Southern Sun shines

Good morning Voornaam,

Fresh out the oven:

Ghost Bites: Southern Sun is riding the tourism recovery wave, with plenty of activity especially in the Western Cape. Spear REIT's focus on the region is also paying off. BHP increased its offer once more to Anglo and got rejected again. Look out for numbers from Burstone, Deneb, Life Healthcare, Pick n Pay (strong stomach needed), Reunert and RFG. Get it all in Ghost Bites>>>

Walmart is going back to its roots and Under Armour is in a fight for survival, with the founder back in the CEO role and taking the brand back to its core strengths. Listen to Magic Markets episode 176 to get the latest on these stories and expand your investment horizons.

Attention: startup and tech sector enthusiasts. When it comes to startups, those in Silicon Valley tend to trade at higher multiples than global peers. Why is this? In an article I wrote for bizval, I explore this topic. Also remember to register for the bizval webinar later today, where I join the team in presenting on how platform businesses move into profitability. Register to attend here.

In case you missed it:

​Ghost Wrap: You need barely four minutes to get up to speed on KAL Group, AB InBev, Redefine, RFG Holdings and Calgro M3, brought to you by Mazars. Listen to it here>>>

​This is a massive election year, with over 60 nations going to the polls. On the latest Investec No Ordinary Wednesday podcast, Investec Wealth & Investment Chief Investment Strategist Chris Holdsworth shared his insights on the election outcomes that matter most to markets. Listen to the show here>>>

With elections around the corner, managing your behavioural bias is so important. In other words: don't panic! Kingsley Williams of Satrix elaborates in this article>>>

Hermès: Birkin Mad This brand new piece by Dominique Olivier has everything from five-star meltdowns in Paris to supermodels and straw baskets. This is the Birkin bag, the iconic piece by ultra-luxury company Hermès that shows how these businesses really work. Read it here>>>

LISTEN: Chasing Returns from the Sun

Local company news:

Southern Sun is thoroughly enjoying the resurgence in travel, with occupancy rates that are nearly back to pre-pandemic levels. Combined with juicy increases in room rates and food and beverage sales, the company just reported a record year of profitability.
At the absolute opposite end of the spectrum, we find Pick n Pay and all its troubles. The core grocery business is awful at the moment, with only Boxer and Pick n Pay Clothing to feel good about. Even with the planned rights offer and spin-off of Boxer, they are going to have the fight of their lives to fix the supermarkets business.
BHP has tested the waters once more with Anglo American and been rejected, with an extension until 29 May to PUSU. I explain that juicy acronym in Ghost Bites.
Speaking of Ghost Bites, you can also read about Burstone's debt and payout ratio trend (this is what happens when you pay a fortune to internalise a management company), great cost control at Deneb, double-digit dividend growth at Life Healthcare, growth at Reunert, strong numbers overall at RFG and a solid performance at Spear REIT despite higher financing costs.
Get all the details in Ghost Bites at this link>>>

Hermès - Birkin Mad

International business news:

US retailer Target missed estimates, with the retailer reporting a slowdown particularly in discretionary items. As I've written many times, even defensive retailers aren't as defensive as you think, as they make the best margins on the non-defensive categories. Bluntly, they want you to buy more kettles rather than another lettuce.
Inflation is biting consumers and this is leading to more aggressive pricing from the likes of Target and other businesses like McDonald's. Of course, this is exactly why people say "the cure for high prices is high prices" - assisted greatly by the Fed and rate hikes.
This week, we are covering payments giant Mastercard in Magic Markets Premium. To get access to this research and the rest of the vast library, subscribe to the platform here.

Macroeconomic Update

Hawkish FOMC minutes have unsettled the market, with some officials even questioning whether current monetary policy was restrictive enough. This dished out a knock to gold, PGMs, copper and even oil prices.
Bond yields moved higher at the short end of the curve and equity markets retreated.
The markets will closely watch the US manufacturing and services PMI release today, along with the weekly jobless claims print and new home sales data with a potential impact this week.
The rand closed just over 1% weaker after a strong run that could consolidate in the short term.
Key indicators: USD/ZAR R18.32; US 10-year 4.42%; Gold $2,372; Platinum ZAR R18,900; Brent Crude $81.43
This macroeconomic update is based on TreasuryONE's morning update.