Thursday, 09 June 2011 - 20:00
Sharenet is pleased to announce the launch of our new publication, The Sharenet Daily. We have built on the success of our Daily Equity Report, while adding more content and helpful information. The result is a publication that gives readers a quick, easy to read and informative synopsis of market activity, company results and news on the JSE for the day, as well as an overview of what transpired on important overseas markets.
The Sharenet Daily includes helpful charts that give a graphical impression of events, and our news content is sourced from a number of contributors, including Reuters. In addition, Sharenet's popular price information is available in our Spot Price format which provides a snapshot of the JSE and world indices, currencies and commodities.
All the JSE trading statistics; major movers; latest dividends; upcoming AGM dates and more are provided to insure that you keep abreast of market developments. The Sharenet Daily is published at 8pm each day on the website and also distributed via email for your convenience. As always, we welcome your comments, feedback and suggestions at firstname.lastname@example.org
Quality Companies vs Quality Investments
There are many instances where investors (professional and amateur alike) have mistaken a quality company with a quality investment. Successful investors are those who are able to differentiate the two, and who don’t allow emotion to sway their investment decision making process.
First off, let’s define the two terms:
A quality company is a company that has a quality management team. The management team should be efficient allocators of capital, thereby only allocating shareholder capital to profitable ventures. Quality companies are also typically in an industry where there are high barriers to entry, which allows them to consistently grow earnings at above market rates without many competitors joining the industry. These businesses also are generally not capital intensive, generating free cash flow which can be used for (profitable) expansion or distribution back to shareholders (in the form of dividends), as opposed to being forced to reinvest the capital to replace capital intensive equipment.
On the other hand a quality investment is an investment that one can reasonably expect an above average return over a targeted time horizon. The return generated on an investment is in a large part determined by the price paid for the investment. Overpay and you will struggle to generate excellent long term returns. Invest at a large discount to fair value, and you will increase the odds of receiving a generous return. This is the modus operandi of value investors.
Very often we find poor quality companies that are offering good long term returns as a result of the price relative to fair value. As an investor you need to be (relatively) sure that your fair value calculation is accurate and that you are being paid to take on the risk of purchasing a poor quality investment. Sometimes we are lucky enough that a quality company is trading at a significant discount to its fair value for some reason. This is the time to fill your boots.
The construction industry is notoriously a poor quality industry. Margins are tight and the business is capital intensive. Over time, however, the industry has offered excellent investment entry points as a result of the shares trading at substantial discounts to fair value. While not being an obvious place to hunt as a result of poor growth prospects and the shadow of the fines they’ve had to pay for anti competitive behaviour, some of the metrics show that they are offering good value. Below are a couple charts showing the value in the sector.
In the chart above we can see that earnings are getting close to historic lows. On these low earnings we can see below that the market is offering attractive multiples. While we don’t expect these to unwind immediately they do offer good long term starting points.
The Seed Flexible Fund currently has a large weighting (via Cannon’s equity allocation) to the construction sector. We expect that this allocation will generate good returns over the look term.
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Thu, 09 Jun 2011
The Financial Mail reported that Grindrod's most exciting asset is the company's concession at the Maputo and Matola ports in Mozambique. The port could earn Grindrod a return of between 18%-20%. . .
Shareholders are referred to the circular to Simmers shareholders dated 2 March 2011, the circular to Village Main Reef Ltd ("Village") shareholders dated 2 March 2011 and the announcements previously released. . .
Shareholders are advised that Optimum Coal will be hosting a number of analysts at Koornfontein Mines and Optimum Collieries in Mpumalanga. The presentations made during the site visit can be viewed. . .
Rental revenue increased to R493.4 million (R446.7 million). Net profit for the year rose to R629.6 million (R479.5 million) In addition, headline earnings per unit grew to 113.22cpu (98.54cpu).
A final ordinary distribution of 79.49cpu has been declared.
The weak office cycle over the last 18 months, with rising vacancies, has led to a short-term setback in Sycom's growth, but as the recovery of the 'A' grade office market gathers momentum, the high offic. . .
World Markets (Spot Prices)
|JSE Top 40||17:00||28307.10||120.44||0.43%|
|JSE Indust 25||17:00||27628.02||-28.67||-0.10%|
|Rand / Dollar||19:59||6.7343||0.0198||0.29%|
|Rand / Pound||19:55||10.9899||-0.0028||-0.03%|
|Rand / Euro||19:55||9.7742||-0.0317||-0.32%|
|Rand / NZD||19:59||5.5724||0.0588||1.07%|
|Rand / AUD||19:55||7.1653||0.0143||0.20%|
|Yen / Dollar||19:59||80.3900||0.5200||0.65%|
|Euro / Dollar||19:58||0.6891||0.0032||0.47%|
|Dollar / Euro||19:58||1.4509||-0.0066||-0.45%|
|Pound / Dollar||19:55||0.6108||0.0011||0.18%|
Click here for the Sharenet Spot Price page
The JSE Today
|Index Name||RP||Move||% Move|
|Financial & Ind. 30||30,668.20||-16.82||-0.05%|
|Oil & Gas ||26,762.58||70.82||0.27%|
|Oil & Gas Producers ||14,389.75||38.08||0.27%|
|Basic Materials ||29,665.68||322.75||1.10%|
|Forestry & Paper ||15,120.13||237.36||1.59%|
|Industrial Metals ||29,339.98||208.18||0.71%|
|General Industrials ||76,036.17||114.84||0.15%|
|Consumer Goods ||27,235.90||208.60||0.77%|
|Automobiles & Parts ||3,238.18||11.33||0.35%|
|Health Care ||33,619.34||170.09||0.51%|
|Food Producers ||47,649.30||-7.11||-0.01%|
|Index Name||RP||Move||% Move|
|Personal Goods ||428.17||1.60||0.38%|
|Consumer Services ||53,409.25||-735.80||-1.36%|
|General Retailers ||40,858.95||-150.75||-0.37%|
|Travel & Leisure ||3,651.31||-1.73||-0.05%|
|Support Services ||2,395.40||1.13||0.05%|
|Non-life Insurance ||31,227.98||916.61||3.02%|
|Life Insurance ||15,742.18||54.66||0.35%|
|General Financial ||2,298.51||17.34||0.76%|
|SHARIAH TOP40 ||3,120.21||24||0.76%|
|FTSE/JSE SHARIAH ALL||3,187.02||22||0.70%|
|FTSE JSE Fledgling ||4,574.05||-23||-0.51%|
|FTSE/JSE Alt X ||1,029.03||-29||-2.70%|
|SA LISTED PROPERTY ||384.29||-0.28%|
|CAPPED PROPERTY ||318.50||-0.04%|
|FTSE/JSE RAFI 40||6,607.05||26||0.39%|
|Capped Top 40||14,789.22||49||0.34%|
|Capped All Share||15,946.65||49||0.31%|
Click here for the Sharenet Index Summary page
Latest Consensus Changes**
|SBK||STANDARD BANK GROUP LIMIT...||SELL||07 Jun|
|KEL||KELLY GROUP LTD||BUY||07 Jun|
|ADR||ADCORP HOLDINGS LIMITED||HOLD||07 Jun|
|SNT||SANTAM LTD||BUY||07 Jun|
|SUI||SUN INTERNATIONAL LTD||HOLD||07 Jun||
|Expected||Company Name||Fin. Date|
|13 Jun 2011||BSI STEEL||March 2011 (Final)|
|13 Jun 2011||MIXTEL||March 2011 (Final)|
|13 Jun 2011||TELKOM||March 2011 (Final)|
|13 Jun 2011||TELKOMA||March 2011 (Final)|
|13 Jun 2011||TELKOMB||March 2011 (Final)|
|ABIL PREF||11-05-23||11-06-09||11-06-20||R 3.1000|
|PWK||Pick n Pay Holdings Ltd||10/06/2011||Confirmed|
|1TM||1time Holdings Ltd||10/06/2011||Confirmed|
|TLM||TeleMasters Holdings Ltd||10/06/2011||Confirmed|
|PIK||Pick n Pay Stores Ltd||10/06/2011||Confirmed|
|DCT||Datacentrix Holdings Ltd||10/06/2011||Confirmed||
Stock Exchange News Service
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