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SHARE WATCH: Possible acquisitions, gold and logistics

Jul 11 2017 09:41
Kirk Swart

Cape Town - Overberg Asset Management share analyst Kirk Swart looks at possible acquisitions, gold and logistics shares in this week's share watch.

1. Holdsport [JSE:HSP]

Holdsport is South Africa's premium listed sports equipment and apparel retailer. In its stable it has leading businesses such as Sportsmans Warehouse, Outdoor Warehouse and Performance Brands.

Shareholders in Holdsport will have been patiently waiting for the company to take its business to the next level. Instead, growth has been mediocre over the last couple of years. At least the dividend yield is sitting at 5%.

However, Brian Joffe's new investment holding company Long4Life, has indicated that it wants to acquire all the share capital of Holdsport. It will be done in a share exchange at a ratio of 10.44 Long4Life shares for every 1 Holdsport ordinary. This deal might be the catalyst that Holdsport shareholders have been waiting for.

2. Life Healthcare [JSE:LHC]

Life Healthcare is one of the premier private hospital groups in South Africa. The Life Group also operates in Poland and has a joint venture with a private hospital group in India.

Like Mediclinic, shareholders in Life Healthcare have had a torrid time of late. The industry continues to face some regulatory pressures from government who keeps making noises about a forced National Health Insurance. Such pressures have forced these private hospital groups to acquire very expensive businesses offshore.

Life Healthcare has announced that shareholders will be receiving a script dividend in the ratio of 1.32772 Scrip Distribution shares for every 100 ordinary shares held. A cash alternative of R0.35 was offered.

3. Richemont [JSE:CFR]

Richemont, the Swiss Luxury goods group, have continued to give shareholders a good return over a rolling one year period despite the strong rand and weak consumer demand. Richemont will benefit from a strengthening European economy which is showing signs of an early recovery following years of suppressed economic growth.

The company announced that it has completed the sale of its wholly-owned subsidiary, Shanghai Tang on June 30, 2017 to the Italian businessman, Alessandro Bastagli.  Per Richemont, the transaction will have no material effect of the company's balance sheet.

4. AngloGold Ashanti [JSE:ANG]

AngloGold Ashanti recently announced that it may cut about 8 500 jobs as two of its mines are unsustainably unprofitable.

READ: ALERT: Charter warning as AngloGold starts retrenching 8 500 workers

The two mines, Kopanang and Savuka, are per Citigroup, operating at double the cost average of $744/oz in 2016. With the gold price at $1 236/oz, the mines are averaging a loss of $252/oz.

READ: AngloGold job cuts may be tip of iceberg

The closures and job cuts will undoubtedly not sit well with the unions. Mineral Resources Minister, Mosebenzi Zwane, has already expressed his concern with the job losses.

AngloGold Ashanti is seeing their share price at a one year low of R125 per share.It has since clawed back, currently trading at R132.56.

5. Santova [JSE:SNV]

Santova is a logistics company listed on the Johannesburg Stock Exchange (JSE), which earns half of its profits outside of South Africa. The company differentiates itself from other logistical companies by being a non-asset based facilitator of international trade.

The company places its focus on the movement and storage of raw materials, work in progress, inventory and all finished goods. Therefore, it provides the logistical assistance for companies throughout their whole supply chain. Because each client`s situation is unique, Santova is very flexible in their client offerings.

Santova has operations in Australia, Mauritius, Hong Kong, Netherlands, the United Kingdom and South Africa. Santova will benefit from a pickup in global trade and is trading at a price to earnings ratio of 8.5.

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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