100 episodes

All about investing on the JSE with Simon Brown. Every Thursday.

JSE Direct with Simon Brown JustOneLap.com

    • Investing
    • 4.8, 146 Ratings

All about investing on the JSE with Simon Brown. Every Thursday.

    Retail updates (#411)

    Retail updates (#411)

    “This week’s episode of JSE Direct is courtesy of Outvest, our preferred supplier in retirement products.”
    Simon Shares Day 132 of lockdown and Covid-19, new cases definitely on the decline.
    Pick 'n Pay (JSE code: PIK) update was somewhat of a horror show, but I'm not sure what the market was expecting. It is for the period of lockdown and includes a voluntary retrenchment that cost the company. The Shoprite* (JSE code: SHP) on the other hand was for a full year to end June, so only three months of lockdown. Solid update and they're exiting Nigeria. Subscribe to our feed here Subscribe or review us in iTunes Gold $2,044. Goldfields (JSE code: GFI) update says HEPS will almost double and this is for the six months ending June when gold was under $1,800. Cashbuild (JSE code: CSB) buying TBC from some R1.1billion. Looks like a decent price and while they could write a cheque they'll use debt. So the question is can management execute on the merger? Intu (JSE code: ITU) will be delisted from the JSE Intu has been suspended already as the company is in bankruptcy so the suspension of the listing is just a technicality. City Lodge (JSE code: CLH) rights started trading yesterday. The stock lost 75% on perhaps the most dilutive rights issue I have ever seen, 13 new shares at 212c for every one held. Everybody asking me if the should take up their rights? Truthfully you have to or be diluted out of existence. Alternatively, sell the shares and the rights and walk away. The company has a solid balance sheet, aside from the BEE deal. But the lockdown is hurting and the question is if they'll need more money? City Lodge market cap this morning cR600m, add in R1.2bn from rights issue, take out R800m for costs and BBE deal = R1billion (very rough numbers) ..

    'Property͕ plant and equipment' (excluding furniture/equipment) = R2.4billion less R660m debt = R1.74billion
    — Simon Brown (@SimonPB) August 5, 2020
     
    The US CARES act and specifically, the $600 payments has ended. Congress is in talks to extend but so far the two sides seem part apart. One wants to extend the $600 the other to reduce it to $200. SAB, Consol Glass and Heineken all responding to the liquor ban by cancelling projects. But are the cancelled or delayed? Are they opex or capex? Is this just a ploy to put pressure on the government? Or is this perhaps a bigger concern about stricter liquor laws post lockdown / pandemic? Upcoming events; 20 August ~ JSE Power Hour: Pro-active passive management * I hold ungeared positions.
    JSE – The JSE is a registered trademark of the JSE Limited.
    JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
     

    • 21 min
    Market Standard 03 August 2020

    Market Standard 03 August 2020

    Offshore
    / US earnings season
    / Q2 GDP data is coming in at about -10%
    / US jobless claims remain stuck at around 1.4million and CARES has ended, albeit congress is in talks
    / Alphabet says WFH until summer 2021 & Zuckerberg says there’s ‘no end in sight’ for Facebook employees WFH
    / Big tech results (Amazon, FB, Alphabet & Apple) knock it out the park
    / Big tech breakup congressional hearings
    Local
    / Steinhoff wants to settle claims
    / Europa Metals booms 16,000%, except it didn’t (500:1 consolidation)
    / ANG ceo quits
    / Vivo Energy results as fuel sales decline
    / GLD closes July at an all-time high
    / City Lodge rights issue 13:1

    • 56 min
    Script lending (#410)

    Script lending (#410)

    Simon Shares Day 126 of lockdown and Covid-19, cases may be moderating?
    Sasol (JSE code: SOL) sells some assets for R8.5billion and the stock is up over 12%. The sale is SA gas operations at Secunda. A sale and leaseback as Sasol only customer. But gets Sasol cash to pay down debt so good news short term, less so long-term. Korean websites also reporting on a possible 50% sale of US Ethane Cracking Center for US$3.3billion, which cost +US$12billion to build (for the other bits as well). Trading update due next week will give more details about the LCCP right downs which will surely be massive, but as importantly also maybe on the possible rights issue? Gold above US$1,900 and looking strong, albeit as I say that it'll now surely collapse in a heap as even I now own gold stocks? South Africa gets a US$4.289billion loan from the IMF. It's a very small amount and at great terms of around a 1% interest rate, albeit currency risk has to be hedged out. Upcoming events; 20 August ~ JSE Power Hour: Pro-active passive management Subscribe to our feed here Sign up for email alerts as a new show goes live Script lending EasyEquities users got all heated last week on Twitter as EE put T&Cs about script lending into their new mandate. I not commenting on the EE offer as they've withdrawn it. But many have asked about script lending as a concept.
    If I want to go short (make money from a falling stock) I need to sell shares and naked shorting is not allowed by the JSE (or most exchanges). So I need to borrow stock from somebody.
    Usually, you borrow from a large institutional investor who has plenty, you pay a fee and will also be liable to pay the lender any entitlements such as dividends.
    This process happens in the background when you're shorting via derivatives and why some shares are not sortable, no script to borrow.
    The script lender earns a fee, but there is risk so default.
    Whoever you lent the script to may not be able to return the script. Maybe they're just a crook? Maybe they can't afford to close out the position. remember they sold to buy back lower, but what if an offer arrives and the stock jumps say 50%?
    It certainly can and some income to a portfolio but the risk needs to be managed and the income is fairly modest. That said I've never lent out my script but I have borrowed script in recent years for some shorting (Aveng and Lonmin).
    JSE – The JSE is a registered trademark of the JSE Limited.
    JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
     

    • 17 min
    Market Standard 27 July 2020

    Market Standard 27 July 2020

    Offshore
    / 1.42 million Americans applied for unemployment benefits in the week ending July 18, up from 1.3 million a week earlier
    / Gold through $1,900
    / EU leaders have agreed to a €750b ($857b) stimulus package (US is in talks for their next round of support)
    / Tesla into sp500
    / Results; Microsoft msft & Intel intc
    Local
    / MPC rate cut
    / IMF loan to be announced tonight, R70billion
    / MTN update Vodacom
    / Datatec update
    / Sasol update

    • 59 min
    Gold gets its wings on (#409)

    Gold gets its wings on (#409)

    Simon Shares Day 119 of lockdown and Covid-19, cases may be moderating? Monday is 4 months of lockdown.
    Quantum Foods (JSE code: QFH) is coming back to earth after 1157c last Friday. Tech stocks in the US are flying. Expensive? yes, but. They have solid earnings, a moat and lots of new products they can roll out. Very solid Datatec (JSE code: DTC) update. From @keithmclachlan on Datatec valuations

    Westcon at $600m x R16.50 = R9bn + Logicalis x 10 PE x R16.50 = R5bn = R14bn..

    Less 10% head office = R12.6bn equity value against R5bn current market cap..

    Listen ==>> https://t.co/HeaMQxTCYK@Moneyweb #MoneywebNOW
    — Simon Brown (@SimonPB) July 22, 2020
     
    Long4Life* (JSE code: L4L) buying back 40million shares at 275c which is less than 50% of the last stated net asset value. The PSG (JSE code:PSG) AGM talks about PSG 3.0. The Zeder (JSE code: ZED) AGM was a mess as directors didn't take all the question that were asked via the virtual system Best execution rule is coming to South Africa and this is a biggie in many ways. * I hold ungeared positions.
    Subscribe to our feed here Sign up for email alerts as a new show goes live Gold gets its wings on I have never been a gold bull, in fact, the phrase I most used for gold stocks was that the only time you buy a gold stock was when you closed a short.
    But golds time has arrived and the miners are going wild even with a vaccine at some point this trend is likely to continue.
    The stimulus in the US and EU is massive and while stock markets are doing great, and maybe they can be propped up forever (certainly it worked post 2008/9 crisis) the underlying economies are not doing so great.
    Gold ETFs are an easy way to get exposure but they have no leverage, so less risk and less reward. Gold miners offer that leverage so will do way better, but also bring a bunch of risk.
    The Rand also brings risk as it strengthens.
    JSE – The JSE is a registered trademark of the JSE Limited.
    JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
     

    • 19 min
    Market Standard 20 July 2020

    Market Standard 20 July 2020

    Offshore
    / US jobless claims remain at around 1.3million
    / Netflix drops 9% on weak Q3 guidance.
    / Jamie Dimon’s warning for the U.S. economy — nobody knows what comes next
    / Amazon stock had its worst week since February
    / Fiscal Cliffs Threaten Fragile U.S. Recovery as stimulus expires late July
    / Qantas has removed all of its international flights until March of 2021
    Local
    / Tsogo Sun Hotels sells Maia resort for wild price
    / CPI May 2.1%, lowest since Sep2004
    / astral enters the quantum fray and price still flying
    / Diamond sales collapse and Richemont update
    / Rights issues announced, TFG R3.95 billion (40 per 100 shares, 40% discount), SUI R1.2billion (93 per 100 shares, 25% discount)
    / Spur CEO resigns

    • 57 min

Customer Reviews

4.8 out of 5
146 Ratings

146 Ratings

OboneSep ,

Straight to the point and insightful

Insightful! My go to with the Fat Wallet Show

Joe@130963? ,

Great dhoe

Great show great info. Always get great tips and thoughts to ponder on

Neil Boyce ,

Neil Boyce

Great show Simon , your a cool head in crazy times !! Good insight and very balanced view !

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