Financial Mail - Investors Monthly
INVESTMENT SHORTS
Given how well his investments have done in the past year, it’s no surprise that when Pepkor and Shoprite chairman Christo Wiese lets slip any wisdom about the markets, investors’ ears tend to prick up.
So it was at Shoprite’s AGM when, discussing the dire situation in SA, Wiese said the country’s mood tends to lift when three things happen.
First, the gold price must go up (which it has recently); second, it must rain across the country (which it hasn’t); and third, SA must do well in the rugby (and the verdict seems unclear on this, given the volatile World Cup campaign in the UK).
“It’s just a tough patch, we have to fight our way through it,” he says.
In fact, things are surprisingly tougher than anyone knew. True, companies have been talking about the “weak consumer” for months, but quite how weak wasn’t entirely clear. Then the answer moved into sharp relief in mid-October when Shoprite released a trading update which showed that growth in its South African supermarket business had slowed to 4,9% — marginally above inflation.
This sparked something of a bloodletting in Shoprite’s stock, as it tumbled 8% in two days, from nearly R160/share to around R147/share. This is not the kind of thing that CEO Whitey Basson is used to, having been unofficially anointed as the golden boy of South African retail years back.
But the upside is that that fall made Shoprite’s stock, hitherto quite pricey, far more reasonable. At its low, Shoprite was trading on a price-to-earnings ratio of less than 20 — which seemed a bargain.
Especially if it starts to rain.
Survé’s sygnia of the times African Equity Empowerment Investments (AEEI) — the old Sekunjalo Investments, ultimately controlled by the flamboyant Iqbal Survé — should make more investments in listed companies, it seems.
For the most part AEEI’s value resides in unlisted Premier Fishing, its technology hub and its rather opaque BEE investment in British Telecoms SA.
Lately, though, AEEI has scored big from its participation in the empowerment scheme for listed consumer brands conglomerate Pioneer Foods, and now appears to have made another impressive return on newly listed asset manager Sygnia (see our cover story).
AEEI has confirmed securing 3,8% of Sygnia in its oversubscribed private placement at the subscription price of 840c/share.
With Sygnia’s share trekking north of R14 at the time of writing, this is a nice boost to AEEI as it kicks off its new financial year. For its last year to August, AEEI said earnings will be up as much as 40%.
There is, of course, an ironic twist to this Sygnia investment. Independent Newspapers, which is also owned by Sekunjalo after a controversial buyout a few years back, messed up at the beginning of October by reporting that Sygnia was a subsidiary of Sekunjalo in its
Business Report supplement. This mistake can’t have pleased Sygnia CEO Magda Wierzycka, because a lengthy apology appeared the next day, reiterating that Sygnia has “no association or affiliation with Sekunjalo or AEEI”.
Now AEEI has made a pretty penny on this investment. Who knows, maybe this rash of successful listings will even prompt AEEI to hasten its efforts to bring Premier Fishing and its tech hub to the JSE.
Yeoville becomes No-ville Real estate investors have probably noticed that the small Cape Town-based property counter Fairvest is making some rather eyebrow raising moves into the retail space.
For one thing, it has already made a very promising stab at revamping Nyanga Junction outside Cape Town. But it was a rather bold plan to pay R56m for a conglomeration of retail properties in the dilapidated suburb of Yeoville, on Joburg’s eastern flank, that really set the risk bell ringing.
Investors, however, will surely be breathing a sigh of relief after Fairvest’s bosses then revealed that the Yeoville acquisition