Daily Report 15 November 2022

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 0.2% lower at the 72 823 level, led by an over 6% drop in the shares of Vodacom Group Ltd.

Omnia shares fell 6% after it released an update in which it said it was pleased with its performance, although it has taken a hit from accounting effects related to Zimbabwe. The Zimbabwe business is expected to report a loss after tax of R172 million for the six months to end September. Adjusted headline earnings from continuing operations, which excludes Zimbabwe, is expected to increase by between 26% and 36%.

In a trading update from Rhodes Food Group, the company said that it expects headline earnings to be at least 54% and 59% higher than the prior year’s R230 million, amid strong demand for canned fruit and fruit puree products internationally. The company also received an insurance settlement of R43.4 million for loss of profits during the Covid-19 lockdown.

In a trading statement ahead of its interim results for the six months ended 30 September 2022,

Telkom warned shareholders that earnings would about halve in its half-year to end-September, hit by a litany of issues including load shedding and upfront payments for handsets. Headline earnings per share are expected to decrease by between 45% and 55% to end-September. The company said that the impact of revenue deferral resulting from the continued growth of its post-paid mobile sales reduced revenue recognised by R299 million. Telkom results are expected to be released on the 23^rd of November. Telkom shares closed lower by 6.6% at R33.46.

In a trading update from diversified industrial group Barloworld, the company said that basic earnings per share are expected to fall in a range of between 22% to 26%. In the group’s update for the eleven months to end-August, it reported a 20% increase in revenue from its equipment business in southern Africa and a 36% increase from Ingrain.

Sephaku reported that group profit jumped 50% to R26.7 million for six months to end-September but further stated that rising inflation and interest rates were weighing on retail customers, with cement demand now having normalised after spiking in the aftermath of Covid-19. Sephaku also owns concrete supplier Métier. Métier’s net profit after tax increased by 47% to R29.5 million, benefiting from both successful cost controls and a 16% rise in volumes.

Shoprite Holdings shares rose 8% to close at R254.90 per share after the grocery retailer reported first-quarter sales growth of 18.6% as financially constrained consumers look for for discounts. Shoprite said that the first quarter has been accompanied by a number of rising costs, in particular, fuel prices as the utility Eskom implements rolling power outages due to generation capacity constraints. Shoprite estimated that its additional monthly spend on diesel amounts to R100 million per month.

Brait PLC said that it plans to list consumer packaged goods company Premier Group separately on the JSE with the aim of raising up to R3.7 billion. Premier Group owns brands such as Blue Ribbon bread, Iwisa maize and Snowflake flour. It plans to list on the main board of the JSE as early as December.

 

SA Economy:

Ratings agencies S&P Global and Moody’s are scheduled to review South Africa’s sovereign credit ratings, with their decisions expected on Friday. An improved fiscal outlook in last month’s mid-term budget means that the ratings agencies are likely to strike a positive tone in their reviews, but that may not translate into an upgrade yet.

A new lender has entered the South African agriculture sector. AgMerchant Capital, a new credit provider focusing on supporting the local agricultural value chain, was launched last week, with former Agri boss, Chris Venter in charge. The new company said that it aims to provide the entire value chain with financial support, backed by innovative, digitised, and long-term sustainable financial services solutions.

 

Global Economy:

China’s retail trade declined by 0.5% year-on-year in October 2022, shifting from a 2.5% gain in the prior month and pointing to the first drop in five months while industrial production expanded 5% year-on-year in October 2022, less than market estimates of a 5.2% increase.

India’s inflation rate slowed less than expected. India’s retail price inflation eased to 6.77% year-on-year in October 2022, down from September’s high of 7.41%.

U.S. government bond yields rose after a Federal Reserve official, Christopher Waller signaled that there are more interest-rate increases ahead despite inflation softening. The yield on the benchmark 10-year Treasury note edged up to 3.886% from 3.828% at last week’s close.

 

Global Company:

The FTSE 100 closed 0.92% higher at 7 385.

The Hang Seng and Shanghai composite were upbeat after the meeting between Biden and Xi at the G20 summit where they called for reduced tensions between the two countries.

The Hang Seng Index is higher by 3.48% to 18 227. Tencent rose 7.6%, Meituan gained 5.9% and Alibaba rose 9%. The Hang Seng Tech index was up around 4%.

In China, the Shanghai Composite is up 1.44% to 3 127.

The Dow Jones Industrial Average fell by 0.63% to 33 536, while the S&P 500 was lower by 0.89% to 3 957.

Growth stocks gave back some gains from last week, with Apple Inc, Intel Corp and Amazon.com closed down about 1% each.

 

Commodities:

Gold is up 0.55% to $1 770/oz, while Platinum is higher by 0.29% to $1 031/oz.

Brent crude was 2.76% lower at $92.78 a barrel.

 

Currencies:

The rand traded at R17.25 against the US Dollar, R20.34 against British Pound and R17.84 against the Euro.

The Euro is slightly firmer against the US Dollar to trade at $1.0334.