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Simon’s weekly wrap: Exchange control changes, surprising results and hope for maize

This week MoneywebNOW looked at the effects and expectations of exchange control changes; Brait’s NAV; Stor-Age, Tsogo Sun and Octodec’s result; La Niña’s possible effects on maize, and more.
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The big story all over Twitter this past week was changes to exchange controls, with the 30% foreign investment cap effectively lifted in certain conditions and foreign exchange-traded funds’ (ETFs) domestic assets reclassified. Nerina Visser of etfSA says while the Reserve Bank has changed regulations on inward-listed instruments, the Financial Sector Conduct Authority has not and as such the old Regulation 28 restrictions remain in force. They will likely be changed, in time, but she does not think 100% offshore will be allowed.

The Brait interim results show a net asset value (NAV) of almost double the current share price, with many disputing the calculation. I asked Chantal Marx of FNB Wealth and Investments if this offers an opportunity for investors and she is of the view that while the recovery will be rocky, there is value in Brait’s NAV, especially in light of all of New Look being written down to zero.

Stor-Age’s* interim results show that not only does it have a recession-resilient business model, but a pandemic-resilient one too. Good results saw the dividend fall a little after dilution due to the capital raise earlier in the year, but other than that all metrics trended higher. It is also moving into the last mile of e-commerce delivery and doing very well with small businesses that tend to use more space and stay for longer.

The southern hemisphere is expecting La Niña in early 2021 and this means higher rainfall than usual. I asked Wandile Sihlobo of Agbiz if this will help farmers with a potential bumper crop and he agrees it is very possible. If this happens maize prices will fall and chicken producers, such as Astral Foods, will benefit as maize is one of their larger input costs.

Also this week:

Kruger International’s Mia Kruger talks markets as the Moderna vaccine is announced; Tsogo Sun Hotels CEO Marcel von Aulock discusses results after six months of lockdown; and Octodec MD Jeffrey Wapnick discusses its full-year results and deferred dividend.

*The writer holds shares in Stor-Age

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