market value wiped out in recent years.

Investors are familiar with the Amazon effect by now.

The e-commerce juggernaut announces that it is preparing to enter into an industry – be it medication, brick-and-mortar grocery, entertainment, or others – and the stocks of companies in the new target market fall as jittery investors are struck with the fear that irreversible disruption is coming.

So the investment-research firm CFRA created a new index, “Death By Amazon,” that tracks the stocks its analysts think are particularly vulnerable to Amazon’s expansion and offerings.

“The equally weighted index serves as a retail performance benchmark and short-selling idea generation tool for our clients,” CFRA analysts Camilla Yanushevsky and Todd Rosenbluth wrote in a report to clients earlier this month.

To pinpoint the 20 constituents the analysts believe are poorly positioned to compete against Amazon’s efforts in various industries, they evaluated the companies’ “Share of Voice” data that comes from web-traffic analytics company Alexa Internet (which is owned by Amazon as its other Alexa-named product).

That measure shows the percentage of searches for a keyword across major search engines in the past six months “that sent organic traffic to the respective site.”

For example, the analysts compared how much traffic was going to a national jewelry retailer’s website when consumers search for the term “jewelry” versus how much traffic was going to Amazon for the same search term.
With this kind of analysis, you get an index full of brick-and-mortar retailers whose products are available on Amazon – and apparently less popular through online searches – from floor tiles to party supplies.

To be fair, it’s not the first Death by Amazon index. Bespoke Investment Group had already created its Death by Amazon index, tracking the same theme.

Here are all the stocks listed, in alphabetical order, with how their “Share of Voice” scores for various products stack up against Amazon:

  1. At Home Group
    1-year performance: -40%
    % below all-time high: -46%
    Share of Voice score for “seasonal decor”: 4.2%
    Amazon’s Share of Voice score for “seasonal decor: 19.6%
  2. Barnes & Noble Education
    1-year performance: -38%
    % below all-time high: -74%
    Share of Voice score for “textbook”: 1.3%
    Amazon’s Share of Voice score for “textbook”: 6.9%
  3. Barnes & Noble
    1-year performance: -0.1%
    % below all-time high: -84%
    Share of Voice score for “books”: 23.2%
    Amazon’s Share of Voice score for “books”: 12.2%
  4. Bed Bath & Beyond
    1-year performance: -16%
    % below all-time high: -80%
    Share of Voice score for “cookware”: 2.4%
    Amazon’s Share of Voice score for “cookware”: 23.3%
  5. Best Buy
    1-year performance: -14%
    % below all-time high: -19%
    Share of Voice score for “electronics”: 1%
    Amazon’s Share of Voice score for “electronics”: 8.1%
  6. Big 5 Sporting Goods
    1-year performance: -71%
    % below all-time high: -88%
    Share of Voice score for “fitness equipment”: 0%
    Amazon’s Share of Voice score for “fitness equipment”: 11%
  7. Big Lots
    1-year performance: -6.5%
    % below all-time high: -41%
    Share of Voice score for “cookware”: 0%
    Amazon’s Share of Voice score for “cookware”: 23.3%
  8. Dick’s Sporting Goods
    1-year performance: +15%
    % below all-time high: -43%
    Share of Voice score for “sports deals”: 18.7%
    Amazon’s Share of Voice score for “sports deals”: 24.5%
  9. GameStop
    1-year performance: -31%
    % below all-time high: -87%
    Share of Voice score for “video games”: 7%
    Amazon’s Share of Voice score for “video games”: 17.1%
  10. Kirkland’s
    1-year performance: -49%
    % below all-time high: -81%
    Share of Voice score for “home decor”: 5.4%
    Amazon’s Share of Voice score for “home decor”: 10.8%
  11. Office Depot
    1-year performance: -19%
    % below all-time high: -95%
    Share of Voice score for “office supplies”: 33.1%
    Amazon’s Share of Voice score for “office supplies”: 9.8%
  12. Overstock.com
    1-year performance: -67%
    % below all-time high: -86%
    Share of Voice score for “dresser”: 1.3%
    Amazon’s Share of Voice score for “dresser”: 9.9%
  13. Party City
    1-year performance: -49%
    % below all-time high: -65%
    Share of Voice score for “party supplies”: 22.5%
    Amazon’s Share of Voice score for “party supplies”: 13.2%
  14. PetMed Express
    1-year performance: -40%
    % below all-time high: -60%
    Share of Voice score for “pet supplies”: 5.1%
    Amazon’s Share of Voice score for “pet supplies”: 13.7%
  15. Pier 1 Imports
    1-year performance: -65%
    % below all-time high: -97%
    Share of Voice score for “home decor”: 8.3%
    Amazon’s Share of Voice score for “home decor”: 10.8%
  16. Signet Jewelers
    1-year performance: -49%
    % below all-time high: -87%
    Share of Voice score for “jewelry”: 3.8% for kay.com, 2.9% for jared.com, and 0.12% for zales.com
    Amazon’s Share of Voice score for “jewelry”: 10.7%
  17. The Michael’s Companies
    1-year performance: -43%
    % below all-time high: -67%
    Share of Voice score for “drawing supplies”: 13.1%
    Amazon’s Share of Voice score for “drawing supplies”: 24.5%
  18. Tiffany & Co.
    1-year performance: -5%
    % below all-time high: -31%
    Share of Voice score for “jewelry”: 6%
    Amazon’s Share of Voice score for “jewelry”: 10.7%
  19. Tile Shop Holdings
    1-year performance: -36%
    % below all-time high: -85%
    Share of Voice score for “tile”: 2.1%
    Amazon’s Share of Voice score for “tile”: 22%
  20. Williams Sonoma
    1-year performance: +7%
    % below all-time high: -42%
    Share of Voice score for “cookware”: 16.7%
    Amazon’s Share of Voice score for “cookware”: 23.3%

Weak pen, lighter sales knock Bic

By Myles McCormick for Financial Times

Flagging sales of pens in India and lighters in North America knocked revenues at French stationery maker Bic at the beginning of 2019.

The company, known for its ubiquitous biros and razors, said sales had fallen 2 per cent on a comparative basis to €415m in the first quarter of the year as its overall trading environment remained “challenging”.

Pre tax income dropped 18 per cent to €55m as South American exchange rates and rising raw material costs weighed on its margins.

Shares in Bic fell as much as 10 per cent in early Thursday trading, making it one of the worst performers on the Stoxx 600 index — second only to Finnish electronics group Nokia, whose shares plunged after an unexpected first-quarter loss.

“After a strong 2018 fourth quarter, and while the overall trading environment remains challenging, 2019 started with soft results impacted by stationery in India and lighters in the US,” said Gonzalve Bich, Bic chief executive.

“However, we maintained or grew market share in our three categories, and regained momentum in shavers,” he added.

In India, Cello Pens, which Bic bought in 2015, saw a double digit drop off in sales as it sought to reduce shipments to so-called “superstockists”. Global stationery sales fell 6 per cent on a comparative basis, stripping out the impact of acquisitions and divestments.

Lighter sales fell 10 per cent in North America on the back of inventory adjustments by wholesalers and a declining market. Globally, lighter sales were down 6 per cent on a comparative basis.

Its shaver business did better, with strong eastern European and Russian performance driving a 10 per cent rise on a comparative basis.

The company expects first quarter “headwinds” to lessen over the year and retained its full year financial outlook of a slight growth in sales.

Naspers to unbundle and list MultiChoice

By Nick Hedley for Business Day

The transformation of Naspers, which was founded more than a century ago to produce Dutch-language newspaper De Burger, into an online-only behemoth is almost complete.

Africa’s most valuable company, which owns a 31% interest in Chinese internet giant Tencent, said on Monday it planned to unbundle its pay-TV business MultiChoice onto the JSE.

Naspers will hand its interest in the DStv operator to its shareholders.

Investors cheered the news. After falling 3.2% earlier in the day, in line with Tencent’s decline in Hong Kong, Naspers rallied to close 0.7% up at R3,206.42, valuing the company at R1.4-trillion.

Naspers hopes to list the new entity MultiChoice Group, which includes its local and rest-of-Africa pay-TV business along with Showmax Africa and security company Irdeto, in the first half of 2019. The unbundling will cap off a remarkable transformation at Naspers, which was mostly a publishing and pay-TV business until its 2001 investment in China’s Tencent.

Naspers would not raise funds through the deal, said CEO Bob van Dijk, but its shareholders would benefit as the market currently ignored MultiChoice when valuing the group.

In its sum-of-the-parts valuation, US bank JP Morgan calculated that Naspers’ majority-owned MultiChoice unit is worth $8bn. More than 90% of that value sits in SA, according to the bank. That implies that MultiChoice Group is worth more than Shoprite.

Van Dijk said Naspers plans to give MultiChoice SA’s BEE investors another 5% stake in the local pay-TV business. “Besides unlocking value for our shareholders, maybe more important we think it will also unlock value for [BEE scheme] Phuthuma Nathi, which is already one of the most successful broad-based BEE schemes.”

He said Naspers will continue to invest in its SA e-commerce businesses, which include Takealot, Mr D Food, PayU and AutoTrader. “In the last year, we invested more than R3bn in the e-commerce businesses in SA alone. We expect to continue to invest and we’re looking at interesting prospects.”

It will also retain its interest in Media24, which is moving quickly into online publishing. The pay-TV market was poised for further growth despite pressure from internet-based rivals such as Netflix.

“Even in markets like Europe, people still have traditional TV services and on top of that people have connected services. In Africa the story is even more positive — you see very significant growth in traditional TV … as well as decent take-up already in SA of [streaming services] DStv Now and Showmax. I’m confident it’s a growth story.

“I feel confident about putting the business on its own legs.”

Robert Pietropaolo, a trader at Unum Capital, said the unbundling would be positive for Naspers “but the pressure will certainly be on MultiChoice to stay competitive”.

“MultiChoice themselves have already started cutting their headcount and they have started offering lower-tier packages, which unfortunately does not bring in the desired revenues. MultiChoice will not only have to be nimble from now on, but I think they may have to re-invent themselves to be competitive,” Pietropaolo said.

In the year ended March, the pay-TV operator lost 41,000 premium subscribers across its African markets. Even though the total subscriber base grew — MultiChoice added 563,000 users in SA in the year to March — this growth came from far less profitable lower-cost packages. However, the company remains highly cash generative. Over the same period, MultiChoice generated revenues of R47.1bn and trading profits of R6.1 bn.

MultiChoice SA CEO Calvo Mawela said the company had slowed the decline in high-margin premium subscribers. It lost more than 100,000 of these customers in its 2017 financial year but reduced that number to about 40,000 in 2018.

“Our focus on Premium is beginning to bear fruit.… We’ll continue to focus on Premium to ensure that we do not see further decline in Premium subscribers going forward.”

Naspers takes a hit as Tencent stocks tumble

By Kana Nishizawa and Jeanny Yu for Business Day

If you thought the slump in US technology stocks was bad, take a look at Tencent, the Chinese internet giant 31% owned by JSE-listed Naspers.

Tencent has tumbled 25% from its January peak, erasing about $140bn of market value. That is the biggest wipeout of shareholder wealth worldwide, as measured from the date of each stock’s 52-week high. Facebook, the F in the FANG block of mega-cap US tech stocks, is the second-biggest loser, with a $136bn slump over the past three trading sessions.

Investors around the world are beginning to question whether the best days are over for technology stocks — the undisputed leaders of a nine-year boom in global equities. Tencent, Asia’s second-largest company after e-commerce behemoth Alibaba, has also been dogged by concern that growth in its mobile-gaming unit is slowing. The stock, down 9.5% in July, is poised for its biggest monthly retreat since 2014.

“Investors are increasingly pricing in lower expectations for Tencent’s interim results,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “Overall, tech companies are facing a similar problem. They have been enjoying fast profit growth in the past few years, so it will be difficult for them to maintain similar growth in the future as the competition grows and some segments are saturated.”

Tencent’s year-on-year profit growth probably slowed to 5.1% in the second quarter, the weakest pace since 2012, according to analyst estimates compiled by Bloomberg before the company releases results on August 15. At least 11 brokerages cut their Tencent share-price target in July, including Credit Suisse Group and Morgan Stanley.

Still, analysts have not turned bearish: all 51 forecasters tracked by Bloomberg have a buy recommendation on Tencent shares, with the average price target implying a 44% gain over the next 12 months.

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