Daily Report 11 March 2024

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 0.15% higher at the 73 718 level.

Mpact Ltd released results for the year ended 31 December 2023. Profit increased by 7% to R1.3 billion. Headline earnings per share up 8% to 512 cents. Mpact said that input costs had some relief around mid-year, particularly in plastic polymers, recovered paper, and pulp and the company were able to pass on some of cost reductions to customers during second half of year. Looking ahead, the company said that consumer spending and the broader South African economy are expected to remain constrained for the foreseeable future, with the upcoming national elections adding another level of uncertainty to operating environment and this will put pressure on demand and the margins of the South African consumer-focused products. The board has declared a final gross cash dividend of 75 cents per ordinary share.

Mondi Plc announced a potential all-share offer to acquire DS Smith for 5.14 billion pounds ($6.57 billion). Under the terms being discussed, Mondi shareholders will own 54% of the enlarged group with DS Smith owning the rest. The two companies said that the deal offers an exciting opportunity to create a pan-European industry leader in paper-based sustainable packaging. DS Smith shares were up 5.5%, at 343.0 pence in the UK, while Mondi shares were down 1.8% to R324.54 on the JSE.

Ports and logistics provider, Grindrod reported that its headline earnings increased 29% to R1.35 billion.

Net income came in at R1,062.15 million compared to R657.48 million a year ago. Basic earnings per share was R1.48 compared to R0.901 a year ago. Grindrod said that record volumes passed through the Maputo port where it runs three terminals, as mining houses bypassed the Durban and Richards Bay port. The company declared a final gross dividend of 38 cents per share.

Absa Group reported a marginal rise in annual profit for the period ended 31 December 2023. Revenue increased 8% to R104.5 billion, while operating costs were 10% higher at R54.5 billion. Impairments increased 13% to R15.5 billion and return on equity declined to 15.3% from 16.4%. Net interest income grew to R68.1 billion from R60.5 billion a year ago. Looking ahead, ABSA said that they expect high single-digit revenue growth in 2024, driven by net interest income and non-interest income growth. The credit loss ratio is likely to remain above the group’s through-the-cycle target range of 75 to 100 basis points but improve slightly year on year as interest rates start to moderate.

 

SA Economy:

Local markets await the release by Statistics South Africa for the manufacturing and mining production figures for January on Thursday. Mining production year on year in December grew by 0.6%. Mining production is expected to have picked up by 1.5% (y/y) in January. Manufacturing production numbers are also expected to show a recovery from the 0.7% back in December.

 

Global Economy:

The US non-farm payrolls report showed the US economy added 275 000 jobs in February. However, the unemployment rate ticked up to 3.9%, its first increase in four months. Over the past 12 months, the average hourly earnings increased by 4.3% in February and 0.1% month on month.

China’s Consumer Price Index (CPI) increased slightly by 0.7% compared to the median forecast of 0.3%. On a month-on-month basis, headline consumer inflation increased by 1.0%, driven by higher prices in food and services. The core CPI, excluding food and energy, increased 1.2% Y/Y.

 

Global Company:

The FTSE 100 closed 0.43% lower at 7 659.

The Hang Seng Index is trading 1.45% higher at 16 589.

The Hang Seng Tech Index gained 2.3%. Alibaba Group Holding climbed 2.3% to HK$72.95 and Tencent Holdings added 1.8% to HK$274.60.

In China, the Shanghai Composite is up 0.12% to 3 049.

The Dow Jones Industrial Average closed 0.18% lower to 38 722, while the S&P 500 closed 0.66% lower at 5 123.

Marvell Technology and Broadcom reported disappointing results, with Marvell down 11.4% and Broadcom down 7%, saying that they have seen growth in its AI business offset by weaknesses in other segments.

Nvidia made a sharp intra-day reversal, closing 5.6% lower at $875.28.

 

Commodities:

Gold is trading higher by 0.91% at $2 177/oz, while Platinum is lower by 0.37% to $916.40/oz.

Brent crude was 2.14% lower at $81.31 a barrel.

 

Currencies:

The rand traded at R18.78 against the US Dollar, R24.12 against British Pound and R20.54 against the Euro.

The Euro is slightly weaker against the US Dollar to trade at $1.0940.