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 The Sharenet Daily 
Wednesday, 02 May 2012 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

Relative Valuation Methods

Anyone who has spent any time valuing a business, or its indivisible unit, a share in a business, knows that there is not one specific method, but rather a range of valuations methodologies that can be applied when formulating the valuation.

At its most basic level, the value of a share today is the discounted value of all future cash flows that will be generated from the share. While simple in theory, in order to try and determine a theoretical value, investment analysts spend a lot of time on forecasting a company’s future income stream. However, even armed with accurate information on future earnings for a specific company, because we live in a world with extensive investment choice, the investment process often comes down to making an assessment of one investment option relative to another.

This so called relative valuation methodology is widely used and in many respects is simpler than making an assessment of the value on an absolute basis. Ultimately investors have choice and so even after performing a thorough valuation, an investor will produce a ranking table in order to compare one investment option against other competing investments.

As with all investment tools there is not one method that is infallible so when adopting a relative valuation methodology, an investor is looking for certain relationship patterns that tend to hold over time.

A few examples of relative valuation techniques that investors use include the following:
• The earnings yield or dividend on shares relative to the current yield on money market or yield on property shares.
• The price of one share relative to another share – usually, but not necessarily, in the same sector.
• The price of one sector relative to another – or an index in one country relative to another country.
• The price of a share relative to its underlying book value over time to determine if relatively cheap or expensive.
• One currency relative to another currency.

Even one of the most common valuation methods used – the price to earnings – or PE method is in essence a relative valuation method, when extended to comparing a company’s PE to the market average PE. With this method, company’s actual earnings are defined as a ratio to the number of shares in issue to arrive at earnings per share (EPS). Once the common yardstick has been obtained in the form of the PE, then it becomes easy to compare one traded share price to another in a relative format.

Look at the chart below, which compares the PE ratio of Anglo American relative to the PE ratio of Massmart over a 10 year period. This so called PE relative chart is a common tool used by analysts to gauge where value is appearing. This chart does not imply that either share is attractive or unattractive in its own right, but it gives a clear sense of the relative outperformance of Massmart against Anglo American over 10 years.

PE relative of Anglo American to Massmart

Source: I-Net and Seed Investments

Ten years ago, Anglo American had a PE ratio of 18 compared to Massmart’s 8. While the PE ratios have, on average, been almost equal over the past 10 years Anglo American’s PE has declined to 8 compared to Massmart’s 34 – i.e. one quarter of Massmart’s PE and a deterioration of some 90% over this time frame.

Analysts will say things like Anglo American looks cheap relative to the market or relative to consumer shares. There may be very valid reasons why one company’s valuation has deteriorated on a relative basis over time, but this is where an analyst should do additional work in order to make an assessment of the fundamental reasons. So by all means, make use of relative valuation techniques. They can be very powerful, but in and by themselves they will not tell the full story.

Kind regards,

Ian de Lange
021 9144 966

Wed, 02 May 2012
Top News
South African government bonds rallied on Wednesday and yields fell on strong demand from foreign accounts but the rand weakened against the dollar, tracking a softer euro as data pointed to weak growth in that region.  Full story

South Africa's broad All-share index closed at a record high on Thursday, as improving Chinese manufacturing data boosted appetite for Johannesburg-listed resource firms such as BHP Billiton.  Full story
Blind Chinese dissident Chen Guangcheng left the U.S. Embassy in Beijing on Wednesday after winning concessions from Communist Party authorities that will keep him as a pivotal figure in China-U.S. relations, but a supporter said he made the decision "reluctantly" after his family were threatened with reprisals.  Full story
Myanmar opposition leader Aung San Suu Kyi took a historic oath on Wednesday to join a parliamentary system crafted by the generals who locked her away for much of her long struggle against dictatorship, ushering in a dramatic new political era.  Full story
Suicide bombers attacked a compound housing Westerners in Kabul on Wednesday hours after U.S. President Barack Obama signed a security pact during a short visit to a city that remains vulnerable to a resilient insurgency.  Full story
European shares fell on Wednesday after a weak euro zone manufacturing report heightened concerns about the region's economic crisis and U.S. data dampened optimism. . .  Full story
U.S. stocks fell on Wednesday, a day after the Dow closed at its highest level in more than four years, as data showed. . .  Full story
Britain's blue-chip index dipped on Wednesday, surrendering much of the previous session's gains as weaker banking and oil stocks outweighed stronger performances from Next. . .  Full story
Global stocks and the euro fell o n W ednesday after weak euro zone manufacturing and U.S. private-sector jobs data fueled concerns about. . .  Full story

European shares fell on Wednesday as w eak e uro zone macro data further raised concerns about the region's debt crisis and U.S.. . .  Full story
Gold prices fell on Wednesday along with the euro as U.S. factory orders data helped the dollar extend early gains and as speculation. . .  Full story
European shares extended losses in the afternoon on Wednesday after weak U.S. factory orders cast a shadow on the recovery prospects of Europe's. . .  Full story
U.S. stocks opened lower on Wednesday after a report on private sector job creation was weaker than expected, giving nervous investors another reason. . .  Full story
SA Business
South Africa's seasonally adjusted Purchasing Managers' Index fell to 53.7 in April from 55.1 in March, declining for the second straight month as lack of demand from Europe weighed on new. . .  Full story
South African ferrochrome producer Merafe said on Wednesday output from its joint-venture with London-listed Xstrata fell 21 percent in the first quarter after some furnaces were suspended to cut down on. . .  Full story
South Africa's rand held steady near a month high on Wednesday, having rallied with a stronger euro, while the local market was closed for a holiday in the previous session.. . .  Full story

South African mobile operator Vodacom said on Wednesday it expects to report a gain of up to 10 percent in full-year earnings, hit by tax on higher dividends paid and depreciation. . .  Full story
Bharti Airtel, India's biggest mobile operator, may face higher operating costs due to possible bandwidth purchases, further eroding profits that have been battered by fierce price competition for more than two years.. . .  Full story
General Motors Co first proposed taking a controlling stake of more than one-third in Isuzu Motors Ltd - an investment worth some $3 billion - but is now seeking a smaller holding after the. . .  Full story
Company News
Seardel advised that for the year ended 31 March 2012 the company expects its financial results to fall within the following. . .  Full story
The board of directors of B&W ("the board") notified its shareholders that Mr Steve Pinkney has resigned as an executive director. . .  Full story
The board of directors of PSV ("board") announced the appointment of Ms Portia Molefe as an independent non-executive director to the. . .  Full story
Rockwell announced the results of its diamonds sales for the fourth quarter of fiscal 2012. Total proceeds of USD6.0 million were. . .  Full story

It is with great sadness that the MMI Holdings board announced the death of Mr Thys Visser, a non-executive director on. . .  Full story
Notification was given that Wiseman Khumalo, an independent non-executive director of Wescoal, has been appointed as an executive director with effect. . .  Full story
Shareholders are advised that Ms Babalwa Ngonyama and Ms Neo Phakama Dongwana have been appointed non-executive directors of the board of. . .  Full story
Textainer announced the closing of a USD1.2 billion warehouse securitization facility. Textainer Marine Containers II Ltd. ("TMCLII"), a new Textainer asset. . .  Full story
Company Results
Revenue increased to R763.5 million (R680 million). Gross profit rose to R202.8 million (R172.5 million) and EBITDA improved to R97.4 million (R76.5 million). Net attributable profit increased to R55.6 million (R46.5 million). In addition, headline earnings per share grew to 47.79c (40.85cps). Prospects The current order book at Conco together with higher than expected levels of bidding, tenders awaiting adjudication and the prospects of the Department of Energy Renewable Energy Ten. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0034482.4383.390.24%
JSE Top 4017:0030446.2881.690.27%
JSE Gold17:002236.89-3.72-0.17%
JSE Financial17:0025219.771.580.01%
JSE Industrial17:0038752.2057.310.15%
JSE Indust 2517:0032605.9459.330.18%
JSE Resource17:0050559.22299.380.60%
DJ Futures26/0413022.005.000.00%
DJ Ind19:4513257.22-22.10-0.17%
SP 50020:001401.79-4.03-0.29%
FTSE 10017:355758.11-54.12-0.93%
All Ords08:414504.807.500.17%
NZSE 5007:463614.9737.651.05%
NameTimeRPMove% Move
Gold/R kg20:004107675100.12%
Brent Crude19:56118.13-1.46-1.22%
Rand / Dollar19:597.73180.00280.04%
Rand / Pound19:5512.4939-0.0154-0.12%
Rand / Euro19:5510.1770-0.0578-0.56%
Rand / NZD19:586.2599-0.0407-0.65%
Rand / AUD19:557.9813-0.0105-0.13%
Yen / Dollar19:5980.14900.05800.07%
Euro / Dollar19:550.75970.00460.61%
Dollar / Euro19:591.3157-0.0080-0.60%
Pound / Dollar19:550.61720.00090.15%

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The JSE Today

Trading Statistics
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 LONAFRIC  1702517.24.%3600
2 VERIMARK  12486.90.%64233
3 GBGOLD  565356.60.%7813
4 CALGRO  395246.47.%52248
5 CIL  1335655.12.%51799
6 COMPCLEAR  320154.92.%5000
7 AMECOR  230104.55.%9425
8 BELL  2350753.30.%90084
9 TASTE  22762.71.%84280
10 ADAPTIT  11732.63.%130230
11 WINHOLD  11832.61.%8203
12 HUDACO  110012612.43.%63074
13 BILLITON  253185182.09.%6665420
14 ALTRON  2530502.02.%146988
15 HOSP-A  1315251.94.%54
16 ADCORP  2750501.85.%32895
17 OCTODEC  1670301.83.%3984302
18 MVELASERV  1170201.74.%94455
19 PALLINGHT  31051.64.%115595
20 DCENTRIX  50081.63.%26850

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Major Moves Down
SharenameSaleMove% MoveVolume
1 EXCELL  110-12-9.84.%15000
2 EASTPLATS  290-25-7.94.%274190
3 BAUBA  175-15-7.89.%4200
4 COAL  657-32-4.64.%572593
5 VILLAGE  162-7-4.14.%900737
6 DELRAND  240-10-4.00.%99520
7 ARB  390-15-3.70.%14000
8 TSOGO-SUN  1801-67-3.59.%9171
9 KAP  348-12-3.33.%580626
10 AFRIMAT  572-18-3.05.%64657
11 DISTELL  8245-255-3.00.%13224
12 VIVIDEND  510-15-2.86.%28060
13 CAPEVIN  9900-275-2.70.%820
14 BASREAD  1481-39-2.57.%80414
15 ELBGROUP  2300-60-2.54.%3150
16 CITYLDG  8287-213-2.51.%28214
17 HOSP-B  390-10-2.50.%4944
18 HULAMIN  690-15-2.13.%27367
19 ESORFRANK  145-3-2.03.%202604
20 ANGLOPLAT  49400-1000-1.98.%140292

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New Highs
SharenameSaleHighMove% MoveVolume
1 CIL  13351340655.12.%51799
2 FIRSTRAND  25662570391.54.%22785414
3 RMBH  34103417501.49.%1101840
4 NASPERSN  47530476966851.46.%2099697
5 CML  29493050290.99.%267146
6 CIPLAMED  73874160.82.%670626
7 REDEFINE  83083050.61.%3730185
8 IMPERIAL  16983172461010.60.%354127
9 MRPRICE  1057010899500.48.%2155989
10 A-V-I  48374875170.35.%1078209
11 SPAR  1217412271190.16.%355384
12 OMNIA  97739957-27-0.28.%23401
13 METAIR  26852833-14-0.52.%105397
14 ASSORE  2629826950-202-0.76.%36440
15 KAP  348370-12-3.33.%580626

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New Lows
SharenameSaleLowMove% MoveVolume
1 IMPLATS  1487614402-254-1.68.%1473436

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Index Summary
Index NameRPMove% Move
Top 4030,446.2881.690.27%
Mid Cap49,360.7755.210.11%
Small Cap36,397.8750.510.14%
Resource 2050,559.22299.380.60%
Industrial 2532,605.9459.330.18%
Financial 159,495.56-5.08-0.05%
Financial & Ind. 3036,046.3836.620.10%
All Share34,482.4383.390.24%
Oil & Gas 28,036.6783.240.30%
Mining 32,536.87182.360.56%
Gold Mining2,236.89-3.72-0.17%
Platinum Mining56.56-.85-1.48%
GENERAL MINING8,478.1190.431.08%
Oil & Gas Producers 15,074.8044.760.30%
Basic Materials 27,849.41129.190.47%
Chemicals 15,084.80-13.46-0.09%
Forestry & Paper 14,272.66-62.34-0.43%
Industrial Metals 30,828.16-193.20-0.62%
Industrials 33,582.69-37.85-0.11%
General Industrials 91.38-91557.34-99.90%
Consumer Goods 33,346.994.220.01%
Automobiles & Parts 6,080.07-31.70-0.52%
Household Goods183.37-3-1.63%
Health Care 42,746.04209.090.49%
Beverages 110.76-.34-0.31%
Index NameRPMove% Move
Food Producers 61,522.46205.800.34%
Personal Goods 482.602.190.46%
Consumer Services 67,880.18454.030.67%
General Retailers 55,822.83234.150.42%
Travel & Leisure 3,792.69-55.98-1.45%
Media 104.081.461.42%
Support Services 2,440.5643.391.81%
Telecommunications 67,924.7973.610.11%
Financials 25,219.771.580.01%
Banks 48,560.77-5.25-0.01%
Non-life Insurance 44,153.42204.180.46%
Life Insurance 19,470.56-67.04-0.34%
General Financial 2,368.664.460.19%
Technology 28,816.42-33.27-0.12%
SHARIAH TOP40 3,094.18110.36%
FTSE/JSE SHARIAH ALL3,215.44100.32%
COAL MINING27,677.641130.41%
FTSE JSE Fledgling 5,437.32-9-0.16%
FTSE/JSE Alt X 1,276.25433.51%
RESOURCE 27,840.981450.52%
DIVIDEND PLUS200.0900.10%
FTSE/JSE RAFI 407,158.3350.07%
Capped Top 4016,049.82340.21%
Capped All Share17,439.28400.23%
JSE TABACO 5,128.16460.90%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
03 May 2012REDEFINEFebruary 2012 (Interim)
03 May 2012TREMATONFebruary 2012 (Interim)
04 May 2012CULINAN5.5March 2012 (Interim)
04 May 2012CULINANPRMarch 2012 (Interim)
04 May 2012CULLINANMarch 2012 (Interim)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
HOSP-A12-04-3012-05-1812-05-28R 0.6334
HOSP-B12-04-3012-05-1812-05-28R 0.0791
REDEFINTL12-04-3012-05-1812-05-28R 0.0209
CLICKS12-04-2612-06-2212-07-02R 0.4410
ALTECH12-04-2512-06-1512-06-25R 2.4800
Ex Div**
Share NameDec-DateLDTPay-DateAmount
NTC PREF12-04-0212-04-2512-05-07R 3.7227
SBR00312-02-0612-04-2512-05-07R 1.4700
CADIZ12-04-0312-04-2512-05-07R 0.5000
VIVIDEND12-04-0512-04-2512-05-07R 0.2450
BRIMSTON12-03-0612-04-2512-05-07R 0.1800

Upcoming AGMs**
CodeCompany NameDateStatus
KDVKayDav Group Ltd.03/05/2012Confirmed
MNDMondi Ltd.03/05/2012Confirmed
MNDLPMondi Ltd.03/05/2012Confirmed
ASAAbsa Group Ltd.03/05/2012Confirmed
ABSPAbsa Bank Ltd.03/05/2012Confirmed

Stock Exchange News Service
02/05/201217:47 Exxaro Resources Limited - Trading of Exxaro ordinary shares on behalf of
02/05/201217:27 Vodacom Group Limited - Trading statement for annual results to
02/05/201217:00 Capital Property Fund - Voluntary announcement of Capital`s expression of
02/05/201217:00SER/SRN - Seardel Investment Corporation Limited - Trading Statement
02/05/201216:36 Aspen Pharmacare Holdings Limited - Dealing in Aspen securities by a
02/05/201216:16BIIVU - iVuzi Investments Limited - Listing of New Financial Instrument
02/05/201216:07 Amalgamated Appliance Holdings Limited - Dealings in securities by the
02/05/201215:53ACL120 - Absa Bank Limited - Interest Rate Reset announcement
02/05/201215:52ACL118 - Absa Bank Limited - Interest Rate Reset announcement
02/05/201215:30 Murray & Roberts Holdings Limited - Dealing in securities: announcement
02/05/201215:27 B & W Instrumentation And Electrical Limited - Resignation of an
02/05/201215:09 Distribution and Warehousing Network Limited - Director`s dealing in
02/05/201215:08 Metair Investments Limited - Results of Annual General Meeting
02/05/201215:00 PSV Holdings Limited - Appointment of independent non-executive
02/05/201214:48 Consolidated Infrastructure Group Limited - Consolidated Infrastructure
02/05/201214:30 Rockwell Diamonds Incorporated - Rockwell provides feedback from
02/05/201214:05 Shoprite Holdings Limited - Dealings in securities by director
02/05/201214:00 Anooraq Resources Corporation - Finalisation information relating to
02/05/201214:00CLR/CLRP - Clover Industries Limited - Dealing in securities by an associate of
02/05/201213:58 MMI Holdings Limited - Passing of a non-executive director
02/05/201213:33IPL/IPLP - Imperial Holdings - Dealing in securities by a director of Imperial
02/05/201213:22 Lonmin Plc - Total Voting Rights and capital as at 30 April 2012
02/05/201213:01 Reunert Limited - Trading Statement
02/05/201212:44BIIVU - iVuzi Investments Limited - Full Capital Redemption
02/05/201212:29SCIB - Standard Bank - Notice of rollover of Standard Bank share
02/05/201212:26BIFR1 - FirstRand Bank Limited - Interest Rate Reset announcement
02/05/201212:09 Ellies Holdings Limited - Dealing in securities by a director of Ellies
02/05/201211:45 Tawana Resources NL - Notice of Annual General Meeting
02/05/201211:34 Oceana Group Limited - Trading Statement
02/05/201211:17INVS - Investec Bank Limited - Expiry of hot enhanced dividend securities
02/05/201211:13 Wescoal Holdings Limited - Appointment to the Board of directors
02/05/201211:03CPI - Capitec Bank Holdings Limited - Dispatch of Capitec integrated Annual
02/05/201210:27 African Eagle Resources plc - Shareholding update
02/05/201210:20BIIIPL - iNguza Investments (Proprietary) Limited - Interest Rate Reset
02/05/201210:17BIFR1 - FirstRand Bank Limited - Interest Rate Reset announcement
02/05/201210:17ABL/ABLP - African Bank Investments Limited - Trading Statement
02/05/201210:13 MTN Group Limited - Planned release of MTN Group Limited subscriber
02/05/201210:04BIIND - iNdwa Investments Limited - Listing of New Financial Instrument and
02/05/201210:00BAW/BAWP - Barloworld Limited - Appointment of Directors
02/05/201209:46 Trencor Limited - Trencor`s textainer completes US$1,2 Billion Warehouse
02/05/201209:08GEN - General - SAH - Suspension of listing
02/05/201209:00 IPSA Group Plc - Trading Update
02/05/201209:00ATN/ATNP - Allied Electronics Corporation Limited - Resignation of Executive
02/05/201209:00BIESKM - Eskom Holdings SOC Limited - New Financial Instrument Listing
02/05/201209:00 Protech Khuthele Holdings Limited - Further cautionary announcement
02/05/201208:58 Tawana Resources NL - Appendix 5B
02/05/201208:57 Tawana Resources NL - Quarterly Activities Report 1 January - 31 March
02/05/201208:55 Firestone Energy Limited - Voluntary suspension
02/05/201208:38 Mediclinic International Limited - Passing on of a non-executive
02/05/201208:30 Tradehold Limited - Appointment of sponsor
02/05/201208:30 Merafe Resources Limited - First quarter 2012 ferrochrome production
02/05/201208:00 Mr Price Group Limited - Voluntary trading statement for the 52 weeks
02/05/201207:43 DiamondCorp plc - Appointment of a Non-executive Director
02/05/201207:16 Anglo American plc - Total voting rights
02/05/201207:16 British American Tobacco p.l.c.- Transaction in own shares
02/05/201207:15 Anglo American plc - Treasury shares - Transfers
02/05/201207:15 British American Tobacco p.l.c.- British American Tobacco p.l.c.- Voting
02/05/201207:10 British American Tobacco p.l.c.- Transaction in own shares
02/05/201207:10SYN915 - Synthesis Funding Limited - New Financial Instrument Listing
02/05/201207:05 Datatec Limited - Logicalis agrees to acquire Australian IT Solutions
02/05/201207:05 Buildmax Limited - Proposed Consolidation of Share Capital
02/05/201207:05 Gold One International Limited - Appendix 3B new issue announcement,

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