| Thursday 28 April 2022 Good morning Voornaam,
It's been a wild time in the US market, with all eyes on the earnings releases by the world's most important tech companies. It's incredible to see the growth rates at companies like Microsoft and Alphabet (Google). Microsoft grew its revenue by 18% year-on-year, which is extraordinary when coming off a base that size. In just one quarter, Microsoft's revenue was $49.36 billion. Let that number sink in for a moment. Alphabet revenue was even larger at $68 billion (up 23% year on year), with around 10% of that coming from YouTube advertising revenue. I hold shares in both.
As I announced earlier this week, InceConnect and my weekly mailer Ghost Mail will be merging. If all goes to plan, then the second week in May will see Ghost Mail arriving in your inbox every morning instead of InceConnect. As part of that, I plan to dedicate som e more time to covering the most important international news, without compromising the local focus of this publication.
In line with an announcement a few days prior, Barclays PLC sold down its stake in Absa such that it now holds just 7.44% in the local bank. Considering Barclays took a controlling stake in the mid-2000s during a bull market and a time of strong economic growth in South Africa, it hardly sends a great message about our economy that this is where Barclays has ended up with its Absa adventure.
Kaap Agri was bright green on Tuesday, rallying over 4% after releasing a trading statement for the six months ended March 2022. HEPS is expected to be between 340 cents and 343 cents, an increase of between 13.3% and 14.3% vs. the comparable period. Recurring HEPS is even higher at between 350 cents and 353 cents. The share price closed at just over R45, an annualised Price/Earnings multiple of around 6.4x . The price is down around 9.9% this year.
The CEO of Royal Bafokeng Platinum indicated in 2021 that he wished to retire at the 2022 AGM. The board has secured his services under a 12-month contract, or until certainty is achieved with the current corporate action with Impala Platinum. The COO has also retired and entered into a similar contract. It's important to have management stability during a period of significant change in the business, so I think the company has done the right thing here.
Retail investor favourite Renergen has released a trading statement for the year ended February 2022. The value of the company lies in the projects being developed, not in the current earnings. Don't be shocked to learn that the headline loss per share is between -31.4 cents and -24.1 cents per share, an improvement of between 14% and 34% vs. the prior year.
The acquisition of ARB Holdings by Sabvest-backed Masimong Electrical Holdings has been approved by ARB shareholders. The focus will now be on meeting the other deal conditions that were detailed in the circular. Sabvest expects the deal to close by June, which would give the company an indirect interest in ARB of just over 20%.
Today's feature articles include mining news from tin miner Alphamin (new drilling results from Mpama South) and a comprehensive quarterly update from South32. I've also covered Netcare's voluntary trading update, which is a wonderful case study of operating leverage in practice.
If you haven't done so already, be sure to listen to Episode 72 of Magic Markets. Petri Redelinghuys from Herenya Capital Advisors joined us to discuss his energy and ETF positions, along with one of the major ethical dilemmas in the world of trading and investing.
Have a great "fake Monday"!
The Finance Ghost
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