Cape Town - Overberg Asset Management analyst Kirk Swart looks at interesting corporate moves made on the JSE in this week's five shares to watch.
1. Calgro M3 [JSE:CGR]
Calgro released their results for the six months ending August 31 2016. Disappointing was headline earnings per share (HEPS) that dropped 1.7% to 65.13 cents per share.
The drop was largely due to Calgro acquiring the rest of Fleurhof and accounting for it as a subsidiary rather than a joint venture. Calgro is anticipating a slowdown in government spending which is driving the group to increase focus on private sector development.
Construction on private sector units sold only commenced towards the end of the reporting period and will contribute to profit in the next six months.
Family owned Dis-Chem pharmacies are planning a listing on the JSE. Unfortunately, Dis-Chem will not be offered to retail investors as the company plans to sell shares to institutional investors and selected persons only for a minimum placement of R1m.
Dis-Chem, which started in 1978, has annual sales of over R15bn. The company was founded by Ivan Saltzman and his wife Lynette.
Currently the biggest shareholder is the Saltzman Family Trust, which holds 66.9% of the company. Dis-Chem will provide investors with an alternative to listed pharmacy group, Clicks.
3. Reinet [JSE:REI]
Reinet's biggest holding, British American Tobacco (BAT) [JSE:BTI], announced on Friday that they are proposing to increase their investment in American company, Reynolds American Incorporated, from 42.2% to 100%.
The proposed merger values Reynolds at $56.60 of which $24.13 will be paid in cash and $32.37 will be in BAT shares. The $56.50 price tag is 20% more than the price of Reynolds on the 20th of October 2016.
Both BAT and Reinet shares climbed by over 3% on Friday. Reinet is still seen as a proxy for BAT although it has been actively disinvesting from BAT and using the proceeds to diversify its underlying investments.
4. Stellar Capital Partners [JSE:SCP]
Diversified holding company, Stellar Capital Partners, has increased its stake in Torre Industries to 55,38% from 35,43%. In the deal minority shareholders received 1.25 Stellar shares for each Torre share.
Stellar, which has various other unlisted investments, has had a trying time of late. The share price came down from R3,20 in November 2015 to R1,33 today.
Stellar Capital Partners has Christo Wiese as anchor shareholder which should encourage one not to take an eye off this company.
5. Grand Parade Investments [JSE:GPL]
Grand Parade Investments (GPI), via its foods division Grand Foods, has acquired the rights to roll out Dunkin' Donuts. This is the second big American food franchise it has added to its portfolio. GPI also has rights to the Burger King franchise. GPI is planning to open 5 stores before Christmas in the Western Cape and will be opening stores in Gauteng in 2017.
The move into food is part of GPI's plan to move away from its gaming assets.
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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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