Despite ending the month relatively unchanged the rand fell to its weakest intraday trading level in 12 years vs the US dollar during February.
This rand volatility saw rand-hedge counters perform well with nearly half of the shares among the top-20 performers offering investors some form of currency protection.
At the same time, February also saw a deluge of results releases with most of the bottom-20 performers having released disappointing results or trading updates and gold counters dragged down by the weaker gold price and a stronger US dollar. Conversely, the 20 best performers saw positive results releases buoy their share prices.
Northam Platinum emerged as the best-performing share among the FTSE JSE All Share Index constituents, rising 33.3% for the month after swinging to a first-half profit on the back of increased group production. This follows protracted strikes at its Zondereinde mine in the year-ago period. A higher rand basket price for platinum group metals (PGMs), due to the weaker rand vs US dollar exchange rate, also contributed to the R354.1mn profit vs a R96mn loss in the same period last year. The company recently agreed to buy the mining assets and rights to Aquarius Platinum’s Everest operation in South Africa for R450mn.
Although initial reports indicated that Bidvest had offered to buy the whole of pharma group Adcock Ingram (+21.8% MoM) which it doesn’t already own (Bidvest has a 34.5% stake), Bidvest said on Friday that it would not buy all of the company. This comes as the Adcock share price continued to trade around Bidvest’s planned offer price of R52/share, closing the month at R51.65/share. Press reports have valued the deal as potentially being worth R6bn. Adcock Ingram also released its interim results last month which showed that revenue increased to R2.72bn from R2.69bn posted in the corresponding period a year ago and diluted EPS rose to ZAc83.80 from ZAc60.70 in the year-ago period.
Coming in third spot for the month with a 17.6% gain was Telkom which has seen its share price rise 17.1% YTD. In mid-February Telkom announced further restructuring plans in a continuing push by the company to lower costs but, more importantly for the share price, Telkom was also chosen by Cabinet as the lead agency for a countrywide broadband roll-out.
During the month Cashbuild (+17.2% MoM) released a trading statement indicating that it expects 1H15 EPS to be between 30% and 40% YoY higher. Cashbuild was followed by Capevin Holdings which rose 16.6% MoM and New Europe Property Fund (Nepi, +16.5% MoM). During February Capevin’s share price rocketed closing at its highest level ever of R9.91/share on Friday. The company has a stake of c. 29% in drinks-maker Distell which reported growth in its local operations last October. Nepi’s performance was likely due to the fact that it offers local investors fast-growing exposure to offshore real-estate markets and is a rand hedge.
JD Group (+16.2% MoM) and BHP Billiton (+15.6% MoM) also managed to record share price growth above the 15% level for the month, albeit the latter from pretty depressed levels. JD Group saw its share price bounce after 100% of its shareholders voted in favour of selling its finance book to French bank BNP Paribas for R4.6bn. BHP Billiton released 1H15 results which beat analyst expectations even though lower iron ore and petroleum prices saw the company record a drop in revenue to $29.9bn from $33.9bn in 1H14 and a decline in underlying profit ($5.35bn), which came in well below the $7.8bn posted in 1H14, but was nevertheless far better than the $4.89bn analysts had been expecting.
Petmin’s (+14.7% MoM) share price surged after it reported robust interim results, posting a 25% YoY increase in headline earnings. The coal and iron ore company has been under pressure on the back of the significant drop in the iron ore price (which traded at a five-and-a-half-year low of $61.10/tonne in February) and the difficult local operating environment. Nevertheless, Petmin managed to increase production at its flagship mine, the Somkhele anthracite operation in KwaZulu-Natal which also produced more thermal coal.
Rand hedges, Mondi and Mondi Plc rose 14.2% and 13.5%, respectively, with the Group reporting FY14 results last month which saw the paper and packaging company’s revenue decreasing marginally to EUR6.40bn vs EUR6.48bn reported a year ago. However, basic EPS rose 22.1% YoY to EUR0.97 despite tough global markets and Mondi said that at 17.2% its returns on capital expenditure were well above its cost of capital, making projects “strongly value-enhancing”. CEO David Hathorn also noted that all of the group’s business units had contributed strongly to the results.
Steinhoff (+12.6%), which owns 86% of JD Group, also benefitted from the approval of the BNP Paribas deal mentioned above. It was followed closely by EOH Holdings (+12.5%), which released a trading statement for the six months ended 31 January 2015, saying that management expected EPS to be between ZAc275.8-ZAc298.7, reflecting a YoY increase of between 20% and 30%.
Anglo American (+12.2%) saw its share price increase despite the company reporting a significant FY14 net loss of GBP1.62bn and its revenue tumbling 7.7% YoY to GBP17.5bn. Anglo American told investors that it aims to complete its iron ore Minas Rio project at $400mn below budget, that it would maintain a range of cost-cutting measures and also said it believed the group would be able “…to ride out the storm of volatile commodity prices” and has a “diversified enough portfolio” to protect it. Omnia Holdings’ share price (+11.3% MoM) has been under pressure since it peaked at R242/share in September 2014, with the share price closing at a 52-week low of R167 on 22 January, however last month it rebounded to close at R190/share at the end of February.
Old Mutual (+10.7%) released FY14 results during the month which showed that total revenue was down 21.9% YoY to GBP15.48bn, while its diluted basic EPS came in at GBp11.50 vs GBp13.90 recorded in the previous year. The company said that its profit fell after the average rate of the rand weakened c. 18% vs the pound. However, it added that its UK and rest of Africa operations were expected to increase their portion of group earnings at a faster rate than the South African business (currently its main profit source).
Paper and plastics packaging group, Mpact (+10.6% MoM) reported interim results which saw it post a 9.7% YoY increase in revenue and a 20.9% YoY rise in underlying EPS to ZAc77.0/share despite a difficult operating environment as the weaker rand improved the company’s export competitiveness and the relative competitive position of “the group’s manufactured products vs imported substitutes – especially in the paper business”.
Iron ore, coal and base metals producer Exxaro (+10.2%) reported a lower-than-expected FY14 loss (due to a write-down in a Congo Republic iron-ore project) and a good performance in its coal arm which saw investors piling into the stock after the counter’s c. 30% YoY loss in 2014.
Finally Truworths (+9.7%) and Transaction Capital (+9.1%) made up the remainder of the top-20 performers with both posting single-digit gains. Truworths reported relatively flat half-year earnings during the month but investors seemed to welcome a move by the clothing retailer to hike its dividend (the interim dividend rose 9% YoY to ZAc236/share).
*This article was first published by Anchor Captial