STOCK TAKE | Surviving on bread and Coke on the JSE

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OPINION

Let them eat bread

The JSE needs new-school listings

High-tech IPOs focused on big data, the internet of things, electric vehicles, robotics and biotechnology? Not for us. In South Africa, we are sticking to bread and Coke. The listing of Coca-Cola Beverages Africa was postponed earlier this year, but Premier Group – which controls 24% of the SA bread market – released its pre-listing statement on Tuesday, and could list soon as Christo Wiese's investment group Brait plans to unbundle its biggest holding.

The JSE's newest listing won't be a sexy unicorn. It won't make you rich quickly, and it's not big. Its market value is estimated at between R6.9 billion and R8.9 billion. It will be among the smallest in its sector, which also includes Tiger Brands (R34 billion), AVI (R25 billion) and RCL Foods (R10.3 billion).

Still, Premier is a proper player: it has cornered a third of the SA flour market, and controls almost a fifth of the markets for maize meal, sugar-based confectionery and feminine hygiene products. Its brands include Blue Ribbon bread, Snowflake flour, Iwisa maize meal, Super C sweets, and Lil-lets SA. The group has seen strong growth, despite rocketing input prices and load shedding. In the past six months, its revenue was up almost 24% from a year before, and its EBITDA grew nearly 16%. Unlike those racy tech plays, it plans to pay a dividend from the start.

Premier's JSE entry is welcome. Fidelity Services Group, the largest private security firm in South Africa, is reportedly also considering an IPO, and OUTsurance will have its own listing soon. But these entrants are not game changers for the local investable universe, which is shrinking fast amid the delisting of large companies like Mediclinic and Distell.

Not only that. Fact is, the investment offering on the JSE is pretty old school. While you can get exposure to mobile payment technology and fintech via SA's biggest banks and telecom groups, to really capitalise on the revolution in digital technology and other international innovation, you will have to invest elsewhere. It's a pity - South Africa was the cradle of cloud services (Amazon Web Services) and the revolutionary technology that enabled sending messages from the internet to cellphones (Clickatell).

But for now, as tech shares slump and the crypto crisis takes the gloss off all things intangible, an even greater pity is that there aren't great JSE-listed investment options in the one SA sector set to boom in coming years: renewable energy.

As Warren Buffett famously advised, never invest in a business you don't understand. After 15 years of load shedding and Eskom crises, South Africans now understand electricity almost as well as bread and Coke. Emerging power players may find a particularly receptive investor base in SA. Unfortunately, with all the red tape and regulation, bourses aren't the go-to place to raise capital anymore. The JSE and its competitors must innovate to entice these new players - and help turn South African investors' power pain into long-term profit. 


Quote of the day

I never thought I would see the day when a minister came to justify the NHI because his own medical aid ran out of funds.
- EFF MP Naledi Chirwa, after health minister Joe Phaahla, in a presentation about the merits of the NHI, shared how he had to "dig deep into his pocket" to pay for medicine during a recent pharmacy visit - after being told that his medical aid saving funds were depleted.


Graph of the day

Source: Statistics SA


Number of the day

A$250m (R2.9 billion)
How much the Australian Stock Exchange had to write off after it canned a new blockchain-based platform which was supposed to replace its clearing and settlement system. The project was abandoned after seven years. The Financial Times reports that Australian banks and financial services groups are estimated to have spent up to A$150m preparing for the upgrade.

Previously:

STOCK TAKE | Where did the Trustco trust go?

STOCK TAKE | Another SA firm burned in Australia and what the Post Office, Twitter have in common

STOCK TAKE | Will Gold Fields come up short?

STOCK TAKE | Chicken Licken eyes everyone's souls and Shoprite has fans in Singapore

STOCK TAKE | The Dis-Chem dodge - and will you be paying by cash, card or crypto?

STOCK TAKE | Discovery executives make bank

STOCK TAKE | Heineken keeps it green, Godongwana's careful words and SA's tax revolt odds

STOCK TAKE | In praise of SA's great worriers

STOCK TAKE | Eskom (sort of) stimulates business spending, while super yacht heads SA's way

STOCK TAKE | Telkom gets jilted and Markus 2.0

STOCK TAKE | The Dis-Chem drama - and Pick n Pay slump points to trouble ahead

STOCK TAKE | A tale of two smelters, and did banks get it wrong on home loans?

STOCK TAKE | Reserve Bank walks the hawk talk and Harmony re-emerges down under

STOCK TAKE | Allan Gray takes shine to Gold Fields - and Anglo's Kusile-sized generator

STOCK TAKE | Pick n Pay's big bet - and should you follow Gerrie?

STOCK TAKE | Is Sasol's hydrogen plan just hot air?

STOCK TAKE | Karooooo grows its Os and Ackerman states it like it is

STOCK TAKE | A German cure for SA labour woes - and what’s Schadenfreude in Swedish?

STOCK TAKE | Allan Gray takes shine to Gold Fields - and Anglo's Kusile-sized generator

STOCK TAKE | Telkom avoids signal loss amid the Rain - and the Woolies wage way

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