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Ghost Bites:

Bytes dropped over 10% and you have to dig deeper in the results to guess why
EOH still needs a solution for its debt
Famous Brands exceeds pre-Covid revenue
A quarterly review of Kore Potash helps you get up to speed on this company
Renergen and the inconsistent heating: a story of a three-week delay

Other than these headlines and some director dealings, the results of Nu-World are included in Ghost Bites this morning. Read it here>>>

What happened to Bytes?

Well, I'm not quite sure. There are three plausible explanations for the drop in price of over 10% on the market yesterday in response to results.

With HEPS up by 17.3% and an interim dividend that is 20% higher than last year, this was hardly a poor result. For many, the most confusing thing in the markets i s a decent result that gets greeted by a drop in the share price.

Here are my theories:

The valuation multiple is still too high, so the company is growing but not quickly enough
The market panicked about negative cash conversion, without reading further in the result to note that a small delay in a customer payment can cause havoc for that ratio
The bid-offer spread is wide and the share price is incredibly range-bound (an opportunity for traders)

I included the share price chart in Ghost Bites this morning. I would love to hear your opinion on why the price fell so sharply yesterday.

The rand ignored the MTBPS

The Medium-Term Budget P olicy Statement was delivered without much incident on the markets. The government announced plans to take over between a third and two-thirds of Eskom's debt, with details to be announced in February. SANRAL and Transnet will get bailouts, with a total package of R30 billion.

The budget deficit narrows faster than expected to 4.9% of GDP this year (vs. the 6% forecast in February). The first primary surplus in 15 years is expected in 2023 - 2024 and no new taxes are envisaged for now. Debt as a percentage of GDP is expected to peak at 71.4% in 2023 vs. a peak of 75.1% in 2025 in the February budget.

The total wage bill is expected to increase by 3.3% over the next three years and the R350 grant will be extended to the end of March 2024. Finance Minister Enoch Godongwana didn't confirm the public sector pay increases next year.

The rand shrugged off this news, with risk-on still evident in the marke t ahead of the ECB decision later today. The expectation is a 75bps hike, with focus likely to be on the subsequent press conference.

To help you understand the market context this week, TreasuryONE's Andre Botha has covered topics ranging from the UK to China in this article.

Final boarding call

There's still time to register for the bizval webinar scheduled for 12pm today. We will be presenting on ways to make your company more valuable. It's free and you can sign up here>>>
Magic Markets Ep 98 was an opportunity to answer questions sent through by our listeners, ranging from technical portfolio matters through to personal questions. You can enjoy it here>>>

Have a great day!

Ghost Bites (Bytes | EOH | Famous Brands | Kore Potash | Renergen)

The market took a bite out of Bytes | EOH still needs a solution for its debt | Famous Brands exceeds pre-Covid revenue | A quarterly review of Kore Potash | Renergen and the inconsistent heating

Another week, another central bank

This week, it's all about the ECB decision on Thursday. Andre Botha of TreasuryONE sets the scene.

Do slow iPhone sales mean trouble for Apple?

Chuck Saletta of EasyResearch highlights slower iPhone sales and what this could mean for the long-term performance of Apple. This article is brought to you by EasyEquities.

Unlock the Stock: Calgro M3 | Pan African Resources

In the latest edition of Unlock the Stock, we welcomed construction group Calgro M3 and mining house Pan African Resources to the platform.

Magic Markets Ep98: Answering listeners' questions

We love engaging with the Magic Markets audience. This week, we asked for questions and the people delivered. This is a fun and insightful episode, with some personal touches along the way.

Listen Now

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