Is there really value in Sasol? (#599)
08/14/24 • 20 min
Sasol's Struggles:
Simon revisits Sasol's recent production and trading updates. Despite some positive news, the company's financials remain grim due to significant write-downs and a challenging pricing environment, especially in the chemical complex. With a forward PE ratio hovering around 3, Simon questions the actual value in Sasol and advises caution, emphasising the importance of waiting for a stock to show signs of recovery before investing.
Sasol weekly chart | 13 August 2024
ADvTech's* Solid Performance:Simon provides insights into ADvTech's latest trading update. Despite a voluntary update (not mandated by a 20% variance), the company shows strong growth in earnings per share. He discusses the stock's valuation, historical performance, and why he remains optimistic about its future prospects, even as it trades at a PE ratio of around 15.
ADvTech weekly chart | 13 August 2024
Combined Motor Holdings* (CMH):Simon shares his thoughts on CMH, a stock he has held for years. Despite a stagnant price movement over the past three years, the stock offers a solid dividend yield. He discusses the broader consumer environment, the potential impact of reduced interest rates, and why he continues to favour CMH over competitors like Motus.
CMH weekly chart | 13 August 2024
Renegen's* Milestone:After a year and a half of delays, Renergen finally starts producing helium. While the stock has seen a recent uptick, Simon highlights the challenges that still lie ahead, including scaling up production and the company's upcoming NASDAQ listing. He also reflects on the broader sentiment in the junior mining sector.
Coronation's Active ETFs:Coronation has launched six actively managed ETFs on the JSE, a significant development in the local ETF market. Simon explains the concept of actively managed ETFs and why this move could be a game-changer for both Coronation and the JSE, even if he personally isn't planning to invest in them. Find details here.
US Inflation Update:The latest US CPI data shows a slight decrease to 2.9% for July, but core inflation remains elevated. Simon discusses the implications for future interest rate cuts by the Federal Reserve and the potential impact on South African monetary policy.
Tribute to Brett Duncan:Simon pays tribute to Brett Duncan, a former stockbroker and warrants market leader at Standard Bank, who recently passed away. Brett was a key figure in Simon's early career and played a significant role in the South African warrants market. His passing is a significant loss.
Sasol's Struggles:
Simon revisits Sasol's recent production and trading updates. Despite some positive news, the company's financials remain grim due to significant write-downs and a challenging pricing environment, especially in the chemical complex. With a forward PE ratio hovering around 3, Simon questions the actual value in Sasol and advises caution, emphasising the importance of waiting for a stock to show signs of recovery before investing.
Sasol weekly chart | 13 August 2024
ADvTech's* Solid Performance:Simon provides insights into ADvTech's latest trading update. Despite a voluntary update (not mandated by a 20% variance), the company shows strong growth in earnings per share. He discusses the stock's valuation, historical performance, and why he remains optimistic about its future prospects, even as it trades at a PE ratio of around 15.
ADvTech weekly chart | 13 August 2024
Combined Motor Holdings* (CMH):Simon shares his thoughts on CMH, a stock he has held for years. Despite a stagnant price movement over the past three years, the stock offers a solid dividend yield. He discusses the broader consumer environment, the potential impact of reduced interest rates, and why he continues to favour CMH over competitors like Motus.
CMH weekly chart | 13 August 2024
Renegen's* Milestone:After a year and a half of delays, Renergen finally starts producing helium. While the stock has seen a recent uptick, Simon highlights the challenges that still lie ahead, including scaling up production and the company's upcoming NASDAQ listing. He also reflects on the broader sentiment in the junior mining sector.
Coronation's Active ETFs:Coronation has launched six actively managed ETFs on the JSE, a significant development in the local ETF market. Simon explains the concept of actively managed ETFs and why this move could be a game-changer for both Coronation and the JSE, even if he personally isn't planning to invest in them. Find details here.
US Inflation Update:The latest US CPI data shows a slight decrease to 2.9% for July, but core inflation remains elevated. Simon discusses the implications for future interest rate cuts by the Federal Reserve and the potential impact on South African monetary policy.
Tribute to Brett Duncan:Simon pays tribute to Brett Duncan, a former stockbroker and warrants market leader at Standard Bank, who recently passed away. Brett was a key figure in Simon's early career and played a significant role in the South African warrants market. His passing is a significant loss.
Previous Episode
What really happened in Japan? Are markets safe again? (#598)
Apple's Financial Performance and Buffett's Decision:
- Apple's recent financial results showed steady revenue growth across various segments including iPhone, MacBooks, and iPads.
- Warren Buffett's Berkshire Hathaway reduced its stake in Apple by half, sparking market speculation.
- The implications of Apple's valuation and Buffett's strategy in maintaining a significant yet reduced position in Apple were discussed.
- The dramatic drop in Japan's Nikkei 225 index, which fell nearly 27% from its recent highs, was analyzed.
- Possible reasons behind the sell-off included the unwinding of the Japanese carry trade and broader market concerns about global economic stability.
- The role of low liquidity in exacerbating the market decline was highlighted.
- Nedbank reported solid financial results with HEP's up 11% and a near 15% return on equity.
- Improvements in impairments and concerns over the cost-to-income ratio were noted.
- The banking index's performance and its implications for Nedbank's stock were discussed.
- Anglogold Ashanti's strong production and profitability metrics were reviewed.
- The importance of holding gold miners and gold ETFs in the current market environment was emphasized.
- The approval of Ethereum ETFs by the US SEC was announced, with eight new ETFs available for trading in New York.
- The differences between Ethereum's proof-of-stake blockchain and Bitcoin's proof-of-work blockchain were explained.
- Potential implications for investors and the broader crypto market were discussed.
Next Episode
It's a bull market, until it isn't & 600 shows WHOOP (#600)
In this landmark 600th episode of JSE Direct, Simon Brown reflects on the podcast's journey from its beginnings as a radio show in 2008 to becoming a leading podcast for market insights. The episode covers a range of topics, from South Africa's local CPI and a strengthening Rand to the surprising twists in the gold market and a mixed bag of corporate earnings.
Local Inflation Data:South Africa's CPI has come in better than expected at 4.6%, fueling speculation on whether the next rate cut by the MPC might be more aggressive than anticipated.
Rand Strengthens:The Rand has shown significant strength, dropping below 18 to the dollar, with Simon analyzing the contributing factors, including foreign investment in bonds and a weakening US dollar.
Bull Market Sentiment:Simon reaffirms the current bull market, highlighting the JSE's all-time highs and advising listeners to stay invested while cautioning against the risks of sitting on the sidelines.
Top40 20 August 2024 | Weekly chart
Gold Market Rally:Gold prices have surged above $2,500, driven by central banks' increased purchases and concerns about the US dollar's stability. Simon discusses the potential for further gains in the gold market.
Corporate Earnings Recap:- Coronation Fund Managers: Special dividend announced but falls short of expectations.
- CMH*: Despite low liquidity, the stock continues to climb, reflecting the breadth of the bull market.
- Sasol: Disappointing results with no dividend payout, a situation Simon had previously predicted.
- Spur Corporation: Strong earnings, signaling improving economic conditions.
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