| Finance Minister Tito Mboweni has a daunting task ahead of him as he prepares to present his adjusted 'emergency' budget this afternoon. The National Treasury faces a massive revenue shortfall this year as personal and corporate taxes dry up and additional relief is provided to those most affected by Covid-19. The budget deficit will be magnified by the contracting economy. According to Stats SA, the official unemployment rate reached 30.1% in the first quarter of the year. That's before the devastating impact of the pandemic and the lockdown on jobs, which will result in even fewer individuals paying tax. At the same time, corporate profits are under extreme pressure. Combined Motor Holdings and Mpact are just the latest companies to report or warn of lower earnings this year. Pepkor's sales also came under pressure after it was forced to close most of its stores during the height of the lockdown. It now plans to raise over R2 billion in equity capital to reduce debt and provide a buffer in a weak environment for retailers. The retail environment in the UK is also tough, with shopping centre owner intu Properties putting KPMG on standby in case it can't reach a debt agreement with its lenders and has to enter administration. There's better news from Sasol, however, as its Lake Charles Chemicals Project in the US finally nears completion after a series of obstacles and delays. Finally, Ingham Analytics have opened their subscription offer to InceConnect readers for a limited time. Click on this link to take up this subscription offer today and don't miss out on independent equity research released weekly. I hope you have a good day. Stephen Gunnion Managing Editor, InceConnect
The latest from Ingham Analytics Ahead of the Minister of Finance's speech today you may want to read the Ingham Analytics latest note entitled "BA900 isn't a British Airways service to Jo'burg". If you are a shareholder in a JSE listed bank the newest data on the institutional and maturity breakdown of liabilities and assets is important to know at this fast-moving time of Covid-19 lockdown fallout. Banks are in the firing line and there is the likelihood of continued volatility in banks share prices. How do traders take advantage? With bank share prices having fallen so much as a long-only investor do you nibble, or stay clear? There could be event risk stemming from the Tito Mboweni speech so be careful.On a completely different topic two recent mining notes have been popular, the cryptically entitled "Kumba, qaphela!" and a BHP focus entitled "New hands on the financial tiller". Meantime, Sasol, another core stock in the Ingham Analytics universe, gained some reprieve yesterday on news out of the Lake Charles project. But this does little to alter the Ingham Analytics view on Sasol and they continue to advise caution. Even if Lake Charles does generate $100m in EBITDA this next year higher interest costs caused by the two-notch credit rating downgrade will swallow 40% of that alone. | 