Late Friday night Moody’s released its rating for South Africa and reaffirmed its sovereign debt rating at investment grade. It even improved its outlook from negative to stable but stated policy ineffectiveness could “… undermine confidence, growth and social cohesion, with inevitable consequences for the country’s balance sheet”.
The Monetary Policy Committee are expected to decrease interest rates by 0.25% on Thursday due to inflation remaining subdued. This will give indebted consumers a welcomed boost. Retail stocks and banks that have pulled back, after a strong rally, present an opportunity now.
The week ahead:
- Local economic data releases: Quarterly Employment Statistics (27/03), SARB Interest Rate decision (28/03), M3 Money Supply, Quarterly Financial Statistics, Producer Price Index (29/03)
- Results Due: CPI, GRF (27/03), BSR, TBG, EOH, PHM (28/03), PGL, UCP, WEZ (29/03)
- Ex Div (27/03): CSB, FSR, HYP, MSP, MPT, MTN, RMH, SAC, SUR, TEX
Last week’s movers and shakers…
Best Performers: GFI 10.2%, HAR 8.7%, ANG 8.1%, AVV 6.7%, RLO 3.9%
Worst Performers: SNH -24.3%, FFB -18.6%, TOR -15.2%, RES -14.6%, GRT -8.1%
Other Economic data releases of interest…
- Tuesday: CB Consumer Confidence (USA); ANZ Business Confidence (NZL)
- Wednesday: Final GDP, Crude Oil Inventories (USA)
- Thursday: Current Account (UK); GDP (CAN)
- Friday: Public Holiday
One to Buy
Naspers: Building Cash reserves for Organic Growth
The enquiry into Facebook has seen a selloff in all social media stocks lately and with Naspers more than 25% lower from levels last year, we see an opportunity at these levels.
The share is trading at an almost 40% discount to its SOTP value and Management have sold down its Tencent stake by 2% to raise cash. This is to drive organic growth and unlock value in existing ecommerce businesses and ultimately push to reduce the discount to NAV.
We’ve been invested in Naspers for a while and see the current pull back as an opportunity to get invested or top up an underweight position.
Buy below R3,200 with an interim target of R5,000
None to Sell
Short term Ideas
- Sibanye – Stillwater: Up 4.2% ungeared, target remains at R13.50
Long Term Ideas
- Shoprite: Buy below R257.50 with a target of R285.
- Anglo: Accumulate below R285
- Sasol: Buy dips below R400
- Aspen: Accumulate below R260.
- Sygnia: Add below R12.50.
- Santova: Buy below R3.00.
- Merafe: Accumulate below R1.55. Special Dividend on the cards.
- Jubilee: Bottoming out. Hold.
- MTN: Buy Dips below R120.00 Ex-Dividend today
- Glencore: Diversified Commodity exposure. Hold
- Wescoal: Long term buy. Add below R1.80
- Naspers: Buy dips below R3,200.