The world is changing quickly and in unexpected ways.
Who would have guessed that a virus in Wuhan, China would have led to a semiconductor shortage, negative oil futures and our inability to buy alcohol?
Or that it would pave the way for Russia to invade Ukraine, and Germany to start looking at ‘dirty’ energy again?
In this wild world, markets are whipsawing daily and it is worth putting some interesting facts down on paper for context.
Naspers has destroyed more value than triple the debt at Eskom
The latest estimate of debt held by struggling SA power utility Eskom is said to be around R392 billion. This whopping figure, though, is dwarfed by Naspers’s (code: NPN) collapse in market cap on the JSE.
From its high on November 21, 2017, with a market cap of R1 804 billion, Naspers has fallen to a low (at the time of writing this) of a market cap of R606 billion.
This is a negative swing in value of R1 197 billion.
That means Naspers management has the dubious distinction of having wiped out more than triple the debt of Eskom (well spotted, Dale on Twitter).
So much for “value unlock”…
Admittedly, that is a little tongue-in-cheek, as a large amount of this downside has been driven by a collapse in Naspers’s major investment in Tencent. Being listed in Hong Kong, Tencent has been under immense and shareholder-hostile regulatory pressure in China that is making many investors begin to mutter words like “uninvestable” when referring to Chinese Big Tech.
Spun out of Gold Fields, Sibyane-Stillwater was (briefly) larger than Gold Fields this year
Established as Sibanye Gold Limited in February 2013, what is now called Sibanye-Stillwater (code: SSW) was created through the unbundling of Gold Fields Limited’s 100% owned subsidiary GFI Mining South Africa Proprietary Limited, which owned the Kloof, Driefontein and Beatrix gold mines.
The ‘Stillwater’ part of its name came from the large acquisition of the Stillwater Mining Company in the United States, a predominantly palladium miner that added geographic diversification to the group.
Despite being the unwanted orphan of Gold Fields (code: GFI), from January 7 to March 4 this year), Sibanye-Stillwater had a larger market cap than Gold Fields!
I’m pretty sure Gold Fields wishes it had kept those assets …
Okay, that is also a little cheeky as Sibanye-Stillwater has only grown so large due to the raft of platinum group metal (PGM) acquisitions it made when PGM basket prices were hitting multi-year lows. These same spot prices hit (could it be all-time?) highs as Russia (a large PGM producer and exporter of around 40% of the world’s palladium) invaded Ukraine, triggering major sanctions that benefitted non-Russian producers of these metals.
The reality is that if Sibanye-Stillwater had remained within Gold Fields it would almost certainly never even have entertained these deals into non-gold assets, and thus would have missed out.
The entire JSE-listed property sector is smaller than Amplats … by a third!
For many years, listed property outperformed. Rates kept falling, shopping centres and offices kept being built and filled, wild cross-holdings kept being structured, and increasingly marginal real estate investment trusts (Reits) kept listing on the JSE …
The music stopped a couple years ago.
The JSE-listed property sector has gone from bad to worse and collapsed, as a huge oversupply in shopping centres and offices (which the pandemic has not helped one bit) met over-geared balance sheets and shaky, often indecisive, management.
The entire listed property sector’s market cap is a little over R400 billion (not reversing cross-holdings that artificially boost this figure).
Staggeringly, this means the entire JSE-listed property sector is only slightly bigger than FirstRand’s (FSR) R398 billion market cap and nearly a third smaller than Anglo American Platinum’s (AMS) R546 billion market cap!
This is because the world needs well-run banks and PGM metals; does South Africa really need another marginal shopping mall and office park?
Keith McLachlan is investment officer at Integral Asset Management.