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Ingham Analytics says the building and construction sector of the JSE is a shadow of what it was before the football world cup a decade ago. They have trimmed construction sector coverage to just three companies, Raubex, Wilson Bayly Holmes and Afrimat. Since their last note on Raubex in early October 2019, the stock is up 25%. Is there more to come or is this as good as it gets for now?
Ingham Analytics has issued a fascinating insight into Prosus. They say that Prosus has been rebuffed by the Board of Just Eat and Just Eat shareholders. Just Eat will now merge with Takeaway.com. Ingham Analytics had been sceptical that a £5.5 billion cash offer for Just Eat would have been ultimately value enhancing anyway. They also say that since listing on Euronext Amsterdam to fanfare in September 2019, the Prosus discount to its 31% shareholding in Tencent has increased and they view the listing as a flop. The Naspers discount too remains intact.
Ingham Analytics say Sasol has a new CEO and the interim results to be released on his watch on or around 24 February will be weak. In fact, they say F2020 will be weak for earnings, period. They expect some “kitchen sinking” in the results. That may set Sasol up for a better F2021, by which time Lake Charles will (hopefully) be better than breakeven, but that is not saying much, and returns will still be mediocre for several years. The executive of Sasol has presided over material shareholder value destruction says Ingham Analytics. Purchase this report today to find out more about the latest Ingham Analytics view on Sasol and earnings prospects.
Every December for almost two decades, Saxo Bank, a Copenhagen headquartered specialist trading and investment bank, publishes its annual “Outrageous Predictions”. For 2020, South Africa makes a rare appearance, and the prediction makes for an electrifyingly possibility for capital markets. Should Saxo be proven right, even half right, says Ingham Analytics, the implications for the bond market, government borrowing, interest rates, and the rand exchange rate would be dire and economically very painful. The implications for the banking sector would therefore be equally bleak. This squares with what Ingham Analytics have been cautioning about for some time.
Ingham Analytics have updated their earnings on Kumba, 69.7% owned by Anglo American. They say the iron ore giant will end the twelve months to December 2019 with a strong financial performance, driven by higher average realised iron ore prices.
It is just over seven months since our first “Politics-proofing your portfolio” note, issued ahead of the 8 May general and provincial elections. We advised that it was prudent to keep hedging your bets and have a good proportion of SA politics-proof stocks. As Christmas approaches this is even more the case. For those who wish to bolster their investment portfolio or give shares as a gift, we challenged ourselves to pick just three out of around 400 listed companies for the stocking. Predominantly domestic-orientated JSE listed companies don’t feature but we do see the three we have chosen as being accessible to all through the JSE, without having to buy foreign listed companies on another exchange, and which offer a shield from a weak local economy with problematic politics.
This latest note by Ingham Analytics is hot on the heels of the Prosus note last week (“It’s all in Tencent”) which also had a China tech theme. In coverage of Baidu, among other overseas listed companies, Ingham Analytics gives investors an informed view of companies not listed on the JSE, but which South Africans have access to through various platforms. Ingham Analytics have deep knowledge on assets across several foreign markets, so their view is well-worth taking note of. They point out that several China-facing tech stocks can be bought on US or Hong Kong exchanges. Baidu, Alibaba, JD.com and NetEase can be purchased on Nasdaq whilst Chinese education stocks like TAL and New Oriental are listed on the NYSE. Tencent of course is listed on the Hang Seng. Ingham Analytics point to a bifurcation between different sub-categories of China tech. Over twelve months, Baidu is down 35%, Alibaba is up 33% and Tencent is up 9%. JD.com is up 60% over twelve months but that is after falling by 60% from the 2018 high in January. So, is Baidu a buy then? Ingham Analytics discuss latest Chinese internet developments with some companies doing better than others. They do say that for Baidu artificial intelligence is a high growth market but is this enough to propel earnings? iQIYI, the online video platform that is majority owned by Baidu, is also mentioned. An updated sum-of-the-parts valuation is given. This is a more than $40 billion market cap company so worth a read if you are interested in Chinese tech investment options.
Ingham Analytics will retain the analogy we applied to its holding company Naspers, namely a marked-down Tencent proxy. Not only does Naspers retain a significant discount to its shareholding in Tencent but so too does Prosus, albeit much less, with other assets valued at zero.
FirstRand is the favoured local bank by overseas fund managers, and we see the restructuring by Remgro and RMH as positive in that regard too. A detailed announcement is expected to be made during Q1 2020.
Mike Henry has been appointed CEO and takes over on 1 January 2020. A 16-year veteran of BHP he is currently President Operations, Minerals Australia. The announcement comes in the same week that BHP held a briefing in Sydney on its petroleum portfolio. BHP takes the view that oil is a highly attractive commodity and likely to remain so in the 2030s, beyond the projected peak in demand.