SIKI MGABADELI: A quick look at the markets. The all-share down a touch today at 54 123; the same with the Top 40 index. The rand is at R11.82/dollar, R18.52/pound and R13.15/euro. Gold is at $1 205.84/oz, platinum at $1 151.05 and Brent crude oil up at R66.52/barrel.
Hello, David. Trade – not much going on today.
DAVID SHAPIRO: A lot of results, and very influential on the market. I don’t think the MPC meeting had much impact. I think it was very much in line. In fact, we were talking about what the issues were last night. Inflation’s going to be affected by wage increases, the petrol price, electricity, etc. And I think most analysts probably are pencilling in a 0.25% rise maybe towards the end of the year now.
But it did hurt the rand. I think there might have been a view that the rate would go up and therefore it would draw some money into the country. But as there wasn’t a rise, the rand weakened again to R11.85. Not serious.
But a lot of results. Mediclinic down 8%. I think rather harsh because, if you go through the results, the reason that they missed forecast was that they are building hotels in the United Arab Emirates and Abu Dhabi and there are start-up costs there. Also in Switzerland there were certain tariff reductions that they didn’t expect, which hurt their margins in Switzerland, pulled down margins at their hospitals. But I think they’ll overcome most of those. They are adding more beds in Switzerland and increasing there. So I think given time they will recover. But the market was … [overtalking].
SIKI MGABADELI: And they were so nice to Netcare just the other day.
DAVID SHAPIRO: Local operations did well, but remember this is a hospital group that earns a lot more outside South Africa. I looked at Remgro, which has a big stake. It didn’t affect them at all. They were down a mere 0.5%, and they’ve got a big stake in the company.
SIKI MGABADELI: Investec – also out today. We chatted to Stephen Koseff and they are quite pleased with where they are right now. He says they are back to where they were mid-2000s.
DAVID SHAPIRO: I think they’ve repositioned themselves, got rid of a lot of the businesses that they didn’t want, and they are really becoming where they were originally – specialised lending and a wealth company. I think the wealth company does very well. What’s interesting is I still think most of the earnings are coming from here, and it does hurt them in translation into pounds. So if you view it in rands, it’s a much better result than the pounds result is. But very steady. They were the only company to go up in the financial sector – I’m generalising, but most of the banks were down. The market was also pleased with those results.
SIKI MGABADELI: Tsogo Sun?
DAVID SHAPIRO: A worrying result because it does begin to reflect the pressure on consumers. And also I think it’s an industry that’s probably peaking.
SIKI MGABADELI: And one of the things Marcel von Aulock said – and we were laughing about it – obviously a lot of their hotel business tends to depend on people holding conferences, and we know who holds conferences a lot, government. And austerity measures are in place.
DAVID SHAPIRO: I laughed at that because the statement was a little more terse than that. It didn’t quite say “conferences”. It just said “government austerity” – they are no longer travelling. I wondered whether that hurts the hotels or the gambling.
SIKI MGABADELI: A bit of both.
DAVID SHAPIRO: But they were down. You could see that it’s becoming a lot harder and harder for them to earn revenue on gaming. Look, the market didn’t flinch. The market was up 2.5%. Yes, they’ve come back from their 2008 levels, but I thought that on the result and on the outlook statement it help up pretty well.
SIKI MGABADELI: We also had a chat with Willie Meyburgh, who is CEO of Stefanutti Stocks. I don’t think the construction guys are having a great time of it either. Let’s just have a quick listen, David, to what he had to say.
WILLIE MEYBURGH: The basic target of the … was to get the building business in a position where it is profitable. And that was achieved because, if you look what happened last year and the year before, last year and the year before last we had a massive loss, including the Middle East. Although the Middle East made a profit of R2m, we had a loss in the whole building business of R140m. This year, including the Middle East, we actually made a profit of almost R29m. So it’s a turnaround of almost R170m. Now that to us was a big drive.
And the other part of the current strategy was to get out of businesses that are not profitable and where we don’t see a good market in those businesses. And that was why we closed the Power business as well.
So going forward, the continuing businesses – I think they are well positioned for us to see how we can improve results going forward.
SIKI MGABADELI: David, I see PPC continues to recover.
DAVID SHAPIRO: I think it’s recovering. It had been sold down a little too far on its results. It wasn’t a great result. I think this anti-dumping legislation that’s coming out is stabilising the market.
But a very good result from Afrimat. This is a blue-chip company. They’ve never let us down. They’ve just continued to produce superb results. And I think, with Stefanutti, it’s the first time we are seeing a more positive outlook. I think it’s too early to start cheering but very nice to have two companies like that producing a solid result.