BizBytes – Friday 9 June 2023

Friday, 9th June 2023

Here are today's top movers on the JSE from Sharenet, platinum sponsor of the Fantasy Fund Manager game

Eskom latest: Storms Boost Wind Generation; Outages at Weekend

A series of winter storms helped reduce electricity blackouts over the past week, allowing renewable-energy plants at the coast to boost their supply to the national grid, according to an official at South Africa's state power utility Eskom Holdings SOC Ltd.

There have been "great wind-resources generation coming through in the last week," Eric Shunmagum, a generation executive at Eskom, told reporters Friday in the capital, Pretoria. "With cold fronts coming through, we see better wind resources."

The improved availability of electricity has also been driven by higher tariffs that have cut demand, improved maintenance at power plants, and increased diesel supply at the open gas cycle turbines used for emergency supply during periods of high demand, he said.

South African Presidency Maps Out Path to End Blackouts (June 9, 12:57 p.m.)

South Africa will focus on fixing its dilapidated coal-fired power plants and the longer-term roll-out of at least 50 gigawatts of private renewable energy projects by the end of the decade to tackle crippling blackouts, according to senior officials in the nation's presidency. The South African government officials in Johannesburg announced plans to:

• Unlock new grid capacity with 25 transmission projects.
• Appoint an independent board for the transmission unit by end of June.
• Invest 72 billion over three years to upgrade the transmission system.
• Add 50-60 gigawatts of renewable energy by 2030.

Eskom Plans Power Cuts Through the Weekend (June 9, 12:52 p.m.)

Eskom said it will implement power cuts throughout the weekend after plant breakdowns and delays in returning to service generating units at three facilities.

The electricity utility will implement so-called stage 3 loadshedding — the removal of 3,000 megawatts from the grid — between 4 p.m. on Friday until 12 a.m., before implementing stage 1 outages from 5 a.m. to 4 p.m. on Saturday, the company said in a statement. The cuts will then be increased to stage 4 until midnight on Saturday, with the pattern repeating on Sunday.

Worker Concerns Slow South Africa's $8.5 Billion Green Pact (June 9, 10:30 a.m.)

The implementation of South Africa's landmark $8.5 billion climate finance pact with some of the world's richest nations has been delayed by work on how to incorporate recommendations that it do more to spell out how coal-dependent workers and communities will be shielded from the impact of a green transition.

The South African government's Just Energy Transition Implementation Partnership aims to produce a plan on how it will spend the money to shift the country away from using coal by the end of August, according to Rudi Dicks, head of the project management office in the Presidency. -Bloomberg

Analysts raise earnings outlook for South Africa's Equity Index, but money managers express doubts

Analysts have increased profit forecasts for South Africa's main equity index, the FTSE JSE Africa All Share Index, to nearly an 11-year high. However, money managers caution that these optimistic projections may be misleading. While the index's earnings outlook has improved, it relies heavily on growth prospects outside the country, such as luxury goods sales in Asia and digital commerce in Europe. South Africa's economy continues to face challenges, including energy shortages and high inflation. Money managers express concerns about a domestic earnings recovery and expect further downgrades. Companies with international operations dominate the index's performance, rather than South African-focused firms. -Bloomberg

Donald Trump indictment

According to the New York Times, Donald Trump has been indicted for the second time, making him the first president, former or current, to face multiple federal charges. The latest indictment relates to his handling of classified documents after leaving the White House. Trump is accused of resisting efforts to retrieve the documents and faces several criminal counts, including violating the Espionage Act, making false statements, and conspiracy to obstruct justice. Trump denies the charges, labeling them as a political witch hunt. The indictment raises questions about the potential impact on his third run for president. The case is being overseen by a special counsel in Miami, possibly offering a jury that is more favorable to Trump. In addition to this indictment, there are two ongoing criminal investigations into Trump's actions regarding the 2020 election and the Capitol attack.

Woolworths tops retailer Sentiment Index in South Africa, while telcos struggle with poor customer service

PwC and BrandEQ have collaborated to produce the first-ever Retailer Sentiment Index for South Africa, analysing consumer sentiment towards the country's major retail brands. The study examined over 1.5 million social media posts categorising them as positive or negative to calculate a net sentiment score for each brand. While specific scores were not disclosed, Woolworths emerged as the leader with a net sentiment score of +19.2%, significantly higher than the industry average of 3.3%. Woolworths received praise for affordability, house brands, high-quality goods, and customer service, although the latter still had a negative net sentiment. Complaints across all retailers primarily focused on slow turnaround time, staff conduct, and staff competency. Spar excelled in offering special deals, while Checkers' Xtra Savings loyalty program fared well. The overall retail sector outperformed local telecom and insurance companies but lagged behind banks in terms of net sentiment. The banking sector was praised for product offerings and loyalty programs, while insurance companies saw positive feedback for customer engagement. The telco industry had the lowest net sentiment due to poor customer service, although some operators received positive feedback for network maintenance during load-shedding and online acquisition campaigns.

TFG loses R1.5bn in turnover through load shedding in year to end March
Despite significant challenges, including load shedding in South Africa, TFG Group achieved solid financial results for the year to the end of March it announced on SENS today. The impact of load shedding resulted in a conservative estimate of 360,000 lost trading hours, reducing retail turnover by over R1.5 billion. Despite this, sales for the year were 19% up at R52bn. The company invested in alternative power solutions but experienced difficulties during increased load shedding. The group's gross margin contracted due to increased promotional activity and surplus inventories. Headline earnings per share fell 4% to 968.9c, and the final dividend for the six months to the end March was reduced by 54%b to 150c a share because of "both the high level of uncertainty in the global consumer environment as well as the significant level of investment in the business." The share price picked up 3% on the results, rising to R93.24, providing welcome relief in a long downward trend.

Dispute over Rupert's valuation of Leopard Creek Golf Estate

A dispute between South Africa's wealthiest person, Johann Rupert, and the Nkomazi Local Municipality over the valuation of the Leopard Creek Golf Estate has shed light on the difficulties faced by the luxury golfing estate sector, as reported by Business Day. The municipality valued the property at approximately R1.6 billion, while Rupert and his associates insist it is worth only R330 million. Leopard Creek contested the valuation and hired property mogul David Nagle to argue that golf estates are saturated, unprofitable on their own, and burdened by high maintenance costs. The court ruled in favor of Leopard Creek, ordering a reconsideration of the valuation. The outcome will impact the estate's rates and taxes.

Foschini Group's turnaround of Jet Chain attracts rival's attention in South African market battle

The Foschini Group (TFG) has successfully revitalised the South African discount clothing chain Jet after acquiring it three years ago, catching the eye of its larger rival, Pepkor Holdings. TFG has refurbished stores, expanded the supply base, and introduced its home-furnishing brand, Jet Home, to numerous outlets. The increased competition for the lower-end market, driven by South Africa's energy crisis and rising food inflation, has prompted consumers to flock to discount stores. TFG aims to double its revenue from the value segment to $1 billion in the next five years. -Bloomberg

Business Day: Ramaphosa visiting Moscow to convince Putin to stay home

South African morning newspaper Business Day reports today that SA president Cyril Ramaphosa plans to visit Russia and Ukraine to handle the political and diplomatic challenges arising from the arrest warrant issued by the International Criminal Court against Russian President Vladimir Putin. Ramaphosa aims to persuade Putin to participate in mid-August's BRICS summit online, as detaining him – as SA is obliged to do – could lead to war between the countries. Pretoria is apparently concerned about antagonizing Russia and its Western trading partners, is considering various options to address the situation while upholding the rule of law. The government had previously granted diplomatic immunity for BRICS events, but has clarified that it did not override the arrest warrant.

Promising Results for Zuranolone in Major Depression: Phase 3 Data Reveals Rapid Symptom Improvement

Zuranolone, a neuroactive steroid targeting GABAAR receptors, demonstrated significant and rapid improvement in depressive symptoms in a phase 3 study for major depressive disorder (MDD). Patients receiving zuranolone 50 mg/d experienced greater improvement compared to placebo, with effects observed as early as day 3 and sustained throughout the treatment period. These findings highlight zuranolone's potential as a promising therapy for MDD.

UK Government's COVID-19 Inquiry Challenge to be Expedited in Late June: Lawyer

The British government's legal challenge against the COVID-19 public inquiry, involving the withholding of internal WhatsApp messages, will be expedited and heard at London's High Court on 30 June or shortly after. The "rolled up" hearing will address both the permission for a judicial review and the full legal challenge concurrently. The inquiry, initiated by former Prime Minister Boris Johnson, scrutinizes the country's pandemic preparedness and response, potentially impacting current Prime Minister Rishi Sunak as the next national election approaches.