Investment Insights
JSE's top five leap 50% in a quarter
Bouncing from the depths of despair.
David Carte
Five share prices have leapt by more than 50% in the past three months, underlining the adage that the time to buy is when the canons are at the city gate.
In the same period, the JSE All-share index had improved by 28% to 25 694 by Friday.
Merafe Resources (JSE:MRF) was the best three-month performer with a jump of 72.6%. That's how ferrochrome prospects have improved.
Bell Equipment (JSE:BEL) came second in the three month race with a rise of 55% to R28.50. At one stage, Bell was priced for bankruptcy at a low of 488c. The results plus a statement of shareholder and banker support seem to have soothed some troubled brows.
Tracked down to Germany CEO Gary Bell told Moneyweb that no good news is about to burst. Indeed, the rand's recent strength has been another negative since the results were published. It appears the share was merely oversold at its low.
He said trading remains bleak in Europe but Bell has done better domestically in the last couple of months thanks partly to the rebound in commodity prices and mining activity.
Mini-bank Sasfin (JSE:SFN) soared by 55% to R43. It is still far short of the R60 at which it traded in 2008 but well up on the low of R21.
CEO Roland Sassoon said: "In any crisis, they always sell our shares to nothing, followed by great relief when they see our numbers."
Sasfin last week bettered the Big Five with bad debts of only 1% of advances and headline earnings.
Sasfin is a niche player. Sassoon once worked for Barclays and noticed the huge gulf in understanding between a risk averse bank manager and entrepreneurs, who are risk takers. Sasfin tries to fill the gap by providing bankers who understand small and medium business. It's entrepreneur-to-entrepreneur banking. A R900m securitisation book is the biggest item in R1.8bn of advances. The rest is trade and debtor finance. Deposits come mainly from the stock broking and asset management divisions.
Its interest rates are higher than those of the Big Five. In addition, its staff costs are higher because its lending officers become deeply involved in client affairs. They go out to clients consulting and monitoring their business. Its security requirements are even tighter than those of the big banks.
Sasfin describes its lending as granular, by which it means it makes many loans of smaller size. The average sized loan in a book of R1.8bn is R50 000. The clients are in different sectors, so that Sasfin should not suffer as subprime lenders did in the US.
Sassoon says big banks are more wary than ever of small clients since the credit crunch. That should help market share. Some $30m of new money is coming in from the IFC, which has identified Sasfin as a good channel to fund emerging business people in SA.
Merafe (first over three months and up by 72.6%), Kumba Iron Ore (up 55.2%) and Mvelapanda Group (up 51%) have all recovered dramatically from the total gloom and doom surrounding commodities in June.
Datatec's interim result, with earnings up 19% in dollars and cash flow up by a factor of 20, seems to have been a pleasant surprise to the market. Outsiders joined the directors in buying the shares up to R24.95. That was not a bad improvement from the one-year low of R10.50.
After Telkom's payout in respect of the Vodacom unbundling, the share understandably plunged. The market seems to have concluded lately that the plunge was overdone and has rerated the fixed line monopolist with a 48% jump to R44.75. At this price it is still at a 38% discount to book value.
The dogs of the quarter were: Sentula (-46.88%), Simmers (-23,85%), Keataon (-22.22%), Metorex (-16.23%), Wesizwe (-14.92%), DRDGold (-12.08%) and Convergenet (-10.91%). |