Indholdsfortegnelse for 11/05/2021 i Finweek - English

all the talk over the last couple of months in the markets has been about the US Federal Reserve’s reaction to rising inflation. The Fed has indicated that it would start to scale back its asset (bond) purchases in the open market from this month to decrease money supply with possible interest rate hikes following next year. The reason for this: persistent inflation. Domestically, we saw the petrol price jump above the R20/litre mark in some areas of South Africa at the beginning of this month. The price of diesel, an important industrial fuel, is not trailing far behind. We already saw in September’s consumer price inflation data that fuel price acceleration was one of the key drivers of local consumer prices over the preceding year. The trouble with fuel…

orion Lee Herman is the founder and CEO of LiquidGold, a company with a mission to help save the environment through recycling and repurposing human urine. “I was at a personal crossroads in my career as an industrial psychologist and wanted to venture into something new. Initially I wanted to do something that would create a legacy for my family, but this has since become something much bigger. My passion is to help communities and save the environment,” Herman says. His research into social entrepreneurship and environmental issues highlighted that South Africa is a water scarce country, and especially poor and rural communities need sanitation solutions. “I saw the potential in waterless urinals in this regard, but this then led me to consider the entire circular economy. Why not repurpose…

Grindrod has had a tough decade after peaking at almost 3 000c/share in 2007 and again in 2015. Since that 2015 peak they’ve spun out the shipping business into Grindrod Shipping and are in the process of selling other non-core assets. The current net asset value (NAV) is just over1 000c and since the results for the six months ending June, they’ve sold their remaining stake in Grindrod Shipping for R368m and their UK property operation for another R340m. Together these two sales are worth some 100c in cash per share, adding to the 250c cash per share they already have on the balance sheet. There is also another attraction to this stock and that is their rail division which owns rail locomotives and wagons but no tracks. With Transnet…

MURRAY& ROBERTS US deal Murray& Roberts* said it is buying a US construction company, JJ White, for about R430m. Murray& Roberts is paying cash. While JJWhite has averaged around $5m in earnings before interest, tax, depreciation and amortisation (ebitda) a year (around R75m), this purchase is about expanding Murray& Roberts’ energy, resources and infrastructure business in the US with new work boosting future profits. Currently, Murray& Roberts only has a presence inTexas and the new business operates in 11 states and has licenses to operate in a further11. With President Joe Biden’s administration wanting to pass an infrastructure bill worth trillions of dollars, this could become a major profit centre, but it’s not without risk. The US is a hugely competitive market with many global companies vying for the same…

i have written before how the South African Reserve Bank (SARB) governor Lesetja Kganyago has always referred to the inflation target as 4.5%. He never mentions the 3% to 6% range which the bank officially targets and there is a simple reason for this: inflation expectations. Expectations of consumer price inflation is almost as important as the actual rate. If you think inflation is going to be much higher in the year ahead, you will buy big ticket items now (if the budget allows), rather than waiting a year. This then sends inflation higher as it pulls some of next year’s demand into this year and more demand relates to higher prices. Bringing this to the now, in the US the big debate is whether the current higher-than-5% inflation is…

The common thread shared amongst the three listed health insurance companies, AfroCentric, Momentum Metropolitan and Discovery, is that of a favourable financial performance, despite the negative impact of the pandemic. Medical schemes, listed and unlisted, benefitted from reduced elective procedures and a decline in general healthcare utilisation in 2020, says Warwick Bam, head of research at Avior Capital Markets. Nevertheless, he cautions that the larger concern in the industry is whether the reduction in preventative consultations and check-ups will result in more severe forms of chronic conditions, cancer or heart disease in future periods. As was witnessed, the pandemic, most especially in South Africa, exposed the lack of capacity of most medical systems and led to shortages of medical supplies, lack of support for medical staff and delayed treatment of…

with her skills of deconstructing complex IT challenges into its basic component parts, together with her personal journey with the Mukuru founders, Sandy Rheeder finds herself in the position of chief information officer (CIO) at Mukuru. Mukuru is a fintech company that provides financial services to the emerging consumer in Africa. The company started out by facilitating money flows for traditionally unbanked individuals into and across the continent’s borders. Today Mukuru’s orange booths are part of the landscape in several African nations, and it is providing additional retail services such as Mukuru Groceries, Funeral Cover and the Mukuru Money Card. “Although I officially joined Mukuru five years ago as business architect, I was involved right from the start as my then future husband and one of the founders of Mukuru…

Call for help This issue’s isiZulu word is biza. Biza is call, summon or request. It is also cost or expensive. Because South Africans have been up to nonsense for years now, I am developing an app that will help remedy the situation. It’s called “Ubra…” The ellipses (…) are intentional because they hold space for the name of the big brother who comes and sets you straight, when you biza him. As such, if the nearest big brother who can set you straight is Tshepo, the app says “Ubra Tshepo is 2 minutes away”. Let’s say you are about to spend money on luxuries, before paying school fees – biza Ubra… to get you the nearest big brother to set you straight. You feel like drinking tequilas mid-week: biza Ubra……

In 2002, a 31-year-old South African immigrant to the US founded a company that is likely to transform the course of human development. SpaceX would, within two decades, become the first private company to send a spacecraft to the International Space Station (in 2012), achieve the first vertical take-off and vertical propulsive landing of an orbital rocket (in 2015), be the first to reuse an orbital rocket (in 2017) and become the first private company to send astronauts to the ISS (in 2020). SpaceX also launched, by January 2020, the largest satellite constellation – Starlink – to provide commercial internet services. Although Elon Musk is an enigma, there are many who have caught on to his vision and who now see space as the next frontier. Jeff Bezos’s BlueOrigin and…

Netcare is South Africa’s third-largest private hospital operator by market value; it also operates the largest private hospital network in the UK. Established and listed on the JSE in 1996, the group owns and manages 57 hospitals in SA. Its additional divisions include Netcare 911, Medicross centres, PrimeCureClinics and BMI Healthcare in the UK. Its history in the UK started in 2001. Netcare, whose primary focus is on SA, said recently that it expects core profit to rise as much as 26%, about R665m, in its yearto end-September. Though the group warned shareholders that it remains concerned about the new variants of the virus, it’s content with how it has become better at managing the strain of the influx ofCovid-19 patients – and its adaption to theCovid-19 conditions have provided…

warren Buffett remains one of the most famous investors out there, so it’s no coincidence that his sayings are equally famous. One of my favourite Buffett sayings has to do with two key emotions in the investment world: “Two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable … We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” The genius Albert Einstein said that compound interest is the eighth wonder of the world. “He who understands it, earns it … he who doesn’t … pays it.” Now, I would never dare to disagree with a man of his calibre, but I would like to add that if compound interest…

i have several top wishes for the upcoming Medium-term Budget Policy Statement (MTBPS). Any number of local small and medium enterprises (SMEs) are in real distress and would welcome being approached for a merger and acquisition (M&A) deal. On the other hand, many foreign investors are keen to gain a foothold in Africa with a base in South Africa – but are strongly deterred by investment-unfriendly policies. There are several which I would like to see addressed. At a fundamental level, the incumbent government needs to urgently improve the ease of doing business, or none of their tinkering with tax rates will be significant. The ultimate outcome of the speech must be improved economic prospects. In the upcoming MTBPS, we hope that finance minister Enoch Godongwana provides a clear and…

The National Health Insurance (NHI) Bill has come about to address universal access to healthcare in South Africa. To support this aim, the bill paves the way for establishing an NHI Fund, which will purchase services from accredited public and private healthcare providers. Uncertainty surrounding implementation of the NHI is real and could impact investor perception. Although AfroCentric believes that access to healthcare is an issue of national importance, its CEO, Ahmed Banderker, says they are worried about the uncertainty created by the bill in its current form, together with the unfavourable quality and management of public health as it stands. “The rationale of the upcoming NHI is a no-brainer. Having medical coverage makes people healthier and enables them to get the care they need when they get sick or…

earned wage access (EWA), defined as providing employees with “early access to already earned wages”, came to South Africa just before the Covid-19 lockdowns commenced. Having been in the international fintech segment for almost a decade, Deon Nobrega decided the time was ripe to emulate the EWA trend in SA. Nobrega approached his former roommate from university, none other than retired Springbok rugby player Bryan Habana, as well as two of his former banking and IT colleagues, Willem van Zyl and Gerry Potgieter, to become founding partners of Paymenow. In 2019, Nobrega and Habana flew to London for talks with Hastee Pay andWagestream to explore the possibility of collaboration. However, they soon realised they couldn’t simply duplicate the EWA models from a developed market in a developing country such as…

arcelorMittal SA is sub-Saharan Africa’s largest steel producer with an annual production capacity (in 2019) of 7m tonnes of liquid steel and 5.5m tonnes of saleable steel products. It currently supplies 60% of the steel used in South Africa. Share price history ArcelorMittal SA once tested an all-time high at 26 500c/share in 2008, but the magnitude ofthe global economic recession soon after forced the companyto slash production by 35%. This triggered a sharp fall in the share price, which continued to tumble in 2015, when cheap Chinese imports depressed the steel price, resulting in customers delaying purchases. ArcelorMittal SA lost $1.3bn in a short space of time as orders dried up significantly and wrote down the value of its steel stocks by $500m to reflect rapid falls in prices.…

the music industry is a fascinating subsector of the entertainment business for investors. The industry is unusually concentrated. Just a handful of companies dominate the distribution of recorded music. Similarly, one can count on one hand all the major labels on the content side of the business. Given that the leaders in the industry are likely to have high returns on capital, low capital requirements and the ability to grow at decent rates, we believe the leading content and leading distribution music companies (UMG and Spotify) make for interesting investment cases for investors. Universal Music Group (UMG), Sony Music Entertainment (SME) and Warner Music Group (WMG) are the three major music labels. Those three labels in addition to Merlin, which represents hundreds of independent labels, accounted for 78% of the…

the first time I heard the expression “the fear of missing out”, I had to figure out what it actually meant. FOMO sounded more like a new brand of washing powder to me. Let’s think about what FOMO in fact means. The fear of missing out refers to the feeling or perception that someone is having more fun than you are, or is leading a better life or experiencing better things than you are. It involves a deep sense of envy and affects one’s self-esteem. This is often aggravated by social media platforms. Nowadays, the feeling of “normality” is distorted and it seems as if one person is doing worse than another. Those party photos on Facebook where your friends are having a good time suddenly take on a different…

every now and then, some global phenomenon or event thrusts a sector into the spotlight. It was the oil and gas industry with the first oil crisis in 1973. The local construction, travel, tourism, and hospitality sectors immediately after South Africa won the bid to host the 2010 Fifa World Cup. The finance industry when the global financial crisis of 2007/2008 hit. In 2020, the world looked to the pharmaceutical, healthcare and insurance sectors for solutions. Both the local and global healthcare systems underwent significant pressures following the out break of the novel corona virus. Medical schemes were caught off-guard with good reason, as just about everything about the ongoing pandemic was, indeed, novel. Impact on listed medical schemes Assessing the impact of this virus on overall claims experience, considering…