Taking Stock - PPC to spend R664m over three years.

SOUTH AFRICAN MARKET COMMENTARY

The Johannesburg Stock Exchange's All-Share Index closed 2.03% higher at 70,008 index points, with investors welcoming the news that domestic tourism remained unaffected for now. The blue-chip Top-40 was up 1.91%. The travel and leisure index jumped 5.12%, with hoteliers City Lodge, Sun International, which also owns the country's biggest casino chain, and Tsogo Sun Hotels up 9.24%, 12.55% and 3.10% respectively after crashing on Friday. Government bonds also recovered, with the yield on the benchmark 2030 maturity down 4 basis points to 9.860%. The yield hit 10% on Friday, its highest since early May 2020.

EUROPEAN MARKET COMMENTARY

European stocks closed higher on Monday as concerns over the newly discovered omicron Covid variant appeared to ease. The pan-European Stoxx 600 provisionally closed up by 0.8% with oil and gas shares climbing 2.2% to lead the gains. Almost all sectors and major bourses traded in positive territory, with stocks looking to rebound from Friday's sell-off. Investor nerves were calmed somewhat after the South African doctor who first spotted the new Covid mutation said symptoms were "extremely mild" so far.

US MARKET COMMENTARY

U.S. stocks bounced on Monday, following Friday's big sell-off, after President Joe Biden said economic lockdowns in response to the omicron Covid variant are currently off the table. Mega-cap technology names emerged as the winners Monday. Tesla popped 5.1%, Microsoft gained 2.1%, and Amazon advanced 1.6%. Apple popped 2.2%. However, Twitter shares fell 2.7% on news that CEO Jack Dorsey is stepping down as chief of the social media company. Travel-related stocks posted a slight rebound after a choppy session.

ASIAN MARKET COMMENTARY.

Shares in Asia-Pacific mostly rose earlier today as Japanese stocks led gains regionally, with investors reacting to the release of Chinese factory activity data for November. China's official manufacturing Purchasing Managers' Index for November came in at 50.1 on Tuesday. That was above expectations by analysts in a Reuters poll for a reading of 49.6. PMI reading below 50 represent contraction while those above that level signify expansion. PMI readings are sequential and represent month-on-month expansion or contraction.

CURRENCY MARKET COMMENTARY

The rand firmed on Monday, recovering from last week's plunge to its lowest since October 2020 on concerns around the discovery of a COVID-19 variant in the country that has been described as the most concerning. At the close of the session, the rand was trading around R16.17 to the dollar or 0.81% firmer. Global authorities reacted with alarm on Friday to the new variant, Omicron, which was detected in southern Africa, with the EU and Britain among those tightening border controls as scientists sought to find out if the mutation was vaccine-resistant.

COMMODITIES MARKET COMMENTARY

Gold prices were flat this morning, as cautious investors assessed the extent to which the omicron coronavirus variant could hurt the global economy. Meanwhile, oil prices climbed earlier today, extending a rebound from last week's plunge on growing expectations major producers would pause plans to add crude supply in January amid uncertainty over the severity of the omicron coronavirus variant. Oil plunged around 12% on Friday along with other markets on fears the heavily mutated omicron would spark fresh lockdowns and dent global growth.

PPC (+5.2%)
JSE-listed cement and building materials producer PPC is to spend R664 million over its next three financial years to reduce its carbon emissions by 10% and has developed a strategy to achieve net-zero emissions by 2050. PPC CEO Roland van Wijnen said on Monday that if PPC manages to reduce its carbon intensity by 10%, it will also reduce its carbon tax bill by 10%. But he stressed that the strategy is not just about reducing its tax obligations. "So all projects that are part and parcel of the R664 million capex are value-accretive," he said following the release of PPC's inaugural Task Force on Climate-related Financial Disclosures (TCFD) Report. The report outlines the company's assessment of climate change-related risks and opportunities and its sustainability solutions. Van Wijnen said the initiatives to be implemented during the next three years in terms of the R664 million in capital expenditure are to some extent integrated into PPC's normal future capex plans. He said PPC provided guidance to the market last week that it annually spends between R500 million and R550 million on its capital programmes and part of the short-term R664 million carbon reduction costs are included in this. Van Wijnen added that an additional about R300 million in capital expenditure for one specific project over two years will come. "Given the fact that we are in a much better financial position than previously, we expect we will be able to finance this [R300 million] out of our normal cash flows. Van Wijnen said in the short term, PPC believes a 10% reduction is feasible from its current 756kg of CO2 per ton of cementitious materials to 680kg or less by its 2025 financial year and has set aside R664 million over that period to achieve that target. He said the next step is a 27% reduction in its carbon emissions by its 2030 financial year, when the group expects to be at 550kg of CO2 per ton or less. Van Wijnen said PPC has a very good idea of what it wants to do to achieve its 2030 financial year target, but has not yet disclosed the capital expenditure that will go hand-in-hand with that.

Standard Bank (SBK) +4.9%
South Africa's Standard Bank said on Monday the performance of its lending book had been better than expected in the 10 months to end-October, and its revenues were recovering from the impact of the pandemic. In a trading update, Africa's largest lender by assets said its client base was growing and sales and client activity levels had improved compared to last year, though costs had risen as a result of higher activity and some performance-related spending including employee bonuses. Its full-year guidance remains unchanged, it added.

Samsung (005930) -0.7%

Samsung Electronics this morning revealed new auto chips targeting demand for advanced chips in cars, including one mounted in Volkswagen's infotainment system developed by LG Electronics. Demand is rising for "high-tech" automotive chips that can handle more entertainment consumption and increased electrical components in cars, Samsung said in a statement, saying that it plans to actively respond to the growing demand. The chips, developed by Samsung's logic chip design business System LSI, include a chip enabling 5G-based telecommunications for downloading high-definition video content during transit, and a power management chip for stable electricity supply.

Nissan (7201) -2.5%

Japanese automotive giant Nissan is to invest 2 trillion yen (around $17.6 billion) over the next five years to speed up the electrification of its product line. Nissan said on Monday it would aim to roll out 23 new electrified models by 2030, 15 of which will be fully electric. It is targeting a 50% electrification mix for its Nissan and Infiniti brands by the end of the decade. On the battery front, the firm is planning to introduce all-solid-state batteries, or ASSB, to the market by 2028. A pilot ASSB facility in the Japanese city of Yokohama will be readied "as early as fiscal year 2024", Nissan said. In a speech outlining the plans, Nissan CEO Makoto Uchida said his company was focusing on the in-house development of ASSB.

Download full report here

Public link

Please use the above public link if you want to share this noodl on another website.