Raubex is one of the few remaining listed construction stocks and it’s seeing increased tender activity locally. Coupled with proposed infrastructure sending in response to the pandemic it is well positioned. However, it remains very tough and highly competitive in bidding for tenders and as a country we’re still waiting for the Integrated Resource Plan 2019 programme, approved by Cabinet n October 2019, to be sent for tender. This as WBHO reported an expected 150% decline in headline earnings per share and an unsolicited offer for its Probuild business.
Capital Appreciation may be a small tech stock on the JSE, with a market cap of just over R1.2billion, but it’s operating in the sweet spot of fintech and cloud services. Solid results and an increased dividend saw the stock trading at 52-week highs even as its chairman Michael Sacks commented that “In my 50-odd years of professional and corporate life, the current state of our economy, through Covid-19, must rank as the most difficult I have encountered.”
During Wednesday’s show Cannon Asset Management CEO Adrian Saville helped us understand why deflation is not great. Firstly it means we delay big ticket items as we expect them to be cheaper in the future. So we save more but demand collapses. Bank credit agreements also come under pressure as the assets over which the debt is raised reduces in value over the term of the loan but the real clincher was that salary negotiations suddenly become about how much your salary is being reduced, not increased. South Africa is not at risk of deflation yet and April CPI was delayed but PPI gives us a hint that CPI s certainly around the bottom end of the 3%-6% inflation target range.
Payment hardware and software developer Yoco has 85 000 credit card terminals with small and micro businesses in South Africa; its data showing the impact of Covid-19 measures on the local economy is fascinating. In the first few days of lockdown, transaction values dropped 92%, but that activity has now started to return as latest data shows value is back at 67% of pre-lockdown levels. Health, beauty and fitness remain at under 50% in lockdowns levels but under level 3 the economy is starting to open up again.
Also listen to ‘Rand falls below R17/$, pandemic investment opportunities and battle of the banks’