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SHARE WATCH: Mixed bag on share results and movements

Cape Town - Overberg Asset Management analyst Kirk Swart looks at South African share results and movements in this week's five shares to watch.

1. Mpact [JSE:MPT]

The paper and plastic packaging business recently released its results for the six months ending June 2016. Revenue was up 6.2% for the year to R4.7bn. However, earnings per share decreased to 95.2 cents, down from R1.35 in 2015. The earnings per share decline was driven by Mpact Polymers that saw their earnings decline by 20.1%. 

Despite these sluggish results, Mpact continues to invest in South Africa. The company's R350m recycled polyethylene teraphylate business, received European approval for their materials in September 2015 and Coca Cola granted Mpact approval to use their materials in their bottling process in February 2016.

Mpact is trading on R33 and a price to earnings ratio of 10.

2. Hosken Consolidated Investments [JSE:HCI]

HCI is an investment holding company with diverse investments ranging from gaming and hotels to Golden Arrow bus services. HCI's biggest investment is a 48% interest in Tsogo Sun [JSE:TSH]. Last year HCI unbundled Montauk, its natural gas investment, and Deneb, its branded goods and manufacturing operations.

It also sold off its KWV interest with the money from the sale (about R500m) safely in their pockets. HCI's sum of the parts price is around R170. Trading at R140, the share is trading at a discount to its Net Asset Value (NAV). HCI is sitting on a price to earnings ratio of 13.

3. Trans Hex Group Limited [JSE:TSX]

The diamond miner Trans Hex halted the trading of their shares on Friday, 5 August. This followed an announcement that they had received an offer from a consortium of investors to acquire the remainder of the shares that was not already owned by the consortium. The consortium consists of Christo Wiese and RECM. They plan to buy the remainder of the company from minority shareholders.

This begs the question whether Trans Hex will remain a listed company as the investors, who will own all of the company shares, will be the capital suppliers.

READ: SA’s richest man buys stake in diamond mine

The share, which started trading again, ended last Friday on R3.76

4. PPC Cement [JSE:PPC]

When buying PPC cement you become part of a turnaround story. PPC traded at lows of R6.30 in the middle of July after it had to borrow money from banks to pay back its bondholders. Auditors weren’t able to conclude that the company is a going concern. In order to pay off the debt owed to the banks, PPC hopes to raise money from its shareholders. They aim to raise around R4bn. It is likely that the shares will be issued at a discount to the current share price.

The attractive side of PPC is that after the rights issue the company will have low debt levels. The company is still operating at a profit and its African operations are finally turning the corner.

On Friday PPC ended 5.59% higher on R9.49.

5. JSE Limited [JSE:JSE]

The JSE released their interim results for the period ending June 2016. Revenue increased to R1.2bn from R1bn, profit from operating activities increased to R567.4m from R483.8m and profit for the period increased to R512.7m, up from R430.5m.

The JSE remains a well-run organisation with a very predictable cost base. Still being the primary stock exchange in South Africa allows the JSE monopoly-like profits. Competition is likely to enter the market, rivalling the JSE going forward. However, replicating or improving the world class product that the JSE offers won't be an easy task.

The JSE ended Friday on R168 which places it on a price earnings ratio of 16.5.

Do you agree with Kirk's stock picks? Send us yours and tell us why.

* Kirk Swart is an analyst at Overberg Asset Management , an Authorised Financial Services Provider (No 783) which specialises in the private management of local and global discretionary portfolios as well as pension products.

Disclaimer: The above article does not constitute financial advice and is not a recommendation. Investors must always seek the advice of professionals and trade with caution. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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