11/25/2022 | News release | Distributed by Public on 11/25/2022 00:45
SOUTH AFRICAN MARKET COMMENTARY
Stocks on the Johannesburg Stock Exchange (JSE) closed slightly higher yesterday, helped in part by rising commodity prices. The benchmark All-Share index closed 0.32% higher (now at 73,127 index points) while the Top 40 ended up 0.37% with the main lending rate move to 7% coming after Wednesday's data showed annual consumer inflation rose to 7.6% in October from 7.5% in September, a first rise after two consecutive declines. The Monetary Policy Committee (MPC) also cut its economic growth forecast for 2022 to 1.8%, from 1.9% previously. The mining index climbed 1.55%, led by gold miner Sibanye Stillwater up 3.79%, as bullion prices rose to a near one-week high on a weaker dollar.
EUROPEAN MARKET COMMENTARY
European markets remained upbeat yesterday as investors assessed the latest meeting minutes from the U.S. Federal Reserve. The pan-European Stoxx 600 closed up 0.5% provisionally, with a third straight session of gains taking it to a more than three-month high. Chemicals stocks added 1.1% to lead gains as all sectors and major bourses edged into positive territory. Euro markets have been cheered by indications that the U.S. Federal Reserve is looking to slow the pace of interest rate hikes, while in Europe, PMI data this week showed the euro zone's downturn in business slowed slightly.
US MARKET COMMENTARY
Markets were closed yesterday for Thanksgiving Day Holiday.
ASIAN MARKET COMMENTARY
Shares in the Asia-Pacific traded mostly lower today as China's reported Covid cases continued to rise. Zhengzhou, where protests took place at Apple supplier Foxconn's iPhone factory, said it would conduct mass testing. Stocks in Malaysia closed more than 4% higher, with the benchmark index reaching its highest levels in more than two months after Anwar Ibrahim was sworn in as the nation's tenth prime minister. Telecommunications group Axiata rose more than 12%, and Maxis rose 11%.
CURRENCY MARKET COMMENTARY
The rand weakened against the dollar yesterday after the central bank hiked its main lending rate by 75 basis points to tame rising inflation. The rand traded at R17.02 against the dollar, 0.29% softer than its previous close. The dollar stood close to a three-month low and was on track for a weekly loss today. The sterling rose while the Japanese yen jumped overnight. Also, the Aussie fell after rising overnight and the kiwi slid this morning.
COMMODITIES MARKET COMMENTARY
Gold prices were flat today, but they were set for a small weekly gain buoyed by the dollar's overall retreat on a perceived dovish tilt to the U.S. Federal Reserve's interest rate hike strategy. Meanwhile oil rose in early trade this morning, trimming some of the week's losses which have been driven by worries about Chinese demand and expectations a high price cap planned by the Group of Seven (G7) nations on Russian oil will keep supply flowing. Russian President Vladimir Putin has said Moscow will not supply oil and gas to any countries that join in imposing the price cap, which the Kremlin reiterated on Thursday.
Kaap Agri Limited (KAL) +3.2%
The Group again performed strongly during the year, increasing revenue by 48.4% to R15.70 billion, up from R10.58 billion in the previous financial year, with like-for-like comparable growth of 24.0%. The revenue growth was achieved on the back of a 54.3% increase in the number of transactions (7.9% increase excluding PEG). Gross profit increased by 27.1% but at a rate lower than revenue growth due largely to the higher contribution of lower margin fuel revenue. EBITDA grew by 21.8% and lower than gross profit growth, due to increased expenditure, largely non-like-for-like expenditure. Headline earnings increased by 23.5% while recurring headline earnings ("RHE") grew by 24.0%. Recurring headline earnings per share increased by 21.1% to 578.23 cents per share, from 477,55 cents per share in the prior corresponding period. The final gross dividend increased by 9.9% to 122.00 cents per share, from 111.00 cents per share in the prior corresponding period. The total dividend per share for the year increased by 11.3% to 168.00 cents per share, from 151.00 cents per share in the prior corresponding period. Last day to trade cum dividend will be Tuesday, 14 February 2023 and date of payment is set for Monday, 20 February 2023.
Lewis Group Limited (LEW) +2.7%
Merchandise sales increased by 4.3% to R2.1 billion and sales in the traditional segment increased by 6.5% while UFO reported a decline of 9.5%. The group's comparable store sales increased by 2.9%. Total revenue, comprising merchandise sales and other revenue, increased by 4.0% to R3.5 billion. The continued disruption in the supply chain and cost pressures from higher freight charges resulted in the group's gross profit margin declining to 39.3% (H1 2022: 40.2%). Operating profit before impairments and capital items declined by 4.1% to R316.4 million. Owing to slower trading in UFO, an impairment of R24.6 million was recognised against goodwill and an impairment of R20.0 million was recognised against its right-of-use assets relating to leased property. Operating profit for the six months declined by 17.1% to R282.8 million. Earnings decreased by 12.5% to R204.8 million, and earnings per share (EPS) decreased by 0.1% to 341 cents. Headline earnings increased by 4.4% to R235.9 million, with headline earnings per share (HEPS) increasing 19.2% to 393 cents, reflecting the positive leverage effect from the group's aggressive share repurchase programme. The board has maintained the interim dividend at 195 cents per share. The last date to trade cum dividend is set for 17 January 2023 while the date of payment will be 23 January 2023.
Mr Price Group Limited (MRP) -8.1%
Mr Price released its interim results for the 26 weeks ended 1 October 2022 ("Period"), increasing basic earnings per share 13.7% to 500.1 cents against H1 FY2022 ("Corresponding Period"). Headline earnings per share (HEPS) increased 10.6% to 496.0 cents and diluted headline earnings per share increased by 10.8% to 486.1 cents. Dividends per share (DPS) increased 10.6% to 312.5 cents. Group revenue was up 6.5% to R13.3bn, the group gross margin expanded 60bps and expense growth was well-controlled at an increase of 5.9%. This enabled the operating margin to improve by 80bps. This result was achieved in a highly contested retail environment where consumer spending was constrained. Retail sales grew 6.0% to R12.6bn (comparable stores -0.3%). Group store sales (contribution: 97.0% of sales) were up 5.8% and online sales (contribution: 3.0% of sales) grew 11.2% (H1 FY2022: 49.9%). Retail selling price inflation was 3.8%, well below CPI with units increasing 1.7% to 122m units sold. Other income grew 17.1% to R536m, primarily driven by a 200bps increase in the repo rate, increasing interest on trade receivables by 29.8%. An interim gross cash dividend of 312.5 cents per share was declared for the 26 weeks ended 1 October 2022, a 10.6% increase against the prior year. Last date to trade cum dividend will be Monday 12 December 2022 and the payment date is set for Monday 19 December 2022.
Nintendo (NTDOY) +1.2%
Nintendo yesterday announced that its latest Pokémon games have set a sales record at the Japanese gaming giant as it continues to pump out blockbusters ahead of the crucial holiday season. The Kyoto, Japan-headquartered company said sales of the Pokémon Scarlet and Pokémon Violet games for the Nintendo Switch surpassed 10 million units in the first three days since their global launch on Nov. 18. That is the highest level of sales for a game's debut in Nintendo's history. Nintendo's success with Pokémon comes two months after Splatoon 3 hit a domestic sales record in Japan, in signs the gaming giant is hitting the mark with players ahead of the holidays. Investors are backing Nintendo thanks to its recent blockbusters.
Hyundai Motor Company (005380) +0.90%
The company's Hyundai, Kia and Genesis brands are expected to capture nearly 11% of the U.S. new vehicle market this year, marking its highest level since the automaker entered the country in 1986. It's also set to be among the top sellers of electric vehicles this year, trailing only Tesla through the third quarter. In August, Hyundai buyers lost federal tax credits associated with purchasing an electric vehicle due to changes in the program under the Biden administration's Inflation Reduction Act. Domestic automakers, including Hyundai's closest competitors in EVs - Tesla, Ford Motor and General Motors still qualify for the credit. All of Hyundai's electric vehicles are currently imported to the U.S., though it produces several gas-powered models at plants in Alabama and Georgia. Hyundai hit the 10% U.S. market share threshold last year, according to LMC Automotive, roughly 10 years faster than Toyota.
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