Cape Town - Overberg Asset Management share analyst Kirk Swart looks at property results, gold, roads and pharmacies in this week's share watch.
1. Octodec [JSE:OCT]
Octodec is one of the largest property owners in the Pretoria and Johannesburg CBD's. Octodec's portfolio cannot be categorised into one type of property. They own residential, retail, office and industrial properties.
In the retail space, Octodec owns various ground floor and walkway, high street and retail properties. This is considerably different to the traditional shopping mall retail investments most other listed REITs have.
Octodec is trading at a discount to NAV of 24% with a forward dividend yield of 9.9%. Focusing on growing their footprint in Johannesburg and Pretoria CBD, Octodec has a relatively high gearing ratio of 37.2%. They will look to reduce the figure once all the new developments are finished.
2. Anglo Gold Ashanti [JSE:ANG]
Anglo Gold Ashanti (ANG), on Monday recently released an operational update for the quarter ending 31 March 2017. The update seems to be on track with ANG's full year production guidance.
However, the quarter has seen an increase in production costs due to the higher planned capital expenditure. ANG is planning a 71% increase in capex which is part of a strategic investment to secure medium to long term operational improvements and secure sustainable free cash flow through the market cycle.
For the quarter, gold production was at 830 000oz at an average cash cost of $813/oz. This is up from last year’s Q1 cost of $702/oz. All in sustaining costs were $1 060/oz, up from 2016 Q1's $860/oz. The company cites the increased capex and strengthening currencies as the reason for the increasing costs.
The gold price is around $1 230/oz.
3. Raubex [JSE:RBX]
Raubex on Monday released their audited results for the year ending 31 March 2017. Revenue increased 13.6% to R9bn. Cash flow from operations increased by 16.5% to R1.22bn. However, operating profit was down 6.9% and Headline Earnings per Share (HEPS) was down 14%.
Shareholders should not be to disheartened by the decrease in operating profit and decrease in HEPS. The decrease is due to a non-recurring Voluntary Rebuilding Programme (VRP) expense of R119.9m.
If the VRP expense is excluded, operating profit would have increased by 10% and HEPS would have increased by 14.8%. Raubex has an order book of R8.03bn.
4. Clicks [JSE:CLS]
The Clicks group keeps reporting impressive results. HEPS for the first half of 2017 grew by 13.5%. Clicks managed to grow retail sales by 11.8%, with like for like sales increasing 7.5%. Clicks pharmacies continued to grow strongly by 20% and continues to gain market share.
Click's distribution business, UPD, grew operating profit by 22.1% on the back of 7.5% revenue growth. The profit growth is attributed to a decrease in operating costs of 2%.
Clicks remains one of the better businesses in South Africa. Trading at a PE ratio of 27%, Clicks needs to continue to deliver these strong results.
5. Redefine Properties [JSE:RDF]
Redefine released their unaudited results for the six months ending 28 February 2017. Redefine has declared a distribution of 44.82 cents per share for the six months’ period. This is an increase of 7.5% on the comparable period last year.
Redefine has made several acquisitions of late which has proven to add to the gross distributable income. The gross distributable income for the period increased by 24.8%. The property portfolio revenue for the period contributed 99.6%, whilst listed security income contributed 0.4%.
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*Kirk Swart is an analyst at Overberg Asset Management, an Authorised Financial Services Provider (No 783) which specialises in the private management of local and global discretionary portfolios as well as pension products.
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