You're listening to Strictly Business Podcast with Lindsay Williams.
JSC has closed its doors for another day, so it's time for the 5 o'clock shadow.
And as always on a Wednesday, I speak to Skulk Lowe, Portfolio Manager at PSG
Wealth Old Oak in Cape Town.
I've got a few things scribbled on my list, Skulk.
One is Alphabet, one is Apple, one is State of the Nation Address, one is Trump,
and then I've got Sappy and Sassl as well.
I've also got the gold price written down because it's done rather well.
And yeah, so...
If you want to add anything to it, of course, that's absolutely fine.
But can we start with tech and particularly Alphabet?
Because the market didn't seem to like the fact that it's spending so much money on
research and development into artificial
intelligence.
And I'd like your broader view as well as to whether companies are investing too
much in that particular sphere in
the future.
Look, Lindsay, firstly, hi there and hello to all the listeners.
Thank you.
When you say, people, we're going to, you know, we're going to, I mean,
the analysts went big.
The analysts originally went like, because they know they're going to spend.
I mean, there's this big thing.
I mean, we've had deep seek and we know the whole thing around AI.
But when analysts go in this optimism and say, well,
they're going to most probably spend 58 billion US dollars.
And they come out and say, well, we plan to not spend only that.
We're actually planning to spend another $17 billion or $75 billion.
I mean, that is just crazy.
It's too much, isn't it?
Yeah, I think so.
I think so.
That's the thing about these tech companies.
And we saw that in the 90s.
A lot of people said, well, you don't need to be focused on earnings.
You need to be focused on… on revenue growth because that's ultimately what it
gets you.
Now, lately, you know, the past few years, we've had these Amazons, Googles, Apples,
these companies bringing out quite solid earnings growth and it sort of became
normal
companies.
And now we're going back to that scenario where you say, well, we believe in AI and
we do,
but we're going to spend a hell of a lot of money to actually make this pay over
the...
very, very, very long term.
So yeah, you're right.
I mean, it is a bit of a worry.
Naturally, if you look at as we're currently sitting here, I mean,
Google down 8%, 8.2%.
Yeah, and it's not, that's big.
That is big.
Market telling us exactly what they're thinking.
They're worried.
They are, they're worried.
Okay, we'll see what happens.
It's also the fear of missing out.
I mean, I know that Zuckerberg did it with meta.
I still don't understand what the metaverse is.
But anyway, now going huge on AI.
So let's see, maybe in five years time, that 75 billion will seem like a bargain,
like a drop in the ocean.
But the jury is out.
What about Apple?
China, of course, involved in a trade war.
with mr trump's administration so the first thing they do is have a go at apple
and and apple has fallen as well i don't know
by how much not as much as alphabet has fallen but nonetheless under a bit of
pressure yeah yeah i mean
not eight percent you know movement still one percent movement today um but i mean
chinese regulators got the
got the nice art i mean chinese regulators you know it's still considering and that's
what what Bloomberg reported today,
if I'm not mistaken, where they said, well, they're going to open a formal probe
into iPhones, you know,
their app store fees and their policies.
So I know they're definitely not Chinese-friendly,
but this could be interesting as well.
And again, the share price is telling us they're worried, very, very worried.
Okay, so we've got Alphabet and Apple, two of the pillars of the tech industry.
in Silicon Valley, in the United States, in the stock market, of course.
And then we've got Trump.
Now, you know, I wouldn't say it's an obsession, but it's a fascination that I
have with this fellow.
And I've had it for years.
But it's becoming more and more fascinating to me.
I wake up every day and I think, what's he going to do next?
He can't do what he did yesterday because that was outrageous.
And this morning...
Well, tomorrow morning I'm going to wake up and say he can't do what he did
yesterday.
He can't say he's going to take Gaza over.
He can't do that.
He can't say he wants to buy Greenland and he wants Canada to be the 51st state.
And he's closing down the CIA or rather saying to everyone at the CIA,
you can go if you want to, we'll give you a nice severance package.
He can't involve...
Yeah.
FBI agents that were involved in the January the 6th investigations.
You can't say that you're under investigation and you might be sacked
because of it or even prosecuted.
There's no way you can beat all that.
But of course he beat it with the Gaza story.
Unbelievable.
It's unbelievable.
He wants to buy Gaza and turn it into the Riviera of the Middle East.
Come on now.
It is unbelievable.
I mean, and it's not backing down on this 51st state thing of Canada as well.
I mean, turning around and saying, well, we don't need Canada.
We really don't need Canada.
We need nothing from Canada.
Neither do we need anything from Mexico.
And then he'll just throw out and say, well, we don't need anything from China.
Yes, you do.
Yes, you do, Mr.
Trump.
or President Trump.
I mean, he's going to have a fun time.
But like you said, I just love it.
I mean, we said it when he got elected.
We knew we're going to have a few years again of fun and games.
He just makes it fun, really.
I know he is.
He's really good fun.
He's a real hoot, actually, as an American would say.
He's a hoot.
And I shall miss him when he's gone.
And he's saying to himself, unlike the first term,
where he was a little bit more tempered in his activity.
The second term, which is obviously his last, he can't run again unless he changes
the constitution,
which I wouldn't put past him like Putin did.
He might say, no, sorry, I can run as long as I like.
But he is just going head down and saying, I can do what I like.
And it is quite extraordinary, and I will miss him.
He's very, very good fun, but dangerous fun, so he mustn't make light of it.
The State of the Nation address is, isn't it tomorrow night?
Yes, tomorrow night.
My...
Experience of the State of the Nation Address.
I've even sort of attended it in Cape Town and reported upon it when I was on
television.
What happens normally is the EFF disrupts everything and then the president talks a
lot of nonsense which no one listens to
and it's completely inconsequential.
And I don't know about the EFF and whether it will be inconsequential this time, but
it leaves me a little bit cold, Skalk, and I'm sorry to be a cynic.
Yeah, I think, well, he's sort of in hot water lately.
I don't want to, you know, go talk about expropriation without compensation and how
this has been.
I just think the way it's been done, most probably not the best.
But be that as it may, I think with the run-up to Sona, I think people will need
to hear something, you know,
warm and fuzzy.
They will need to hear something.
Otherwise, I think, like you mentioned, if it's going to be another sonar of a lot of
nothings, then
I do think that we might see the rant slip again.
I mean, I've got no doubt.
This is one of the things where the world is going to start.
They're going to listen to what President Ramaphosa is saying.
And they would like to see us move in the right direction.
We've done a few things, but currently the GNU is really, really wonky.
This whole Trump really attacking
Ramaphosa on expropriation without compensation.
Let's just hope there's something on that and let's hope he calms the country.
It's time for leadership, I think, is what you're saying here.
It's time to stand there and say, listen, the expropriation bill has been on the
table for a long time,
but show me where land has been expropriated.
No, there hasn't been any.
So just watch out.
And Mr.
Trump, you're wrong.
And everything's fine.
And the government of national unity, we are still working together.
So it's fine.
The greatest thing, of course, would be to say, well, we're tackling unemployment and
we're looking forward to a growth driven economy.
But unfortunately, those last two things I mentioned seem a long, long way away,
Skulk.
Hopefully that's going to be the case.
I really, really hope that this is going to.
He's going to focus on that, because he hasn't done that over the past two, three
years.
We want him to focus on that.
We've got the GNU in place now.
Now we should start focusing on implementing all these great things that
the GNU are working on.
Yes, we can only hope so.
We'll find out on Thursday night.
A couple of companies on the JSC today that caught my eye.
uh notably sappy very very volatile stock it reprised quarterly um share price down
over four percent uh
today the second one was sassel which continues to astound uh it didn't do much
today it was um i think up a little
bit actually after its trading update uh but sappy first of all probably not one
that features in your life too much skull
that's my feeling i've never made money
on this company never ever i mean uh as i doubled every now and then maybe you know
but if you're Bob, you know, like I said, this is not a company for orphans and
widows.
It's just such a volatile company.
And today was no different.
I mean, they came out.
I mean, look at the financial highlights.
The results for Q1-25, I don't think it would look too bad.
I mean, they were talking about EBITDA of $203 million.
A refinitive had them at $200 million, so fairly in line with expectations.
I saw JP Morgan was somewhat a little bit more bullish.
They had them at $213 million on the EBITDA.
And we can continue.
But in general, I thought that this was...
pretty much in line but then they mentioned that the market conditions and
and the outlook did
look quite quite negative they were talking about uh the maintenance shutdowns
that they're going to have in in q2
that's that's usually not good for these bulb bulb companies so um you know the
somerset uh
pm2 project they they're going to be shutting that
down then they also mentioned that the paper fault um oversupply persist um and
and that
But the paper demand is really,
really recovering way slower than they actually anticipated.
So that's also not looking good in terms of the outlook.
I did mention that there's some price stabilities now.
We had that supply chain hiccups a few years ago, and there was a bit of price,
I don't want to say manipulation, but price volatility.
And that seemed to be, let's call it, stabilizing.
And then let me just mention that the paper demand remains stable in North
America and South Africa.
But I would say that the outlook sort of just swing the normal
EPS outlook and EBITDA outlook towards people are worried and the share price got
clapped.
I mean, 5%, 4.76% down today.
You mentioned Sasol.
I mean, what you didn't mention is as this.
This, let's call it a trading update where it was released.
And this is the trading statement for the six-month end at 31st December.
The share price skyrocketed.
It was trading close to 92.
I don't know if the highs and lows here, but it was up over 5%, close to 6% for the
day.
Yeah, yeah, yeah.
And I went through it.
When you look at the...
the the hips expectation versus versus both are well just look at morgan stanley
and also uh refinitive
it's fairly in line there's no no beat no um they did mention that the previous year
hips
uh was gonna it was 20 round 37 that it's going to come out 13 ran to 15 ran this
year and but
if you drill through we know that they made losses the the previous six months
but but if they're going to continue
producing these type of top of earnings yes it's not going to be matching the
previous year but still we're looking
at a forward p in a for sassel of 2.9 times that's that's that's miniscule
that's miniscule that's that's really really i mean such a i mean this is a
company that's that's been trading at fairly low
uh price earnings multiple bills but but
still i mean three times i mean i've backed it in i think 15 years
They're sitting at around about close to nine times earnings.
And when you take 20 years, Cecil is sitting at 11, 12 times average P-E ratio.
Let's just take half of that and say, well, it goes back to a 6-P-E ratio.
Then this company can pretty much very, very easily double up and still not be
expensive trading at a 6-P-E.
After the spike-up of which you spoke so enthusiastically, where is it now?
It's come back to about 86, 87, hasn't it?
Yep, done.
It actually closed the day down after the great performance originally, down 11
basis points, closed at 87 rand.
Okay.
We'll come to the share price movements in a moment.
Any other shares, though, that I've missed on the Stock Exchange news service or any
other ones that really caught your eye?
No, no.
I think the only one that I maybe was Sea Harvest,
but it's a fairly small company, but they also came out with a trading statement.
for the year in the 31st of December.
Okay.
Dollar-Rand.
The dollar's had, sorry, the Rand has had a good day.
The US dollar has fallen over 2% against the mighty Rand.
1856, that exchange rate.
British pound against the Rand, 2321.
And the Euro-Rand is 1934 with the Euro-Dollar, 10420.
That's a euro that's gained one and three quarters percent against the dollar.
British pound, 125.05 against the greenback.
Now.
The gold price has done well.
It's up $20.
$28, $2,873 per ounce.
What else have we got here?
Platinum and palladium, both in the, solidly into four figures,
$10.20 per ounce for platinum, up 1.8%, and palladium, 10.10,
up just very slightly.
But anyway, encouraging to see it going from three figures, both of them, to four
figures.
Now, if we continue with the commodity theme, What's going on on the big ones and
that's the energy sector.
We've got West Texas crude oil $71.55 which is down 1.6%
and Brent crude oil $75.08 per barrel which is down just under one and a half
percent.
Natural gas prices after going up eight percent yesterday just very slightly
weaker.
Anything else there?
Coal prices down 2.7.
Not much.
So we'll go straight to S&P 500 futures.
6,050, off their lows, but still down 0.5%.
We'll talk about that in a moment.
It just seems to me the market's a little bit nervous about what's going on
geopolitically and politically,
domestically in the United States of America.
So down 0.5%.
U.S.
10-year Treasury bond yield, 4.43%.
The South African 10-year. Now, I put out a tweet yesterday because I thought
there'd been this huge spike in yields, but apparently it was a...
a technical anomaly because it's the contracted change it's 10.74 percent for
the south african 10 year
and bitcoin to complete the picture
98 300 and a bit which is down 1.7 percent skunk what were the big movers
on the jsc today i'll weigh in with mine in a minute but what it what are your big
movers up and down gold gold
baby i mean there we go Creeping ever so closely to that $2,900.
We know gold today, again, making all new all-time highs.
I mean, this is something sort of been a theme over the past week.
Gold price making new all-time highs pretty much every second day.
But today, there's no different.
I mean, we're seeing the gold price, as you just mentioned, making new highs.
And that really helped most of these gold counters.
Gold fields up 4.2%.
This is Anglo Gold, 2.1%.
Durban, the road up to a deep 4.8%.
8% and all money sort of lagging a little bit, 1%, 1.1%.
But still, I mean, if it was digging, it was growing today.
So, yeah, I would say I would highlight the gold counters.
But also, I mean, you mentioned, I mean, some of these platinum counters,
PGM counters also looking very, very good, you know,
with the platinum and palladium prices going four figures.
So, yes, that's also helping.
So, in general, I would say it's been a very solid day for resources.
And that's after a phenomenal January. I mean, when I say phenomenal,
I think I can't remember when last one of the sectors, and in this case, it's the
resource sector,
grown close to 20% in one month.
It was 17, let's call it 17.5% growth for the sector.
in the month of january alone you're talking resources now yeah yeah yeah
that's that's very good he's had a
tough time of course but that is a spectacular performance what a recovery
and it is it doesn't seem like it's stopping anytime
soon because uh as we mentioned today it's running again so that's good i mean that
usually is it's been it's back
in the days was way better for for the jse but still i mean we still are very very
strong and predominantly resource
driven type of indice or of um market.
So, yeah, when you've got days like today, I mean, we'll cover the indices today,
but when you've got a day like today where both the industrials and financials was
in negative territory, but still your all share was in positive territory, then you
know it was a resource day.
Very good.
I'll just weigh in with a couple of others.
Pick and pay up 2.5% today.
Anglo Platte, a 2.9% winner.
On the downside, the aforementioned SAPI down 4.75%, Aspen down 4%,
Redefine down 3.6%, BigVest down 2.75%.
Didn't that go shooting up the other day?
Anyway, and DataTech down 2.75%. Skulk, you mentioned the indices.
Give us the indices and start with the good ones and start with resources in
particular and
wipe that smile off your face, please.
Let's do that.
So the resource index today closed the day at 1.6%.
As I mentioned, the industrials, they were down nine basis points and financials down
eight basis points.
Even the asset property were down 1.11% for the day.
But
well all share were looking good all share 86 611 points and this pretty muted
day globally and they still managed to keep themselves in a in a in positive
territory 18 basis points and the jc uh top
40 they actually closed the day 78 000 points 558 that's uh 0.28 positive
uh the turnover on the market didn't look too shabby as well i mean we didn't have
the 25 billion day yesterday but
We take this close to 23 billion value traded on the market any day.
So a very good day for South Africa.
Very nice.
Okay, Skalk, thank you very much for your analysis.
Excellent as always.
We shall speak next week.
We should digest the State of the Nation address and try and digest whatever Trump
has done in the next week.
I mean, who knows?
Fascinating stuff.
There will be something new.
There has to be.
Gosh, who's he going to try and buy next?
Skalk Lowe is a portfolio manager at...
PSG Wealth Old Oak in Cape Town.
And that was the 5 o'clock shadow.
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