Having trouble reading this email? View in your web browser
 The Sharenet Daily 
Wednesday, 21 November 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)

Value in the Local Market

Long term value investors will appreciate the importance of the starting PE ratio when making an investment. Low PE investments typically outperform high PE investments when looking over a 5 year period. While the relationship is true on an individual stock level, the same also holds when looking at the market as a whole and also different market sectors.

The charts below show how this relationship holds over various periods. We have taken market data over the past 15 years or so, and for each starting PE have looked at the subsequent 5 year return (annualised) that an investor would have received from the relevant index. For example in the first chart (looking at the ALSI – overall market) we can see that when the starting PE was around 20, the subsequent 5 year return was just short of 5% pa, while starting PE’s of under 10 have delivered in excess of 30% pa over the following 5 years. The market’s current PE is just above 14, and by this measure the ALSI should deliver just over 15% pa over the next 5 years, which is a bit below the long term average.

On average the market looks fairly valued, but when looking a bit closer we can see some major discrepancies between the various sectors. The Resource sector has been hard hit in relation to the Industrials and Financials; particularly this year as the global economy (and especially China) has slowed and locally has been exacerbated by the numerous strikes across the industry costing not only production, but also lives. On the other side, Industrials have been driven by the ‘flight to quality’ both locally and abroad, where investors have bid up the prices of those companies with stable earning profiles. Locally the retailers have been major beneficiaries and also ‘sin’ companies like British American Tobacco and SABMiller.

While the performance of the Resource index has been poor, the sector is now showing good value with a PE of just over 10, and a dividend yield in excess of 3%. This is compared to the Industrial index’s PE of nearly 20, and dividend yield of 2.5%.

The three charts below show the history of starting PE versus subsequent 5 year return (annualised). The large yellow dots indicate the current PE and expected 5 year return from here for the three sectors.

This method is by no means full proof. There will always be anomalies, but if this approach is consistently applied investors should be able to generate above average returns over rolling 5 year periods. Another caveat is that returns never come in a straight line. Investors must realise that while Industrial companies are expensive, they can continue getting more expensive (i.e. continue to go up). At the same time, while Resource companies are cheap, this doesn’t mean they’re going to instantly deliver returns to investors, they could even continue to fall over the short term. Investors need to be patient and have a time horizon of at least 5 years for this strategy to work.

Investing is neither an art, nor a science, but by consistently using valuations to assist in the investment process investors will increase their probability of generating satisfying returns.

Take care,

Mike Browne

021 914 4966

Wed, 21 Nov 2012
Top News
South African stocks ended slightly higher on Wednesday, tracking similar gains in major overseas markets, with domestic drugs maker Cipla Medpro surging on news of a takeover bid.  Full story

South African retailer Massmart expects no growth in margins until the end of 2013 as the unit of Wal-Mart Inc Stores forges ahead with an aggressive cut-price strategy to double market share in food sales.  Full story
India secretly hanged the lone survivor of the Pakistan-based militant squad responsible for a rampage through Mumbai that killed 166 people, sparking celebrations days before the fourth anniversary of the assault on the financial capital.  Full story
Israel and Hamas agreed on Wednesday to a ceasefire brokered by Egypt on the eighth day of intensive Israeli fire on the Gaza Strip and militant rocket attacks out of the enclave, Israeli, Palestinian and Egyptian sources said.  Full story
China appointed on Wednesday a loyal ally of President Hu Jintao to become propaganda minister and promoted one of its most senior female leaders to Communist Party chief of the northern port city of Tianjin.  Full story
UK shares rebounded from early falls for the second session in a row on Wednesday, with a rising oil price supporting energy stocks. . .  Full story
Gold inched up on Wednesday in a narrow range, caught between recession worries in Europe and the United States and safe-haven bids over. . .  Full story
U.S. stocks were little changed on Wednesday as a lack of progress on some of the potential pitfalls facing the market kept investors. . .  Full story
World shares were little changed Wednesday as policymakers in Europe reassured markets that a deal on releasing emergency aid to Greece was close, though. . .  Full story

European stocks chalked up a third straight session of gains on Wednesday as buyers snapped up recent laggards and positioned for a positive. . .  Full story
Wall Street opened little changed on Wednesday as the absence of a deal by international lenders on emergency aid for Greece was offset. . .  Full story
European shares edged up on Wednesday in choppy trade as investors watched for any signs of progress on a delayed deal to unlock. . .  Full story
Britain's top share index fell on Wednesday after gains in the previous two sessions, with sentiment hurt by a lack of agreement among. . .  Full story
SA Business
Indian drugmaker Cipla plans to offer $215 million for a majority stake in South Africa's Cipla Medpro to strengthen its presence. . .  Full story
South Africa's rand fell more than 1.8 percent against the dollar on Wednesday, reaching its softest level in more than 3-1/2. . .  Full story
South African consumer goods group Tiger Brands is offering to buy out some minority shareholders in Nigeria's Dangote Flour Mills as. . .  Full story
South Africa's headline consumer inflation quickened to 5.6 percent year-on-year in October from 5.5 percent in September, Statistics South Africa said. . .  Full story

Invicta Holdings, an investment company backed by South African billionaire Christo Wiese, said on Wednesday it will raise up to $113. . .  Full story
South Africa's Grindrod will expand annual throughput capacity at its Matola coal terminal in Mozambique to 7.3 million tonnes by March. . .  Full story
Be careful what you wish for.. . .  Full story
South Africa's Pretoria Portland Cement plans to build a $200 million cement factory in Zimbabwe, Business Day reported on Wednesday, citing. . .  Full story

Africa's biggest packaging firm, Nampak, reported a 14.3 percent rise in full-year profit helped by a lower tax rate and a robust performance outside its mainstay South African market.. . .  Full story
The rand was weaker against the dollar on Wednesday, mainly tracking a struggling euro as lack of a resolution to Greece's debt woes knocked risk appetite in general.. . .  Full story
Company News
Shareholders are advised that StratCorp is currently finalising its results for the six months ended 31 August 2012 and anticipates that. . .  Full story
Retrospective restatement adjustment : Solethu Civils Holdings (Pty) Ltd was treated as a special purpose entity in the Group?s financial statements. . .  Full story
Shareholders are advised that Steinhoff's 2012 Integrated Report for the financial year ended 30 June 2012, was dispatched to shareholders on. . .  Full story
Shareholders were advised that there can be no certainty that the acquisition proposal discussions will lead to a firm offer being. . .  Full story

Further to the withdrawal of the cautionary announcement dated 30 August 2012, in which shareholders were advised that the discussions referred to in earlier cautionary announcements had been terminated, shareholders were advised that these discussions recently resumed. Pursuant to these discussions. . .  Full story
The board elected Ms Linda de Beer as deputy chairman of the board with effect from 21 November 2012. Ms de Beer has been a member of the AFGRI Board since May 2010. She is the chairman of the Audit &. . .  Full story
Company Results
Revenue was up 7% to R11.7 billion (R10.9 billion). Earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 10% to. . .  Full story
Revenue for the interim period ended 30 September 2012 decreased by 9% to R96.3 million (2011: R106 million). Gross profit lowered. . .  Full story
Turnover increased by 11% to R22.7 billion (R20.4 billion). Gross profit rose 7.5% to R8.2 billion (R7.6 billion) and operating income. . .  Full story
Revenue increased by 11.5% to R17 639 million (R15 819 million), while operating profit rose by 19.8% to R1 794 million. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0037498.02192.000.51%
JSE Top 4017:0033274.88176.000.53%
JSE Gold17:002299.803.000.17%
JSE Financial17:0027959.7486.000.31%
JSE Industrial17:0044962.61329.000.74%
JSE Indust 2517:0038782.41290.000.75%
JSE Resource17:0049001.46144.000.30%
DJ Futures19:4812800.0044.000.34%
DJ Ind19:5812836.8948.380.38%
SP 50019:581390.572.760.20%
FTSE 10018:355752.033.930.07%
All Ords07:394390.70-16.80-0.38%
NZSE 5006:483971.23-1.74-0.04%
NameTimeRPMove% Move
Gold $19:581728.941.890.11%
Gold R19:5815494.24235.641.54%
Gold R/kg19:5849785354031.10%
Silver $19:5833.2830.14100.43%
Platinum $19:581575.607.200.46%
Palladium $19:58650.5017.902.83%
Brent Crude19:58110.11-.53-0.48%
Rand / Dollar19:588.95740.12521.42%
Rand / Pound19:5514.24930.21191.51%
Rand / Euro19:5511.48970.16931.50%
Rand / NZD19:587.28180.06300.87%
Rand / AUD19:559.27950.10201.11%
Yen / Dollar19:5882.45000.75700.93%
Euro / Dollar19:580.77970.77970.00%
Dollar / Euro19:581.28240.00120.09%
Pound / Dollar19:550.6270-0.0006-0.10%

Click here for the Sharenet Spot Price page
The JSE Today

Trading Statistics
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 BAUBA  1302119.27.%53600
2 ARCMITTAL  280927410.81.%794405
3 SABVEST-N  145513510.23.%48
4 CARGO  1000758.11.%1069
5 CIPLAMED  830617.93.%10146523
6 EFFICIENT  160106.67.%9000
7 JUBILEE  11576.48.%591065
8 GOLDONE  345206.15.%43311
9 COAL  17395.49.%380838
10 ELBGROUP  28501204.40.%131312
11 PREMIUM  1700573.47.%11787
12 HULAMIN  356113.19.%83413
13 TFG  133003252.50.%256654
14 DELPROP  820202.50.%16
15 SPAR  123492992.48.%564886
16 SAPPI  2696642.43.%1235147
17 HOSP-B  30972.32.%5789
18 AQUARIUS  618142.32.%262639
19 ALTRON  2200492.28.%39645
20 CML  3778782.11.%393615

Click here for more Major Moves...
Major Moves Down
SharenameSaleMove% MoveVolume
1 EASTPLATS  130-10-7.14.%47000
2 KAP  310-20-6.06.%52811
3 KEATON   250-12-4.58.%106400
4 SASFIN  3300-150-4.35.%4047
5 TRUSTCO  102-4-3.77.%49000
6 METAIR  2945-105-3.44.%1128548
7 PRESCIENT  118-4-3.28.%57110
8 LIFEHC  3098-102-3.19.%2995945
9 ILIAD  518-17-3.18.%3454
10 STEFSTOCK  890-20-2.20.%512340
11 RAINBOW  1365-29-2.08.%306180
12 AFGRI  495-10-1.98.%1173275
13 CMH  1205-20-1.63.%517818
14 ANGLOPLAT  38253-614-1.58.%123550
15 HOLDSPORT  4500-68-1.49.%47860
16 NETCARE  1754-26-1.46.%9375231
17 FIRSTRAND  2956-39-1.30.%12380502
18 ADCOCK  5530-67-1.20.%494156
19 IMPLATS  14942-173-1.14.%1777256
20 LONMIN  3920-45-1.13.%3347213

Click here for more Major Moves...

New Highs
SharenameSaleHighMove% MoveVolume
1 CIPLAMED  830845617.93.%10146523
2 ELBGROUP  285028501204.40.%131312
3 CML  37783778782.11.%393615
4 INVPLC  54645468500.92.%507029
5 INVLTD  54705489170.31.%374659
6 RINC  5205300.49068
7 DIPULA-B  745760-7-0.93.%174600

Click here for more Major Moves...
New Lows
SharenameSaleLowMove% MoveVolume
1 STEFSTOCK  890880-20-2.20.%512340

Click here for more Major Moves...

Index Summary
Index NameRPMove% Move
Top 4033,274.00176.000.53%
Mid Cap52,288.00236.000.45%
Small Cap38,889.0072.000.19%
Resource 2049,001.00144.000.30%
Industrial 2538,782.00290.000.75%
Financial 1510,416.0031.000.30%
Financial & Ind. 3042,037.00257.000.62%
All Share37,498.00192.000.51%
Oil & Gas 28,907.00227.000.79%
Mining 31,250.0059.000.19%
Gold Mining2,
Platinum Mining50.00.00-0.63%
GENERAL MINING8,165.0032.000.40%
Oil & Gas Producers 15,543.00122.000.79%
Basic Materials 26,856.0075.000.28%
Chemicals 15,800.00-39.00-0.25%
Forestry & Paper 16,737.00208.001.26%
Industrial Metals 26,705.00410.001.56%
Industrials 35,248.00218.000.62%
General Industrials
Consumer Goods 39,622.00347.000.88%
Automobiles & Parts 6,668.00-237.00-3.43%
Household Goods187.0000.06%
Health Care 51,356.00-276.00-0.54%
Index NameRPMove% Move
Food Producers 64,893.00-141.00-0.22%
Personal Goods 650.008.001.28%
Consumer Services 80,671.00927.001.16%
General Retailers 66,550.00860.001.31%
Travel & Leisure 4,693.0029.000.64%
Support Services 2,402.00-9.00-0.41%
Telecommunications 81,516.0081.000.10%
Financials 27,959.0086.000.31%
Banks 49,527.00-82.00-0.17%
Non-life Insurance 44,663.00-63.00-0.14%
Life Insurance 24,129.00153.000.64%
General Financial 2,579.0011.000.43%
Technology 33,475.00165.000.50%
SHARIAH TOP40 3,287.00140.43%
FTSE/JSE SHARIAH ALL3,387.00130.40%
COAL MINING20,162.001490.75%
FTSE JSE Fledgling 5,623.00130.23%
FTSE/JSE Alt X 1,042.00131.29%
RESOURCE 27,027.00760.28%
DIVIDEND PLUS205.0021.01%
FTSE/JSE RAFI 407,601.00410.55%
Capped Top 4017,553.00930.54%
Capped All Share18,967.00970.51%
JSE TABACO 5,842.00791.39%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
22/11/2012PRESCIENTSeptember 2012 (Interim)
22/11/2012ROCKCASTLESeptember 2012 (Q)
23/11/2012AH-VESTSeptember 2012 (Interim)
23/11/2012ARDOR SAJuly 2012 (Final)
23/11/2012CONVERGEAugust 2012 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
REUNERT20/11/201211/01/201321/01/2013R 2.7500
AME20/11/201207/12/201218/12/2012R 1.0000
TSO SUN19/11/201207/12/201218/12/2012R 0.2400
NETCARE19/11/201225/01/201304/02/2013R 0.3400
HCI19/11/201207/12/201218/12/2012R 0.2400
Ex Div**
Share NameDec-DateLDTPay-DateAmount
REDEFINE01/11/201216/11/201226/11/2012R 0.3250
FPT01/11/201216/11/201226/11/2012R 0.2783
SPANJAARD24/10/201216/11/201226/11/2012R 0.1500
AFGRI05/09/201216/11/201226/11/2012R 0.0985
CBH11/09/201216/11/201226/11/2012R 0.0233

Upcoming AGMs**
CodeCompany NameDateStatus
MSMXMassmart Holdings Ltd.21/11/2012Confirmed
MNYMoneyWeb Holdings Ltd.21/11/2012Confirmed
MSMMassmart Holdings Ltd.21/11/2012Confirmed
CBHCountry Bird Holdings Ltd.22/11/2012Confirmed
PMVPrimeserv Group Ltd.22/11/2012Confirmed

Stock Exchange News Service
21/11/201217:30 GROUP LIMITED - Condensed consolidated audited results for the year ended 30 Se...
21/11/201217:30PALLINGHURST RESOURCES LIMITED - Announcement of Gemfields and Faberg Merger
21/11/201217:10JSE LIMITED - Index Change Advice - 20121126 SA French Deletion
21/11/201217:00SACOIL HOLDINGS LIMITED - Reviewed interim results for the six months ended 31 A...
21/11/201217:00INVICTA HOLDINGS LIMITED - Abridged pre-listing statement
21/11/201216:45INFRASORS HOLDINGS LIMITED - Renewal of cautionary announcement
21/11/201216:30 GROUP LIMITED - Restated condensed consolidated unaudited results for the six m...
21/11/201216:25STRATCORP LIMITED - STA - Trading update
21/11/201216:02SENTULA MINING LIMITED - Dealings in securities by a director
21/11/201215:42THE STANDARD BANK OF SA LTD - Interest Rate Announcement
21/11/201215:30WITWATERSRAND CONS GOLD RESOURCES - Dealings in Securities by Directors and Offi...
21/11/201215:01STEINHOFF INTERNATIONAL HOLDINGS LD - Integrated Report
21/11/201215:00TIMES MEDIA GROUP LIMITED - Dealing in Times Media Group Limited shares by an as...
21/11/201214:56ESKOM HOLDINGS SOC LIMITED - Interim results
21/11/201214:23PICK N PAY STORES LIMITED - New Financial Instrument Listing
21/11/201214:21MASSMART HOLDINGS LIMITED - Results of Annual General Meeting
21/11/201213:55MASSMART HOLDINGS LIMITED - CEO AGM Statement
21/11/201213:43NAMPAK LIMITED - Audited group results and dividend declaration for the year end...
21/11/201212:52NEW CORPCAPITAL LIMITED - Finalisation - Proposed Acquisition, Repurchase Offer,...
21/11/201212:00SACOIL HOLDINGS LIMITED - Trading Update
21/11/201211:57THE SPAR GROUP LIMITED - Dealings in securities by the Spar Group Limited employ...
21/11/201211:45WESCOAL HOLDINGS LIMITED - Director dealings in securities
21/11/201211:44ABSA BANK LIMITED - New Financial Instrument Listing - AB013
21/11/201211:32ABSA BANK LIMITED - AB010 and AB011 - New Financial Instruments Listing
21/11/201211:00CIPLA MEDPRO SOUTH AFRICA LIMITED - CMP - Indicative proposal and cautionary ann...
21/11/201209:00NEW EUROPE PROPERTY INVESTMENTS PLC - Rights Offer - Dealing in Securities
21/11/201209:00CAPITAL & COUNTIES PROPERTIES PLC - Resolution to Grant Consent for Earls Court ...
21/11/201209:00JUBILEE PLATINUM PLC - Processing agreement update
21/11/201209:00TIGER BRANDS LIMITED - Investor Presentation
21/11/201208:30E INDUSTRIES LIMITED - Trading statement
21/11/201208:30AFGRI LIMITED - Change in directors
21/11/201207:12The Nitro Securitisation 4 Issuer Trust - Result of Noteholders Meeting
21/11/201207:05TIGER BRANDS LIMITED - Audited Group results and dividend declaration for the ye...
21/11/201207:05KU HOLDINGS LIMITED - Share Dealing by Company Secretary
21/11/201207:05BRITISH AMERICAN TOBACCO PLC - Transaction in own shares
21/11/201207:05STEINHOFF INTERNATIONAL HOLDINGS LD - Dealing in securities by director
21/11/201207:05BUILDMAX LIMITED - Notification of share dealing by director
21/11/201207:05FIRST STRUT (PROPRIETARY) LIMITED - Request for Consent

Click here for more SENS news