Monthly Archives: November 2018

Transaction Capital


Transaction Capital (TCP) is a company which specialises in financing, repairing, insuring and selling minibus taxis in South Africa. It completely dominates the entire value chain associated with the minibus taxi industry.

The company listed in June 2012 and since then has generated an annual compound growth in earnings per share of 20% with a 33% per annum average growth in dividends. This is an almost unique performance from a JSE-listed company. The share is shaping up to be a “diagonal” share (our term for a share whose chart goes from the bottom left-hand corner of your screen to the top right-hand corner). Its share price has risen from 470c in March 2014 to its current level of 1910c today. Read More

Showdown


A showdown is looming in the gold mining industry. On the one side we have Sibanye Stillwater which is now South Africa’s largest gold producer represented by Neal Froneman, and on the other the notorious Association of Mineworkers and Construction Union (AMCU) led by Joseph Matunjwa. Froneman is a tough, experienced mining engineer who has taken on the task of reviving and consolidating South Africa’s ailing gold mining industry. Matunjwa is the leader of AMCU, the man who brought the platinum industry to a complete stand-still for five months.

Sibanye is operating at break-even in its South African gold mines with a cost of production around R565 000 – which does not allow for excessive wage increases. Sibanye has already done a deal with the other three unions for an increase of R700 per month for its lowest paid workers – but Matunjwa and AMCU are holding on for R1000. AMCU represents 43% of Sibanye’s work force of 32 000 in the gold industry. Read More

Capitec Revisited


On 19th February 2018, about two weeks after the Viceroy report on Capitec that took the share price down 25%, we published an article in which we suggested that Capitec was in fact very cheap, because its Price:Earnings Growth ratio (PEG) was at just 0,63. At the time, Capitec was trading for around R820 per share.

The PEG ratio can be easily calculated by dividing a company’s P:E ratio by its average growth in headline earnings per share (HEPS). All the required numbers are in the ShareFriend Pro software. The HEPS is given in the comment feature for each listed share and the P:E ratio is quoted with other price-related data at the top of your screen above the chart. Read More

Pan African Resources


Normally, we advise private investors, especially beginners in the share market, to stay away from commodity shares because of their volatility. Commodity prices are set on international commodity markets over which commodity producers usually have little or no control. This means that it is difficult for a commodity producer to have any clear idea of exactly how much he will be able to sell his product for. At the same time commodity producers have a multitude of problems which are often unpredictable and difficult to assess – like strike action and problems with underground mining operations like flooding, faulting and friability of the rock surface. Read More

The Confidential Report – November 2018


October Month

October month is never a good month for investors. Historically, the 1929 crash and the 1987 crash began in October and several other Octobers over the decades have been bad. Always, some investors will tend to get out of the market in October or in anticipation of a fall in October. This makes the October problem self-fulfilling to some extent and this year was no exception. Analysts have for a while been saying that world stock markets are over-priced based on the fact that the bull trend is now in record territory having been going on for nearly ten years (an opinion which we do not agree with). So, when October month comes along there is what appears to be good justification to get out of the market. Read More