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Johannesburg - Johannesburg-listed shares of Richemont led South African stocks higher on Friday, as investors overlooked disappointing first-half results by the luxury goods maker, focusing instead on value in a stock seen as oversold.
Richemont, which is also listed in Switzerland, reported a bigger-than-expected fall in profits on currency hedging losses, news that initially drove a more than 4 percent drop in its share price. But it ended the session 7% higher, making it the top blue-chip performer.
"Yes, the results are bad but the share price has already come down quite a lot over last couple of weeks and it seems to have already been discounted for the bad news," said Ferdi Heyneke, a portfolio manager at Afrifocus Securities.
The StarMine valuation model, which uses a blend of analysts' forecasts and its own tools, estimates Richemont's earnings growth rate is likely to compound at 9% over the next five years, nearly twice what the current share price implies.
A weaker rand, which earlier in the day hit five-week lows before paring its losses against the dollar, also helped the rally by Swiss-based Richemont, as it boosts foreign currency-denominated dividends for local investors.
The domestic currency's latest stumble pushed local platinum and gold producers higher as it lifts the rand price of their metal.
World no. 3 platinum producer Lonmin blazed this uphill trail, shooting 7% higher ahead of the release on Monday of its annual results, making it the biggest gainer on the All-Share index. Bullion producer Gold Fields zoomed 6.35 percent higher while bigger rival AngloGold Ashanti rose 4.7%.
The benchmark Top-40 index ended 1.15% higher at 44 815 while the wider All-Share index added 0.99% to 50 079.
