I was complimentary of Barloworld's financial results in yesterday's edition of InceConnect and the market seemed to feel the same way, sending the share price up more than 11% on the day.
There are a few momentum trades currently in play and fresh 52-week highs were reached yesterday by the likes of Thungela, MTN and Aspen.
I could only shake my head at the news that Huge Group has sold the tiny stake in Adapt IT that it managed to buy in its attempt to take control of the company. It was a poor display of dealmaking, with a general offer that didn't have a minimum acceptance threshold before becoming effective. That left Huge as the proud owner of less than 2% in Adapt IT, which it now sold at a lower price that it acquired the shares for. The company had little choice but to sell the shares, but that doesn't make it any less painful. Hopefully, lessons have been learnt.
Curro's acquisition of HeronBridge College has been approved by the Competition Tribunal. This will bolster Curro's Select business, which doesn't rebrand or change the ethos of the schools acquired. Curro's valuation crashed down to earth after the exuberance of 2016 but is now trading at similar levels to the net asset value (NAV) and I think it has reasonable prospects from here. It takes a long time to build an education business and the market got way ahead of itself in 2016.
Tharisa Plc operates in the platinum group metals (PGM) and chrome industries. PGMs are critical to cleaner combustion engines in vehicles, but chrome is a dirty metal to produce, with the major use being stainless steel.
Decarbonisation is on everyone's lips at the moment, with Tharisa committing to reduce its emissions by 30% by 2030. The goal is to be net carbon neutral by 2050.
Cuma Dube has written today on corporates committing to ESG and net-zero targets, with the likes of
Remgro and
Sasol mentioned
in his article.
The first challenge for corporates is to set a suitable baseline. Tharisa will use its 2020 results as a base and will measure both relative and absolute carbon intensity in years to come, taking into account the "significant growth" that the company is expecting. Initiatives to achieve this decarbonisation will include renewable energy projects for its mining operations and clean fuels in the truck fleet.
The important theme for investors is confirmed in the announcement, with Tharisa noting that its investment decisions will be informe d by the decarbonisation targets. This is why "clean metals" are starting to trade at higher multiples, while producers of dirty resources like coal are trading at low multiples even though they are printing cash at the moment.
Speaking of clean energy,
Redefine Properties is investing R170m in solar projects that will provide a cost saving yield of 21.5%. That's brilliant news, which is found along with numerous other insights in a great presentation by the REIT on the state of play in the retail property sector. You'll find the details in
this feature article.
Finally, if you want to learn more about earn-outs in dealmaking, you can
read my article on the topic. An earn-out structure is an effective tool for companies to reduce risk in acquisitions.
Happy Thursday!
The Finance Ghost
