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Local Market Update
- On the Johannesburg Stock Exchange, Thungela Resources moved to the top after the company said it was likely to return to profit for the 2021 financial year in terms of earnings per share. Thungela also said it may announce additional distributions to shareholders beyond its target minimum payout ratio of 30% of adjusted operating free cash flow. Lender Nedbank Group was the third biggest gainer, rising 3.30% to 173 rand, after the company said full-year profit would almost double as performance in all industry segments reached pre-pandemic levels. Overall, the Johannesburg All-Share closed 0.3% firmer, while the Top 40 index added 0.45%.
- The Rand trended firmer on Monday on signs that the variant Omicron coronavirus could cause a fourth wave of COVID-19 infections in the country, possibly causing mainly mild infections. At the close of trading, the rand was trading around R15.92 against the dollar, 1.05% firmer.
- Oil prices edged higher this morning after rising nearly 5% the previous day as concerns over the impact of the Omicron bill on global fuel demand eased, while nuclear talks with Iran hit roadblocks that delayed the return of Iranian crude supplies. Oil prices had come under pressure last week on fears that vaccines against the new coronavirus variant Omicron would be less effective. This sparked fears that governments could re-impose restrictions to curb the spread of the virus and hurt global growth and oil demand. Gold prices were unchanged this morning as a firmer dollar and U.S. Treasury yields hurt gold’s appeal, limiting the metal to a narrow $4 range.
In Local News
Nampak still burdened with debt
Nampak reported that operating profit before impairment charges recovered to R1,19 billion, compared with a loss of R283 million in the 2020 financial year. In addition, the 2020 results were impacted by an impairment charge of more than R4 billion. Earnings per share were 62,3 cents compared to a loss of 87,7 cents in the previous year. Nampak is still struggling with high debt levels and appears to be overly dependent on African countries. The company reduced its long-term debt by R1.3 billion (R4.47 billion compared with R5.76 billion a year ago), but current liabilities rose to more than R4.7 billion from R3.9 billion. Total liabilities decreased by R600 million (only) but are still high at almost R11.4 billion compared to the total balance sheet of less than R16 billion.
Tongaat Hulett reports total loss of up to R266 million
JSE-listed sugar producer and land developer Tongaat Hulett on Monday reported a total loss of up to R266 million in a trading statement for the six months to September 30, 2021. The Durban-based group, which is due to release its latest interim results on Thursday (Dec. 9) highlighted hyperinflation in Zimbabwe, as well as unrest in KwaZulu-Natalin July and Covid-19 pressure, as the main reasons for the expected loss. For its 2020 half-year, Tongaat Hulett an adjusted profit of R241 million, and the turnaround appeared to remain on track despite the Covid-19 pandemic. Tongaat Hulett noted in its trading statement that for the latest half-year, it expects a total loss of between R242 million and R266 million.