The JSE failed to follow US stocks higher yesterday as the benchmark S&P 500 hit a new all-time high. The US market has now fully recovered from a sharp slump in March when the Covid-19 pandemic swept across the globe. Optimism about a vaccine for the virus, as well as continued economic stimulus from governments and a possible resolution to US-China trade tensions were reported to have driven the S&P's gains.

Back home, Sasol weighed on the local market, shedding a further 5% after the energy and chemicals group reported a full-year loss on Monday and confirmed plans to launch a rights issue next year. BHP also closed lower after its full-year results fell slightly shy of expectations. You can find more analysis on BHP's results from Ingham Analytics down below, as well as a link to their most recent research note on the group.

Meanwhile, PPC has again delayed its annual results and has restated its 2019 numbers after picking up a number of mistakes as it prepared its accounts. More on that to follow, along with updates from property groups Resilient, Fortress and Balwin. Also, Northam Platinum has continued to buy back the Zambezi preference shares that were issued to help fund its 2015 empowerment deal, paving the way for future dividends for shareholders.

I hope you have a good day.

Stephen Gunnion

Managing Editor, InceConnect

A satisfactory BHP result, say Ingham Analytics

Ingham Analytics say that the annual BHP results were, in their estimation, satisfactory with adjusted EBITDA coming it exactly as they forecast at $22 billion whilst net earnings of $9.1 billion (179 cents per share) were just shy of their forecast of $9.3 billion. Ingham Analytics had forecast return on capital employed of 18% and the final number is 17%. Iron ore contributed 64% of EBITDA, exactly in line with forecast. Copper came in at 19% of EBITDA, Petroleum at 10%, and metallurgical coal at 9%. Net debt of $12 billion was also exactly as forecast, low in relation to equity of $48 billion. Ingham Analytics forecast net interest paid cover based on EBITDA of 23x and the actual figures is 24x.

Ingham Analytics did mention in their last note ("Iron ore up, all else down") that there was scope to pay a special divided. The Board declared a final dividend of 38 US cents per share but topped that up by a further 17 US cents per share so together with the 65 US cents at the interim the total for the year is 120 US cents. Ingham Analytics will update their comprehensive F2021 forecast in due course but they say with iron ore at around $120/t, spot EPS could be as much as 30% higher than their current (largely maintained earnings) assumption - which means there could still be some juice to squeeze out of this share.