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Good Morning Voornaam

The platinum sector is a rollercoaster ride of note. On Friday, we saw the likes of Northam Platinum and Impala Platinum posting double-digit gains. It was a tumultuous week though, as Thursday saw a sell-off in the sector before the big bounce on Friday. Platinum stocks closed higher for the week after creating a few new grey hairs for punters in this space.

A company I’ve been talking about for a while now on Twitter is Tiger Brands. The company has been having a tough time and I hold the view that in a time of food inflation, the retailers are a better bet than the food producers. This is because the retailers squeeze the producers to get every bit of blood out of that stone, ensuring that the bare minimum price increases are passed on to customers. In addition, retailers have private label strategies with their own brands, so they effectively compete with suppliers.

As this chart shows, Tiger Brands has been drifting lower for a long time now (source: Google Finance):

Tiger Brands is now trading below March 2020 levels. Like staring into a murky lagoon, nobody can be quite sure where the bottom is.

A company that I hold is Karooooo (count ‘em – there are five O’s in there). Perhaps the name was designed to reflect how people would react to markets this year. I’ve said “oh” multiple times this year: “Oh wow, oh dear, oh shi…” and you know the rest.

In case you aren’t familiar with the company, Karooooo is the international platform put in place to take Cartrack to the world. It hasn’t been an easy start, as Covid really impacted the ability of the group to grow offshore, particularly in Asia.

The stock is sitting right at the bottom of its traded channel:

Moving on, would you be interested in a company that generates R68.3 billion in revenue and R23.8 billion in EBITDA (earnings before interest, taxes, depreciation and amortisation) – an EBITDA margin of nearly 35%? With cash generated from operations of R29.8 billion, it sounds even better. What if I told you that this company is Transnet?

While you choke on your coffee, I should also point out that significant depreciation and finance charges still take Transnet into a loss-making position. Transnet Freight Rail has been a huge issue with a knock-on negative impact on our economy as well. I cover this story and all the other big news from the JSE in Ghost Bites, your daily source of the news you need to know. In case you're wondering, Transnet is a debt issuer on the JSE. You can't buy shares in it even if you wanted to.

As a quick update on forex and commodities, Wichard Cilliers (Head of Market Risk at TreasuryONE) notes the following:

“It was a stable week of sorts as the rand has been floating in the R15.95 – R16.30 range. The theme for most of the week was that weakness occurred once the US came in to play. We ended the week just below R16.20. A positive note on the rand has been that the continued weakness on the euro has not affected the rand as much, but the R16.30 handle is becoming a more important technical level by the day. Looking at other emerging markets, we are seeing a relatively mixed bag, with the rand still the weakest since the move into the dollar started in mid-April. Gold briefly traded below $1,800 but corrected to $1,820 at the end of last week.”

For market risk and treasury solutions, please visit the TreasuryONE website.

Today's lead story is on MTN, with the latest quarterly results reflecting a telecommunications company that is delivering on its strategy beautifully. Read all about it at this link.

Chris Gilmour is a name you will recognise from the old InceConnect publication. Chris is back with a new format focused on top-of-mind issues rather than all the data points that came out in the market. In his first piece for Ghost Mail, Chris looks at the war in Ukraine and how this is driving inflation and other opportunities. India also gets a mention here, which I found particularly interesting.

In the latest Magic Markets episode, Justine Brophy from AnBro Capital Investments joined us to discuss their investments in the biotech industry. We also took the opportunity to discuss whether we are starting to reach the bottom for growth stocks after such a severe sell-off this year. Listen to the show at this link.

I hope you have a great start to your week!

The Finance Ghost

Ghost Bites Vol 6(22)

Earnings updates, labour issues and an indication of how much money Transnet makes (before debt at least).

MTN's strategy is paying off

MTN's latest quarterly update is nearly perfect. The strategy is being delivered successfully in key markets. Of course, these markets are never without risks, with a particular challenge being faced in the FinTech business.

Inflation, war and India: are there opportunities?

With inflation running away and conflict in Ukraine likely to endure, where are the opportunities?

Magic Markets Ep75: Investing in Biotech (with AnBro Capital)

Justine Brophy from AnBro joined us to discuss whether we’ve seen the bottom in growth stocks. We also looked at three examples of biotech stocks.

Listen Now

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