BizBytes – Market moving news in brief updated through the day

Tuesday 1 August, 2023

Oppenheimer Asset Management Bullish on S&P 500, Predicts Record High by Year-End

Oppenheimer Asset Management’s Chief Investment Strategist, John Stoltzfus, has raised the year-end price target for the S&P 500 to 4,900 from 4,400, predicting a near 7% gain by the end of the year. This optimistic outlook is based on the Federal Reserve’s nearing pivot and the US economy’s resilience. If the prediction materialises, it would lead to the best performance since 2019, with the S&P 500 ending the year approximately 28% higher. The rally is fuelled by investors’ confidence in the economy’s strength and anticipation of a less hawkish monetary policy.

Botswana and South Africa Seek $230 Million for Joint Minerals Rail Line

Botswana and South Africa’s state-owned rail companies are seeking funding for a $230 million railway line to transport commodities, including coal. The Mmamabula-Lephalale link, spanning 113 kilometers, will connect to key mineral export terminals in South Africa and Mozambique. The project will also upgrade existing facilities to accommodate increased volumes from Botswana. Despite global aversion to coal financing, the rail link is expected to deliver significant socioeconomic benefits by facilitating a shift from road to rail transport. The partnership aims to address the lack of rail-export capacity, unlocking Botswana’s vast coal resources.

Competition Commission Cracks Down on Google’s Dominance in Online Search

South Africa’s antitrust body has initiated a regulatory crackdown on Google due to its dominant position in the online search market. The Competition Commission found that Google’s search dominance distorts competition in favour of larger market players by prioritising paid results. As a remedy, the commission recommended measures to improve visibility for smaller South African companies in search results. This investigation, launched in 2021, also scrutinised other tech platforms like Takealot, Uber Eats, and Apple’s App Store. Google responded, stating its platform provides relevant and trusted search results, fostering choice and generating traffic to South African sites. The probe aligns South Africa with other jurisdictions addressing Google’s dominance in search and ad-tech functions.

Prosus to Sell Part of PayU to Rapyd for $610 Million, Focusing on India’s Fintech Market

Prosus NV is set to sell a portion of its financial technology company, PayU, to Rapyd, an Israeli firm, for $610 million. The deal will exclude PayU’s major payments market in India, as well as units in Turkey and Indonesia. PayU’s Global Payments Organisation, accounting for about a third of its revenue, will be part of the transaction. Prosus aims to focus on India’s fintech opportunity where PayU is a leading payment service provider. Rapyd seeks to expand its business in regions like Europe and Latin America through this acquisition. Prosus continues to seek profitability and shareholder returns. The latest deal follows a strong performance in Prosus’ payments and fintech segment, with revenue growth of 52% to $903 million in the last financial year. 

Monday 31 July, 2023

Adani Green’s Q1 Profit Surges 50% on 70% Rise in Clean Energy Sales

Adani Green Energy, the renewables subsidiary of the Adani Group, recorded a 50% increase in first-quarter profit, reaching 3.2 billion rupees ($39 million) compared to the previous year’s 2.1 billion. The boost in earnings was driven by a 70% rise in energy sales due to new projects and improved utilisation of solar plants. With a power generation capacity of 8.3 gigawatts, a 43% increase from a year ago, Adani Green aims to reach 45 gigawatts by 2030 and build the world’s largest hybrid renewables farm in Gujarat, signalling a significant expansion in the clean energy sector.

RMB Reports Challenging Year with Substantial Losses in 2023

RMB, a leading company, has released its abridged summarised consolidated audited results for the year ended 31 March 2023. Despite a significant decrease in revenue of 74% (R159 million in 2023 compared to R629 million in 2022), the company suffered a substantial loss for the year exceeding 100%, amounting to R440 million. This has resulted in negative earnings per share, showing a decrease of more than 100% (loss of 31.9 cents compared to earnings of 43.9 cents in 2022). Headline earnings per share witnessed a remarkable increase of over 100% (11.6 cents in 2023 compared to 4.0 cents in 2022). The company’s diluted headline earnings per share also experienced a similar increase. At the time of reporting RMB’s share price is down just under 2% on the day.

Chinese Stocks Rise as Beijing Aims to Boost Consumption, Investors Hope for Policy Execution

Chinese stocks are on an optimistic trend at the end of July as Beijing demonstrates efforts to strengthen its slowing economy. Equities surged, capping the best month since January, following the release of a policy document outlining consumption-related initiatives. Overseas funds have shown increased interest, signalling confidence in the government’s supportive stance. However, concerns persist about China’s economic recovery, with manufacturing contracting and the services sector weakening. Investors remain cautious but hopeful, waiting to see how effective the latest measures will be in stimulating demand. Policy execution is seen as crucial for sustaining the market rebound.

Euro Zone’s GDP Rebounds, Core Inflation Persists, Paving Way for Possible Interest Rate Hike

The euro-zone economy showed signs of recovery as its gross domestic product (GDP) grew by 0.3% in the second quarter, beating expectations. The growth was driven partly by Ireland’s impressive expansion. However, the underlying inflation measure, excluding volatile costs like food and energy, remained strong at 5.5%, surpassing the headline gauge for the first time since 2021. This has supported arguments for the European Central Bank (ECB) to consider raising interest rates again. Nevertheless, concerns about the region’s outlook persist, with confidence indicators flashing red, and services and demand for loans slowing down. ECB President Christine Lagarde is contemplating either another rate hike or a pause for the next policy decision in September.

Telkom SA Reports Q1 FY2024 Trading Update: NGN Revenues Drive Growth Despite Challenging Conditions

Telkom SA SOC Limited released its trading update for the quarter ended June 30, 2023. The Group reported a 3.8% increase in revenue to R10,668 million, with NGN (new generation network) offerings driving growth. However, Group EBITDA declined by 4.2% to R2,235 million, affected by legacy revenue declines and higher costs. Telkom’s mobile segment saw positive growth, with mobile revenue up 5.2% to R5,448 million and mobile data revenue up 9.9%. Openserve’s fixed data new generation revenue grew at a sustained rate of 10.6%. Telkom remains focused on improving its cost base to enhance profitability in the medium term.

MTN Expects Substantial Increase in Half-Year Earnings, Despite Forex Challenges

Telecom giant MTN has informed shareholders that its first-half results for the 2023 financial year, ending on 30 June, are projected to show a significant rise in earnings. Anticipated earnings per share are expected to be between 10% and 20% higher, ranging from 45 cents to 89 cents. However, forex volatility, especially in Nigeria, has led to forex losses impacting headline earnings, resulting in a 0% to 10% increase. MTN cites challenges in Nigeria and Ghana’s limited forex reserves, and the delay in forex trading liberalization. Nonetheless, the company remains positive and awaits the release of full results on 14 August.

Thursday 27 July, 2023

China Tech Stocks Rally Near Bull Market Amid Stimulus Expectations

China tech shares in Hong Kong are on the verge of a bull market, with the Hang Seng Tech Index surging almost 20% since May. The rally is driven by expectations of additional stimulus measures to boost the nation’s struggling economy. Volkswagen AG’s announcement of its investment in XPeng Inc. has further fuelled investor appetite for the EV sector. Despite a volatile year due to crackdowns on private enterprises and US-China tensions, the market sentiment is improving following a recent Politburo meeting where leaders pledged more policy support. Analysts believe the policy put has been activated, signalling a potential turnaround.

Shell’s Q2 Profit Drops, but Promises Additional Buybacks and Dividend Hike

Shell Plc reported a decline in second-quarter profit compared to the previous year, attributed to lower oil and gas prices. Despite this, the company announced plans for extra share buybacks of $3 billion in the next three months and at least $2.5 billion afterward, along with a raised dividend. The results align with industry peers Chevron Corp. and Equinor ASA, which also faced earnings declines due to price drops. Shell’s new CEO, Wael Sawan, aims to enhance shareholder payouts and focus on core oil and gas business while maintaining financial discipline. Shell’s net debt also decreased significantly to $40.31 billion.

TotalEnergies Commits to Shareholder Payouts Despite Q2 Profit Miss

TotalEnergies SE has confirmed its commitment to shareholder payouts and capital spending despite a second-quarter profit that fell short of estimates. The company’s adjusted net income for the quarter dropped by 49% compared to the previous year due to lower oil and gas prices. Despite the market challenges, TotalEnergies is increasing its investments in renewable energy and gas projects while reducing exposure to petroleum assets. It plans to repurchase $2 billion of its shares in the third quarter and maintain its capital expenditure plan for the year. The company aims to allocate at least 40% of cash flow from operations to shareholders amid increasing interest in renewable energy. -Bloomberg

ArcelorMittal South Africa Reports Challenging 2023 H1 Results Amidst Weaker Trading Environment

ArcelorMittal South Africa reported its condensed consolidated financial results for the six months ended June 30, 2023, amidst a weaker trading environment characterised by lower international market prices and stagnant economic growth. Sales volumes increased by 3%, while crude steel production surged by 29%. However, realised rand steel prices dropped by 8% (22% in dollar terms), impacting revenue negatively. EBITDA declined significantly by 86% to R499 million, resulting in a headline loss of R448 million compared to a profit of R3.03 billion in the same period last year. The company’s net borrowings increased to R2.99 billion. The challenging trading environment affected overall performance, although renewables and infrastructure projects are expected to support future steel demand. Efforts to improve the company’s financial position are underway, including a proposed modification of an BEE existing transaction. ArcelorMittal’s share price is down just under 43% YTD.

Stocks Rally and Dollar Slips as Investors Predict Rates to Peak; Optimism Amid Strong Earnings Season

Global stocks saw gains and the dollar declined as investors believed the Federal Reserve has concluded its 16-month tightening cycle. The Fed raised the federal funds rate to a 22-year high, but investors anticipate no further increases this year. European Central Bank’s potential rate rise may be one of its last moves in this cycle. Strong earnings season buoyed stock market sentiments, while the US economy hinted at a soft landing. Asian shares also surged, with anticipation for the Bank of Japan’s policy decision. Yen strengthened amid speculation on shifting away from ultra-easy policies. -Bloomberg

Anglo American Latest Miner To Post Lower Profits And Payout

Anglo American Plc became the latest miner to post lower profits and lower its dividend as China’s economic slowdown continues to dampen earnings for the world’s biggest mining companies. Anglo reported underlying earnings of $5.1 billion in the first half, down from $8.7 billion last year. It announced a $700 million dividend, in line with its payout policy, compared with the $1.5 billion it returned in the same period in 2022. Despite the lower profits and returns, profitability for the biggest miners remains strong by historical standards. Yet there are growing concerns about China’s crucial property sector, and a wider global slowdown, that’s driving metal prices lower. -Bloomberg

Wednesday 26 July, 2023

JSE Top-40 Gainers and Losers

Ex-Steinhoff CEO Jooste’s Appeal Rejected, Faces German Arrest Warrant

Markus Jooste, former CEO of Steinhoff International Holdings NV, lost his appeal against a German arrest warrant after failing to appear for trial in Germany. Jooste’s lawyer cited his inability to travel due to passport restrictions imposed by South African authorities, where he faces more significant probes and allegations. Steinhoff has been struggling since auditors refused to approve its accounts, leading to Jooste’s resignation and various investigations. The court in Oldenburg may now seek extradition from South Africa or request Interpol’s assistance in the case. -Bloomberg

Federal Reserve Raises Interest Rates to 22-Year High, Eyes Further Hikes Based on Economic Data

The Federal Reserve, under Chair Jerome Powell’s leadership, raised interest rates for the 11th time since March 2022 to address inflation concerns and curb price pressures. The quarter percentage-point hike brought the benchmark federal funds rate to 5.25% to 5.5%, the highest in 22 years. While Powell noted the positive impact of rate increases on curbing inflation, he emphasised the need to return inflation to the 2% target. The possibility of future rate hikes remains open, pending incoming economic data. Investors were optimistic as stocks rose, and the likelihood of another rate increase by year-end is around 50%. -Bloomberg

Snap Shares Plunge as Q3 Sales Forecast Misses Estimates

Snap Inc. projects Q3 revenue to be between $1.07 billion and $1.13 billion, falling at the lower end of analysts’ estimates, indicating a slower-than-expected payoff for improvements to its digital advertising business. The company’s stock drops 19% in premarket trading, marking the largest intraday decline in three months. Snap has been making significant changes to its advertising business, incurring costs related to technology infrastructure and disruption to marketers’ plans. While core digital advertising business performance remains uneven, the company sees potential in its premium subscription offering, Snapchat+, which has grown to 4 million users. Daily users of the Snapchat app continue to rise. -Bloomberg

Telkom in Advanced Talks with South African Government for Broadband Partnership Amid Asset Bids

Telkom is in advanced discussions with the South African government to collaborate on rolling out broadband services, even as multiple buyers express interest in acquiring the telecommunication company’s assets. The partnership will involve Telkom’s businesses, including Openserve fiber unit, Broadband Infraco SOC, and Sentech SOC Ltd. The government, owning a 40% stake, is not interested in selling it. Telkom’s recent financial struggles have attracted bids from various entities, with the latest offer led by its former CEO and partners. The potential partnership aims to help connect 80% of South Africans within three years, according to Communications Minister Mondli Gungubele. Telkom’s share price is down 2.4% at the time of reporting.

British American Tobacco Reports Resilient Half-Year Performance with Revenue Up 4.4%

In the first half of 2023, British American Tobacco (BAT) showcased a resilient performance, reporting a revenue increase of 4.4%, with revenue from New Categories surging by 26.6% (at constant FX). Non-Combustibles now account for 16.6% of Group revenue, a growth of 180 bps compared to FY22. The company’s reported profit from operations saw a significant boost of 61.4%, while adjusted profit rose by 3.6% at constant FX. BAT’s CEO expressed confidence in New Categories’ future contributions and acknowledged the need for further focus in the U.S. premium combustibles market. BAT shares are up 2.67% at the time of reporting.

Altron Limited Forecasts Mixed Results with Significant Changes in Operations

Altron Limited projects a variance of at least 20% in financial results for the six months ending August 2023 compared to the same period in 2022. Headline earnings per share (HEPS) from continuing operations are expected to increase by 5% to 24%, while group HEPS is estimated to decrease significantly by 268% to 288%. The company reports positive progress in profit improvement strategies for Netstar and Altron Systems Integration. However, the discontinuation of non-core subsidiaries, Altron Nexus and Altron Document Solutions, negatively impacts the overall financial performance. Altron’s share price is down 7.9% at the time of reporting.

Microsoft’s Azure Growth Slows, Dampening Enthusiasm for AI Expansion

Microsoft reported lacklustre quarterly sales growth, primarily due to a slowdown in its Azure cloud-services business, with Azure revenue growth slipping to 27% from the previous quarter’s 31%. Despite introducing new AI-powered products, including those from partner OpenAI, the company’s AI revenue increase is projected to be gradual. CEO Satya Nadella’s AI initiatives have garnered strong customer interest, but the delay in broad availability of AI-integrated products, coupled with a deceleration in Azure’s growth, overshadowed optimism. As a result, Microsoft’s shares fell nearly 4%, raising concerns about the potential for delayed AI-driven growth.

Alphabet Shares Soar as Google Search Revenue Beats Expectations Amid AI Chatbot Competition

Google’s parent company, Alphabet Inc., outperformed analysts’ projections in the second quarter with revenue reaching $62 billion, primarily fuelled by strong advertising on its flagship search business. Despite facing competition from AI chatbots, Google’s search product remains dominant, outpacing rivals like Meta Platforms Inc. and Snap Inc. The company’s CFO, Ruth Porat, will take on a new role as president and chief investment officer, ensuring continuity in fiscal discipline. Google’s cloud unit also exceeded expectations, and YouTube’s ad sales showed resilience despite market challenges. Other Bets showed promise, narrowing losses to $813 million. -Bloomberg

Drones Aid Anglo in Combating Disruptions on Critical Iron Ore Line in South Africa

South Africa’s Anglo American Plc-owned mines are facing disruptions in their iron ore exports due to cable theft on the 861-kilometer rail link to the port of Saldanha. Kumba Iron Ore Ltd., with the help of drones and surveillance measures, is working with authorities to address the issue. The thefts have resulted in reduced shipments and stockpile buildup. Transnet SOC Ltd., the state-owned operator of the railway, is also facing challenges, including a shortage of locomotive spare parts. Anglo’s subsidiary, Kumba, almost 70% owned by Anglo, reported first-half net income of 9.6 billion rand ($536.9 million), down 17% from a year earlier. -Bloomberg

Tuesday 25 July, 2023

Biggest Market Movers on the Day

US Stock Trading Muted as Tech Giants’ Earnings Awaited; European Shares Edge Higher on Chinese Stimulus

US stock trading remained subdued as investors awaited earnings reports from technology giants Microsoft Corp. and Alphabet Inc., and the upcoming Federal Reserve decision. The S&P 500 fluctuated, while the Nasdaq 100 outperformed. Treasuries faced pressure after a rise in US consumer confidence. European shares edged higher, buoyed by resource firms benefiting from Chinese stimulus. Unilever Plc and Remy Cointreau SA saw significant gains due to strong sales. Investors were cautious ahead of the Fed and European Central Bank policy signals. Chinese leaders pledged more aid to their economy, boosting US-listed Chinese stocks, copper, and iron ore prices. -Bloomberg

Naspers Update on Repurchase Programme

Naspers Limited provided an update on its Repurchase Programme for Prosus and Naspers shares. Between 17th July and 21st July 2023, the company repurchased 427,172 Naspers Shares at an average price of ZAR3,317.7893 per share, totalling ZAR1,417,266,671 (US$78,992,592). Naspers is a global consumer internet company and a significant technology investor with a focus on long-term growth potential. It operates and invests through Prosus, which has listings on Euronext Amsterdam and the Johannesburg Stock Exchange. Naspers’ share price up 2.35% on the day.

Shoprite Holdings Reports 16.9% Sales Growth in 52-Week Period Ending July 2023

Shoprite Holdings recorded a 16.9% increase in total merchandise sales, reaching approximately R215.0 billion in the 52 weeks ending July 2, 2023. The Supermarkets RSA segment contributed 80.8% to Group sales with a growth of 17.8%. Supermarkets Non-RSA achieved a 16.4% increase in sales, while the Furniture segment reported a 5.1% rise. Other operating segments saw a sales increase of 13.3%. Despite customer growth and market share gains, lower prices impacted the gross margin. Additionally, diesel costs during load-shedding amounted to R1.3 billion. Pro forma financial information indicates like-for-like sales growth.

Kumba Reports Strong Interim Results

Kumba’s interim results for the period ending 30 June 2023 highlight their commitment to safe and sustainable mining practices, with no fatalities and a focus on zero harm and occupational diseases. The company achieved a strong financial performance, with R7.9 billion in attributable free cash flow and an impressive ROCE of 77%. They recorded an EBITDA margin of 52%, supported by an average realized FOB export price of US$106/wmt, 4% above the benchmark. Production increased by 6%, and the C1 unit cost improved to US$39/wmt. Consequently, they declared an interim cash dividend of R22.60 per share. The company aims to remain competitive and sustainable while embracing green initiatives.

Sasol Production and Sales Metrics for the Year Ended 30 June 2023

Sasol Limited reported its production and sales metrics for the year ending on June 30, 2023. The company faced challenges due to the volatile global economic landscape, fluctuating oil and petrochemical prices, and an unstable product demand environment, affecting volumes and profitability. The Energy Business showed improvements in operational and business performance in the second half of FY23 compared to the first half. The drilling campaign in Mozambique yielded positive results, leading to an increase in well inventory. In the Chemicals Business, sales volumes for the year were lower than the previous year due to weaker demand and higher costs, affecting overall unit margins and profitability. Looking ahead to FY24, Sasol expects continued pricing and demand volatility. Ongoing business disruptions in South Africa due to challenges faced by state-owned enterprises and recent safety incidents in trucking are expected to continue. Overall, Sasol faces both challenges and opportunities in its various business segments, with market conditions playing a crucial role in its future performance.

Reinet Investments Q1 2023: Net Asset Value Shows 1.3% Decrease

Reinet Investments S.C.A. reported its financial results for Q1 2023, revealing a net asset value of EUR 5,646 million, reflecting an 8.6% annual compound growth rate since March 2009, including dividends paid. However, there was a decrease of EUR 74 million (1.3%) from the previous quarter’s value of EUR 5,720 million. The net asset value per share stood at EUR 31.06, down from EUR 31.46 in March 2023. The company received an inaugural dividend of EUR 57 million from Pension Insurance Corporation Group Limited and made commitments totaling EUR 38 million in new and existing investments. -SENS

Monday 24 July, 2023

Today’s JSE-Top 40 Gainers and Losers from Sharenet, co-sponsors of the Fantasy Fund Manager game

CFO and Executive Director Resigns from Tiger Brands to Pursue Opportunity in Australia

Ms. Deepa Sita, the Chief Financial Officer and Executive Director of Tiger Brands Limited, has resigned to pursue a new opportunity in Australia. The resignation will take effect from 31 December 2023, and the Board has accepted her decision, expressing gratitude for her three years of service and commitment. The company will inform shareholders about the appointment of a new CFO in the future. Tiger Brands’ share price is down 2.5% on the day. -SENS

US Stock Market’s Record High in 2023 Faces Fed Test Amid Profit Improvements

The US stock market is on the brink of reaching a record high, with Corporate America’s outlook expected to improve. However, investors are wary of the Federal Reserve’s influence on the bull run. As inflation pressures ease and the S&P 500 Index remains close to its all-time peak, the upcoming central bank meeting becomes crucial. The fear is that a strong labor market may lead to further tightening, risking Wall Street’s profit forecasts, particularly for tech shares. Despite positive signs in housing, concerns about a potential recession persist as earnings improve. -Bloomberg

Tesla Dominates Global EV Market, Leaving Germany’s Automakers Behind

Tesla has surged ahead in the race for electric vehicle (EV) supremacy, outpacing Germany’s top automakers combined. Delivering 889,015 EVs in the first half of the year, Tesla has left Volkswagen AG, BMW AG, Mercedes-Benz Group AG, and Porsche AG struggling to keep up. Software issues delaying key models, waning sales in China, and fierce competition from Tesla and local champion BYD Co. have hindered the German companies. Despite challenges, they plan to introduce competitive EV offerings and develop new technology platforms to catch up and challenge Tesla’s lead in the global EV market. –Bloomberg

Implats’ Offer to RBPlat Shareholders Results in Acquisition of Over 96% Shares

In the Offer Circular dated January 17, 2022, Implats made an offer to the holders of RBPlat Shares, and the results have been announced. As of July 21, 2023, RBPlat Shareholders holding approximately 96.21% of the RBPlat Shares, excluding those held by Implats before the offer, have accepted the offer. Implats now holds approximately 98.35% of RBPlat’s issued ordinary share capital. Remaining RBPlat Shareholders, representing less than 10% of the shares, will have their shares compulsorily acquired by Implats at the Offer Consideration. Following this, RBPlat is expected to become a wholly-owned subsidiary of Implats, and its shares will be delisted from the JSE. -SENS

Japanese Mom-and-Pop Traders Embrace Risk, Increase Bets on Emerging-Market Currencies

Despite the potential for a monetary policy shift at home, Japanese retail investors dominate spot trading in Tokyo’s foreign-exchange market and have raised their bets on volatile currencies, favouring the Mexican peso and South African rand among others. Their net long positions in these currencies reached ¥147 billion ($1 billion), the highest in over two years. The prospect of higher interest rates in Japan doesn’t deter these investors from carry trades, involving selling the yen for high-yielding currencies, as they continue searching for better returns amid low rates on Japanese bank deposits. -Bloomberg

Friday 21 July, 2023

Egypt, data lifts Vodacom 1Q revenue 37%; ‘wheeling agreement’ with Eskom imminent.

Vodacom Group reported strong Q1 performance, marked by strong service revenue growth in Egypt, increased data volumes in South Africa, financial services and M-Pesa growth. Despite global economic uncertainties and inflation, the company has continued to invest heavily in enhancing network experiences, infrastructure, and power resilience. Group revenue increased 36.9% to R35.7 billion, with substantial contributions from new services. CEO Shameel Joosub says Vodacom is “encouraged by Eskom’s recent publication of a ‘Virtual Wheeling Platform’ paper that builds on our pioneering project with the energy utility to drive private sector investment into new energy generation. We are confident that our virtual wheeling agreement with Eskom will be signed off in the near term and that this will have a positive impact on the country’s power grid and renewable energy mix.”

SARB leaves door open for future interest rate hikes amid inflation risks

The SA Reserve Bank maintained borrowing costs at their highest level in over a decade, leaving room for potential interest rate hikes due to inflation risks in major economies. SARB Governor Lesetja Kganyago cited various risks to inflation, including lower tax revenues, higher employee compensation, and financial needs of state enterprises. The repo rate remains at 8.25%, with future changes being data-dependent. Two MPC members voted for a 25 basis point rise, suggesting a rate cut isn’t imminent. The bank’s GDP growth forecast for 2023 was revised upwards from 0.3% to 0.4%.

Thursday 20 July, 2023

Today’s market movers from Sharenet, co-sponsors of the Fantasy Fund Manager game

Truworths Overcomes Economic Headwinds, Reports 13.2% Sales Increase

In its 52-week business update, South African retailer, Truworths International, reported an 11.4% rise in group retail sales to R20.6 billion ($1.4 billion) for the period ending 2 July 2023. When compared with the corresponding 52-week period of 2022, sales rose by 13.2%. This growth was attained despite challenging macroeconomic conditions in South Africa and the UK, the Group’s main markets. Effective cost and margin management, new store formats, and consistent inventory management underpinned the company’s performance.

JSE All Share index reacts positively to SARB’s interest rate pause

The South African stock market’s overall index rose 350 points (0.2%) immediately after the announcement from the SA Reserve Bank that its Monetary Policy Committee has voted to leave interest rates unchanged. This followed the release earlier this week of better than expected inflation figures. The index rose from around 76 900 to 77 250 on the announcement (see graph below from the FT)

Anglo American shares +4% after 11% production increase in Q2 2023, driven by new copper mine

Anglo American has released its production report for the second quarter ending June 30, 2023, showing an 11% increase in production compared to the same period in 2022. The growth was primarily attributed to the ramp-up of the Quellaveco copper mine in Peru, which has reached commercial production levels. However, there were temporary lower productions from De Beers’ Venetia mine and Platinum Group Metals (PGMs) operations. The company remains focused on achieving full-year production guidance and enhancing operational performance through leadership changes and re-organization. The share price jumped 4% on the news.

Karooooo shares up 3% on 1Q revenue growth of 24%

Karooooo Limited, the parent company of Cartrack, Carzuka, and Karooooo Logistics, has announced solid financial results for the first quarter of 2024. The group’s total revenue grew by 24% to ZAR997 million, driven by a 18% increase in subscription revenue. Earnings per share increased to ZAR5.09, and free cash flow rose by 39% to ZAR158 million. The company’s strong financial position and successful business model position it for sustainable growth. Karooooo’s leading Operations Cloud platform continues to drive digital transformation and customer retention across various industries.

Anglo American Platinum Reports 9% Decrease in PGMs Production in Q2 2023

Anglo American Platinum Limited has released its production report for the second quarter ending June 30, 2023. The report highlights a 9% decline in total platinum group metals (PGMs) production, reaching 943,100 ounces compared to the same period in 2022. The decrease was primarily attributed to operational challenges at Amandelbult, planned infrastructure closures, lower grades at Mogalakwena, and the impact of Eskom load-curtailment. The company’s CEO, Natascha Viljoen, emphasized the commitment to safety and the focus on achieving the 2023 production guidance amidst various challenges. Investors had expected worse – the share price rose 1.8% on the news.

BHP Group FY23 Operational Review – Production Records but Reports Fatalities

Resources giant BHP Group Limited shares rose slightly after its operational review for the year ended June 30, 2023 was released this morning. The report highlights two fatalities during the financial year, emphasizing the company’s commitment to safety. BHP achieved full-year production guidance for copper, iron ore, metallurgical coal, and energy coal. Annual production records were set at Western Australia Iron Ore, Spence, Olympic Dam, and refined gold. The unit cost guidance is expected to be achieved for Escondida, WAIO, and NSWEC. The average realized prices for copper, iron ore, and metallurgical coal were lower compared to the previous year. BHP completed the acquisition of OZ Minerals Ltd and made progress in exploration and strategic investments in various commodities.

IBM beats Q2 expectations with strong performance in Software, Consulting Services

IBM, a stock held in the BizNews model portfolios, reported Q2 net income of $1.6 billion, exceeding expectations, and demonstrated double-digit revenue growth in key business areas: Red Hat and data and AI. Software and consulting services drove revenue performance, with 7% and 4% growth respectively, while infrastructure revenue fell by 15%. For FY2023, IBM maintains its forecast of 3% to 5% revenue growth and anticipates free-cash flow of about $10.5 billion. The shares were steady in the after-market.

Tesla profit up 20%, shares ease on concerns over coming production dip

Despite price cuts and predictions of reduced production in the upcoming quarter due to factory updates, Tesla reported a 20% increase in Q2 profits, reaching $2.7 billion. CEO Elon Musk highlighted the influence of “macro conditions” on pricing, with further reductions potentially required. The company aims to deliver 1.8 million vehicles this year, in spite of a brief production slowdown. Tesla’s automotive gross margin has narrowed to 18%, largely due to cost-cutting efforts.

Netflix shares drop 8.5% despite improved subscriber growth in Q2

Netflix’s crackdown on global password sharing resulted in a growth of 5.9 million subscribers in Q2, recovering from a loss of almost a million in the year-ago quarter. The ongoing Hollywood strikes led to reduced content spend, allowing Netflix to raise its free cash flow forecast to $5 billion. However, revenues missed projections, partly due to overseas price cuts, and shares fell 8.5% in aftermarket trading to $438 (from $477) The company also plans to stop offering its lowest-cost, $9.99/month ad-free plan.

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