The industrial sector has become all the rage among property funds. Yields on industrial properties are low (which means valuations are high), especially compared to retail and office funds. If you believe in mean reversion, then buying industrial funds at the moment isn't as fun as buying the best of the retail and office funds (the approach I have taken).
Stenprop has now changed its name to Industrials REIT. No marks for creativity; full marks for management focus. To be fair and as it was pointed out to me on Twitter, they've been using the name for a while overseas.
Ferrochrome business Merafe had a happy day on the market yesterday, up over 9% on the news that the fourth quarter European benchmark ferrochrome price was 15.4% higher than in the third quarter. At a time when PGM and iron ore miners have been s old off horribly, Merafe has given those with a diversified resources portfolio something to smile about.
The Competition Commission has approved Etion's disposal of Lawtrust to Altron. That's where the good news starts and stops when it comes to the Commission, because the conditions they have imposed on the Burger King sale by Grand Parade are so ridiculous that I couldn't believe my eyes when reading them. I've dedicated an entire article to the topic today. If I was the buyer, I would walk away and never bother in South Africa again. You'll see what I mean when you read the article.
At one point, issuing listed preference shares was all the rage on the JSE. The banks did it to take advantage of favourable capital adequacy rules which subsequently changed. Every now and then, you see one of the banks or other listed companies buying back its preference shares. Sasfin bought prefs back recently and now Nedbank is "considering making an offer" to buy back its listed preference shares. That was enough to send the Nedbank prefs more than 12% higher on the day.
Hyprop shareholders will be pleased to learn that the Delta City Mall in Montenegro, owned by Hystead in which Hyprop holds a 60% interest, is the subject of an offer from a European property investor. Any proceeds will be used to reduce the Euro-denominated debt in Hystead, reducing Hyprop's consolidated debt (if the deal goes through as there are still several conditions).
Telkom's share price jumped 14.8% on the news that Telkom is looking at unlocking value in the Gyro Masts & Towers business (Swiftnet), which has operated as a separate tower company for three years. Telkom is looking at pursuing a separate listing of Swiftnet on the JSE, which is great news for a local exchange that seems to shed listings like a dog sheds its winter coat.
This comes just a couple of days after MTN noted that IHS Towers, in which MTN holds a 29% stake, may list in New York. Companies do this to create genuine price discovery in an underlying investment, which helps close the gap between e.g. Telkom's market capitalisation and its intrinsic value (what the management team believes the company is worth).
Today's other feature article is on Mediclinic's latest debt refinancing, which follows an interesting new trend: sustainability-linked debt. In these structures, the cost of borrowing can change depending on reaching or missing sustainability targets. It's a fascinating topic.
Don't fall behind on Magic Markets episodes - in the second episode of #HerenyaSeptember (and the 43rd episode of Magic Markets overall), Petri Redelinghuys of
Herenya Capital Advisors joined us to discuss the first batch of questions from listeners. There was much to learn from this professional trader.
Listen to the show here.
Will the market be green today? Will it be red? Stay tuned!
The Finance Ghost
