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MTN the star performer among industrials

Famous Brands has written off huge amounts from their burger business in the UK, notes David Shapiro in Thursday’s market news.

NASTASSIA ARENDSE:  Good evening and welcome to the SAfm Market Update with Moneyweb with me, Nastassia Arendse.

Joining me is David Shapiro from Sasfin Wealth. David, how did the markets do today?

DAVID SHAPIRO:  They came down at the end. We fizzled down from being up for most of the day, just losing momentum. Tash, to be honest I’m not quite sure why we fell towards the end, and who sold out and what the reason was, because global markets are picking up a bit of momentum, people feeling a little better about President Trump’s views on tariff increases, with a view that he is going to exempt certain countries.

And also we had some nice positive statements coming out of the European Central Bank head, Mario Draghi, who’s quite confident on the health of the European economy.

So if you look at the US markets, they are picking up, and if you look at European markets they were also good.

Our miners were generally weak – no big falls, other than Exxaro, which fell 4.5% on numbers that just fell short of analysts’ expectations. But looking at metal prices this morning, all down, down for most of the day. I don’t know whether this is an overhang from worries over tariff increases, but platinum shares were down, with Impala, Northam off about 2%. And all our big diversified miners also lost ground.

On the industrial market a mixed performance, but MTN was the star performer. Those shares were up about 10%.

There were a lot of numbers to go through, so it’s almost impossible to give you a quick soundbite about why the shares went up. Overall I think there is a positive operational performance, performance there turning around with an increase in customers, especially in South Africa. And also data revenue was very strong. I need to go through those numbers in greater detail.

I was a bit disappointed in Aspen. Not the results – I thought the results were good, but it was just disappointing that the shares bounced only about 2%. I think it’s starting to look very cheap at these levels. They say that there’s nothing really wrong with the business. I personally don’t believe there is something wrong. Their thrombosis brand is doing well, and South African operations are okay, and even their anaesthetic business is now beginning to contribute.

Those were the major results.

Tiger Brands came under pressure again, another 3% down on their exposure to Listeriosis.

Retailer Famous Brands has written off huge amounts from their burger business in the UK. That took those shares down about 6%.

Financials – I can’t understand why FirstRand is just losing ground. I know their results weren’t great. They were positive on the outlook. Johan Burger was positive. Down for the second day in a row in quite big quantities. And also Standard Bank a bit off. Sanlam as well, slightly down on their numbers.  I think the market knew about those numbers, and also a very big deal that they’ve announced in Africa.

A very patchy market. I’m not quite sure why we should have ended this low, which we did.

NASTASSIA ARENDSE:  Did you have a look at Famous Brands’ trading statement? That GBK Restaurants business [the impairments]. I’m not sure if I’m looking forward to seeing their results – I think in May.

DAVID SHAPIRO:  I’m a bit worried. It shows you that anybody who has gone into UK, we saw it with Brait and New Look – it just seems to be one acquisition too far for the old team, just dragging down on their profits this great burger business, or whatever it was called. To be fair, I’m very dubious on the fast-service restaurants or what we used to call fast-food restaurants. I think we have peaked here and we know it’s becoming a lot more difficult. We’ve seen it with Taste, we’ve seen it in Spur. I think it’s going to be very difficult to grow from these levels. So ja, it was one of my favourite shares. I’ve been out [of it] for a long time now, but it’s under pressure. Ja, be scared of the results.

NASTASSIA ARENDSE:  I noticed that the Resilient stable seems to have recovered today.

DAVID SHAPIRO:  Big turnaround.

NASTASSIA ARENDSE:  I think they decided, well, let’s just go ahead and just unwind this crushed shareholding and various other things that were going on.

DAVID SHAPIRO:  We spoke about it last night. Remember, yesterday they went ex-interest, so they were down because they paid out. So this is a genuine rebound and. Looking at it, I don’t know how much higher they are going to go, because I think analysts are expressing a little disappointment on the guidance of the increase in distribution that you are going to get. But I would think that the short coverers – anybody who is short – are going to start covering now. And as that becomes tighter, you could find the share prices going up because whatever they complained about I think is now being unwound.

NASTASSIA ARENDSE:  Thanks, David.

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