Daily Report 14 February 2024

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 0.89% lower at the 73 063 level.

In a trading update from Transaction Capital limited, the company said that WeBuyCars has resumed its earnings growth trajectory with core earnings growing 20% in the first four months of the 2024 financial year, compared to the same four month period in FY2023. WeBuyCars’ earnings performance in FY2023 was impacted by the change in market dynamics, as the factors that had contributed to unusually high used car demand and price inflation in 2022 reversed.

With regard to the firm’s intention to the unbundling of WeBuyCars and its separate listing on the Main Board of the JSE, the company will distribute 0.30241 WBC shares for every 1 Transaction Capital share held, do a private placement of WeBuyCars shares of R500 million and a proposed pre-listing capital raise of up to R750 million by WeBuyCars. Transaction Capital currently holds 74.9% of the issued share capital of WeBuyCars, it is anticipated that Transaction Capital‘s holding in WeBuyCars will reduce to between 57.5-67.5% prior to unbundling and listing. The unbundling is subject to shareholders approval by the 28^th of March 2024.

In a trading update from Goldfields, the company said that they expect headline EPS for FY 2023 to range from $0.91-0.97 per share ($0.22-0.28 per share lower), which is 18% to 24% lower than the headline earnings for continuing operations of $1.19 per share reported for FY 2022. The decrease in headline earnings was driven by the once off net proceeds for the Yamana break fee of $202 million ($0.23 per share) received in FY 2022. Gold Fields said it marginally missed its production target for 2023 as it produced slightly less gold than in the previous year, while costs jumped as expected, it expects to report a full-year gold-equivalent production of 2.30 million, a 4% dip versus 2.40 million in 2022.

In a trading update from Santam, the company said that they expect headline earnings per share (HEPS), to increase by at least 17% and by as much as 37%. Santam said the increase in HEPS was attributable to improved investment returns earned during 2023, strong returns on local and foreign money-market and fixed-interest portfolios were key contributors to the excellent investment performance, supported by foreign currency gains following a weaker rand exchange rate.

DRDGold released its financial results for the six months ended 31 December 2023. The company reported that revenue increased 12% to R2.97 billion vs year-ago of R2.65 billion. Operating income was up 15 % to R909.3 million vs year-ago of R792.4 million. DRDGold declared an interim cash dividend of 20 SA cents per share.

 

SA Economy:

Mining production rose by 0.6% from a year ago in December 2023, following an upwardly revised 6.9% jump in the prior month and compared with market forecasts of a 4.9% advance. This was the third consecutive month of growth in industrial activity.

Gold production fell 3.4% year-on-year in December 2023, the largest drop since November 2022, following a downwardly revised 2.9% decrease in November and negatively contributing to the volume of mining production by 0.5 percentage points.

Global Economy:

The United Kingdom’s unemployment rate declined to 3.8% in the fourth quarter of 2023, down from 4% in the three months leading up to September and slightly below the market consensus of 4%. Average weekly earnings including bonuses in the UK increased 5.8% year-on-year to GBP 669/week. Regular pay which excludes bonus payment in the UK, went up 6.2% year-on-year to GBP 626/week.

The ZEW Indicator of Economic Sentiment for Germany rose for a seventh consecutive month to +19.9 in February 2024, reaching its highest level in a year and surpassing market expectations of +17.5.

The ZEW Indicator of Economic Sentiment for the Euro Area increased by 2.3 points to 25 in February 2024, above market forecasts of 20.1.

In January, the US inflation rate decreased to 3.1% year-on-year, the lowest since March 2021, but remained slightly above the market’s forecast of 2.9%. Furthermore, annual core inflation eased to 3.9%, surpassing expectations of 3.7%. Consumer prices rose by 0.3% month-over-month, while the core rate increased to 0.4%, both exceeding expectations.

 

Global Company:

The FTSE 100 closed 0.82% lower at 7 512.

The Hang Seng Index is trading 0.39% higher at 15 807.The Hang Seng resumed after the Lunar New Year holiday.

Tencent and Alibaba Group overcame early losses caused by deletions of Chinese stocks from the MSCI global benchmark indices. Tencent is higher 1.3% to HK$290.80, while Alibaba Group added 1.7% to HK$70.50.

In China, the Shanghai Composite is closed.

The Dow Jones Industrial Average closed 1.37% lower to 38 272, while the S&P 500 closed 1.39% higher at 4 953.

All key sectors were in the red with real estate and technology leading the losses as shares of major tech companies such as Microsoft, Amazon and Alphabet were all lower by 2%.

Airbnb shares closed 7% higher after the company’s first-quarter revenue guidance came in ahead of expectations. The company said that it expects Q1 revenue to come in between $2.03 billion to $2.07 billion, ahead of estimates of $2.02 billion.

Coca-Cola shares gained 1% after reporting earnings that was in line with expectations and beating revenue forecasts.

 

Commodities:

Gold is trading lower by 1.35% at $1 993/oz, while Platinum is lower by 1.87% to $876.60/oz.

Brent crude was 0.51% higher at $82.25 a barrel.

 

Currencies:

The rand traded at R19.10 against the US Dollar, R24.07 against British Pound and R20.47 against the Euro.

The Euro is weaker against the US Dollar to trade at $1.0713.