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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 support@sharenet.co.za
Charts
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:
Quality Company
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.
Quality Investment
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.
Construction Industry
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.
Take care,
Mike Browne
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966
Top News
![[IMAGE]](image.php@width=300&height=150&cropratio=2%253A1&image=%252Fnewsimages%252F2011-06-09T123720Z_01_AJOE7580Z2B00_RTROPTP_3_OZABS-SAFRICA-MANUFACTURING-20110609.JPG "To match feature BEER-AFRICA/") Growth in South Africa's manufacturing output slowed sharply to 0.4 percent year-on-year in volume terms in April compared with an upwardly revised 4.9 percent rise in March, Statistics South Africa said on Thursday. Full story ![[IMAGE]](image.php@width=300&height=150&cropratio=2%253A1&image=%252Fnewsimages%252F2011-06-09T100539Z_01_AJOE7580S1G00_RTROPTP_3_OZABS-SAFRICA-MINING-GOLD-20110609.JPG "Gold bars are displayed at South Africa's Rand Refinery in Germiston") South Africa's gold output rose 1.5 percent in volume terms in April while total mineral production rose 12.4 percent compared with the same month a year earlier, data showed on Thursday. Full story |
 Libya's cash-starved rebels on Thursday won more than $1.1 billion (672 million pounds) of aid at a conference of Western and Arab powers that focussed on the end-game for Muammar Gaddafi and the country's civil war. Full story  More than 1,700 Syrians have fled to Turkey to escape a feared army crackdown, officials said on Thursday, in another sign that President Bashar al-Assad's struggle with protesters is disturbing Syria's neighbours. Full story  Millions of children's lives and billions of dollars could be saved if vaccines were more widely available in 72 of the world's poorest countries, according to a series of studies published on Thursday. Full story |
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Markets |
U.S. stocks extended gains on
Thursday after trade data showed record U.S. exports, easing
concerns about a stalled economic recovery following a six-day
slide. . . Full story |
European shares rose sharply on
Thursday, bouncing from six days of losses as investors snapped
up beaten-down stocks, notably those related to commodities.. . . Full story |
U.S. stocks bounced back on
Thursday after a six-day slide and oil prices jumped on supply
concerns, while the euro fell after the. . . Full story |
Miners rebounded from the
previous day's sharp sell-off to help push Britain's top share
index higher on Thursday, while oil stocks tracked crude. . . Full story | |||
Gold prices firmed to session
highs above $1,540 an ounce on Thursday as the European Central
Bank signalled a rate hike may be. . . Full story |
European shares drifted lower on
Thursday, down for a seventh straight day in a choppy session,
with retailers coming under pressure on a. . . Full story |
Australian shares rose 0.3
percent on Thursday, breaking a six-day losing streak after
disappointing May jobs data doused expectations for a rate rise
in. . . Full story |
The Nikkei share average edged
higher on Thursday as buying from foreign investors attracted by
cheap valuations offset growing worries over a slowing. . . Full story | ||||
SA Business |
South Africa's high unemployment rate is a major threat to the country's investment grade rating, said Moody's senior vice president and. . . Full story |
South Africa's rand was little changed from its previous closing level against the dollar in cautious early Thursday trade ahead of. . . Full story |
Africa, regarded as the next iron ore frontier, is only likely to boost global supply from 2020 and only if countries. . . Full story |
South Africa's rand fell against the dollar on Wednesday as importers bought foreign exchange, with bonds following suit and stocks also. . . Full story | |||
South Africa has named Zola Tsotsi as new chairman of power utility Eskom as the government seeks to reshuffle the leadership. . . Full story | Global ferrochrome demand
is expected to rise by 11 percent to 9.87 million tonnes this
year, outstripping expected supply of 9.29 million tonnes,
Merafe. . . Full story | South African maize futures edged up on Thursday, tracking international prices as the market anticipated that a U.S. government report would. . . Full story | Shares in Australian iron ore miner Territory Resources jumped rose by over 10 percent on Thursday after commodities firm Noble Group. . . Full story |
South Africa's Pan African Resources said on Thursday it was encouraged by its drilling programme on the Bramber tailings dam at Barberton Mines and that more dump material was being investigated.. . . Full story | . . . Full story | Members of South Africa's National Union of Mineworkers (NUM) working at Exxaro will go on strike on Monday over planned retrenchments at the miner, the union said on Wednesday.. . . Full story |
Company News |
In accordance with rule 3.59 of the Listings Requirements of the JSE Limited, shareholders of the company are hereby advised of. . . Full story |
Further to the announcement on SENS on 17 May 2011, shareholders were advised that the date for proof of funds and. . . Full story |
Shareholders were advised that the board of directors have been informed that a creditor and shareholder/s intends launching an application for. . . Full story |
Shareholders are advised that the group's headline earnings per share based on continuing operations for the year ended 28 February 2011. . . Full story | |||
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%. . . Full story |
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. . . Full story |
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. . . Full story | |||||
Company Results | 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).
Distribution
A final ordinary distribution of 79.49cpu has been declared.
Prospects
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. . . Full story |
World Markets (Spot Prices)
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics| Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
|---|---|---|---|---|---|---|---|---|
| 09/06/2011 | 167 | 144 | 90 | 401 | 300,166,119 | R12,186,884,209 | 93442 | 1526588 |
| 08/06/2011 | 102 | 211 | 80 | 393 | 289,977,530 | R14,128,113,613 | 97379 | 1638141 |
| 07/06/2011 | 215 | 115 | 79 | 409 | 256,815,594 | R13,316,645,845 | 105587 | 1645193 |
| 06/06/2011 | 154 | 173 | 82 | 409 | 227,940,534 | R10,531,278,670 | 74371 | 1574719 |
| 03/06/2011 | 121 | 203 | 78 | 402 | 279,754,474 | R14,253,513,253 | 107175 | 1741087 |
Major Moves Up
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Major Moves Down
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New Highs
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New Lows
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Index Summary
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Latest Consensus Changes**
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Results Expected**
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Recent Dividends**
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Upcoming AGMs**
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Stock Exchange News Service
| Date | Time | Headline |
| 09/06/2011 | 17:13 | Famous Brands Limited - Dealings in Securities |
| 09/06/2011 | 16:53 | FR1 - FirstRand Bank Limited - New Financial Instrument Listing - Amendment to |
| 09/06/2011 | 16:50 | Interwaste Holdings Limited - No change statement and notice of annual |
| 09/06/2011 | 16:44 | Sephaku Holdings - Notification of Share Dealing by the company secretary |
| 09/06/2011 | 16:19 | Bowler Metcalf Limited - Cautionary announcement |
| 09/06/2011 | 16:16 | Ububele Holdings Limited - Changes to the Board of Directors |
| 09/06/2011 | 16:11 | Pinnacle Point Group Limited - Extension of dates of conditions precedent |
| 09/06/2011 | 16:08 | Pinnacle Point Group Limited - Cautionary announcement |
| 09/06/2011 | 16:00 | Col - Colliers South Africa Holdings Limited - Trading statement |
| 09/06/2011 | 15:55 | Securedata Holdings Limited - Change to the board of directors |
| 09/06/2011 | 15:00 | BRAIT S.A.,Societe Anonyme - Dealing in securities by a non-executive |
| 09/06/2011 | 14:47 | Consolidated Infrastructure Group Limited - Dealing in securities |
| 09/06/2011 | 14:30 | Excellerate Holdings Limited - Announcement regarding the disposal by |
| 09/06/2011 | 13:30 | Capitec Bank Holdings Limited - Dealing in securities by a director |
| 09/06/2011 | 13:00 | SIM/VIL - Simmers/Village - Fulfilment of conditions and salient dates for the |
| 09/06/2011 | 12:23 | Trematon Capital Investments Limited - Dealing in Securities by a Director |
| 09/06/2011 | 12:18 | Reunert Limited - Voluntary announcement: Competition authorities approve |
| 09/06/2011 | 12:15 | SA Corporate Real Estate Fund - Dealing in securities by a director |
| 09/06/2011 | 11:39 | Growthpoint Properties Limited - Acquisition of a 50% Interest in The V&A |
| 09/06/2011 | 11:30 | Trading of Exxaro ordinary shares |
| 09/06/2011 | 11:26 | SYCIVC - Investec Bank Limited - Declared distribution announcement on Sycom |
| 09/06/2011 | 11:25 | SYCIVB - Investec Bank Limited - Declared distribution announcement on Sycom |
| 09/06/2011 | 11:00 | Pinnacle Technology Holdings Limited - Trading statement |
| 09/06/2011 | 10:34 | RBA Holdings Limited - No change statement and notice of annual general |
| 09/06/2011 | 09:34 | CLN72 - The Standard Bank of South Africa Limited - Financial instrument |
| 09/06/2011 | 09:32 | CLN71 - The Standard Bank of South Africa Limited -Financial Instrument |
| 09/06/2011 | 09:30 | CLN88 - The Standard Bank of South Africa Limited - Financial Instrument Partial |
| 09/06/2011 | 09:00 | Pan African Resources PLC - Encouraging Results of Drilling Programme at |
| 09/06/2011 | 09:00 | MAS PLC - Change of Voting Rights |
| 09/06/2011 | 09:00 | Optimum coal analyst site visit |
| 09/06/2011 | 08:30 | ARB Holdings Limited - Appointment of Independent, Non-executive |
| 09/06/2011 | 08:11 | Firestone Energy Limited - Firestone Joint Venture reports Progress with |
| 09/06/2011 | 08:06 | STXSWX - SATRIX SWIX TOP 40 PORTFOLIO - Partial delisting of securities |
| 09/06/2011 | 08:05 | Sycom Property Fund - Audited group results and declaration of the final |
| 09/06/2011 | 08:03 | STXRES - SATRIX RESI PORTFOLIO - Partial delisting of securities |
| 09/06/2011 | 08:02 | STXDIV - SATRIX DIVIDEND PLUS PORTFOLIO - Listing of additional securities |
| 09/06/2011 | 08:01 | STXFIN - SATRIX FINI PORTFOLIO - Partial delisting of securities |
| 09/06/2011 | 08:00 | Acucap Properties Limited - Audited group results and declaration of the |
| 09/06/2011 | 08:00 | STX40 - SATRIX 40 PORTFOLIO - Partial Delisting of Satrix 40 Securities |
| 09/06/2011 | 07:38 | News Release: First Uranium announces changes to its board of directors |
| 09/06/2011 | 07:10 | British American Tobacco p.l.c. - Transaction in own shares |
| 09/06/2011 | 07:05 | BHP Billiton Plc - Transaction in shares |
| 09/06/2011 | 07:05 | ACL122-Absa Bank Limited - New Financial Instrument Listing |
| 09/06/2011 | 07:05 | Conduit Capital Limited - Renewal of Cautionary Announcement |
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