I haven't blogged in a while - been sitting back watching the fun and games on the market and trying to work out where this whole thing is going.
Some very interesting things happening at the moment and volatility seems to be the story of the day.
I battle to find value in this market at the moment. I don't like what is happening in Europe and I think there will be some fall-out to come.
Having said that, the Dow below 10000 almost feels "orderly" rather than out and out panic and that's ok.
There are 3 stocks which catch my eye at the moment and investors might want to consider:
African Bank
Long been a popular choice in my portfolio. Results were not great and the market has turned a little sour on them but they have a lot of positives that could be taken out of these results. Ellerines systems are sorted, they are growing again and the demand for their kind of credit is coming back slowly. But more important than all of that is their ability to generate cash - and quickly!
I would buy it at under R30.
Buildmax
Brait reported earlier this week and they managed to keep this one out of their reporting. This coal mining contractor has been a disaster for the private equity firm falling from R1.15 to 30c and now Brait is having to underwrite a R150m.
35c, a rights issue on the cards. This is a story to watch.
Reinet
I've liked Reinet. Done bugger all except mirror British American since it was listed and its off about 15% in the month but in this market, this might not be the worst defensive play around.
Would be adding this to the portfolio at the moment.
----------------------------
Another interesting thing I picked up this evening is that Zimbabwe is allowing the establishment of four new newspapers. I think this is a further sign that normality is returning to this country which will have a positive spin for many of our resource operators.
Showing posts with label African Bank. Show all posts
Showing posts with label African Bank. Show all posts
Wednesday, May 26, 2010
Friday, May 7, 2010
Finger trouble, burning Europe and Abil fried
What an absolutely intriguing few days on world markets.
A bit of random finger trouble at Citi sends the markets into a tailspin and the Dow drops nearly 10% before you can blink. This is summed up by the literal carnage in Greece and then one of our favourite banking stocks (African Bank Investments Limited - Abil) gets smashed today.
Absolutely intriguing!
Finger Trouble
Make no mistake - Thursdays nonsense is going to piss some US politicians off in a big way. Here they are pushing for regulatory change and trying to convince the public that they are hauling some bankers over the coals and one prick can't decide whether he is selling millions or billions of stock and he sinks stockmarkets across the world.
Story for the rest of the year invariably has to be the politicans against the bankers.
I thought Henry Blodget summed it up really well in this post. Things are overcooked at the moment
Europe is in trouble
Ok that's a given, but I don't think it is the debt issue which is the problem but rather the structural issues facing a number of these economies - they cannot create jobs.
If you think about it, a country going broke is a shrug of the shoulder event. Technically the US is broke and will be for eternity.
Iceland very definately is broke as is Greece... but who actually cares? Ireland, Spain, Portugal and Italy... debt is a way of life get over it. The real question is how are they going to tackle their unemployment issues.
Here are some interesting stats which I've dug up around unemployment in a couple of Europes major regions:
Greece has a population of 11 million.
In contrast France has around 63 million people while Spain has around 41 million. Look at a map of Europe for a moment. Spain cannot create the number of jobs it needs - the job seekers can only push one way - France.
Without oversimplying it - if you think a couple thousand Greeks know how to riot can you imagine what it will look like with a couple hundred thousand French and Spaniards venting their fury...
I would be watching these two economies very closely for changes in the social landscape.
African Bank Investments Limited (Abil)
This is one of my favoured banking shares in the South African market - great company in a great sector.
Anyway the share got slaughtered today - off about 5.5% to close at R32.15.
Those pricks at Deutsche Bank apparently put out a pretty negative analyst report earlier this week which didn't help sentiment which was a bit of a pre-cursor to the following trading update out of them today:
Shareholders are advised that headline earnings and headline earnings per share for the period are expected to decline by 2% relative to the R937 million and 116.6 cents per share respectively reported for the first six months of the 2009 financial year. The African Bank business unit is expected to report a decrease in headline earnings of 5%, whilst Ellerines is expected to report a 6% increase relative to the results reported for the six months to 31 March 2009.
A whole 2%... how frightening...
Well of course it is down, the country is still losing jobs (190000 in the last quarter). Guess what - you don't get a loan (even from Abil) if you don't have a job.
All these analysts are so focused on Ellerines - guess what trading has actually improved in the last six months... wankers.
Personally I still like the stock. While the rest of the big banks with their investment bankers (who can't even push the right buttons) have to worry about nasty politicians and regulators wanting to check out all their cavities, Abil can get on with the business of lending and THAT is what they are good at.
A bit of random finger trouble at Citi sends the markets into a tailspin and the Dow drops nearly 10% before you can blink. This is summed up by the literal carnage in Greece and then one of our favourite banking stocks (African Bank Investments Limited - Abil) gets smashed today.
Absolutely intriguing!
Finger Trouble
Make no mistake - Thursdays nonsense is going to piss some US politicians off in a big way. Here they are pushing for regulatory change and trying to convince the public that they are hauling some bankers over the coals and one prick can't decide whether he is selling millions or billions of stock and he sinks stockmarkets across the world.
Story for the rest of the year invariably has to be the politicans against the bankers.
I thought Henry Blodget summed it up really well in this post. Things are overcooked at the moment
Europe is in trouble
Ok that's a given, but I don't think it is the debt issue which is the problem but rather the structural issues facing a number of these economies - they cannot create jobs.
If you think about it, a country going broke is a shrug of the shoulder event. Technically the US is broke and will be for eternity.
Iceland very definately is broke as is Greece... but who actually cares? Ireland, Spain, Portugal and Italy... debt is a way of life get over it. The real question is how are they going to tackle their unemployment issues.
Here are some interesting stats which I've dug up around unemployment in a couple of Europes major regions:
- Spain - 20% unemployment
- Italy - 8.6%
- Portugal - 10.10%
- UK - 8%
- Ireland - 12.7%
- France - 10%
- Poland - 12.9%
- And then Germany for some context - 7.5%
Greece has a population of 11 million.
In contrast France has around 63 million people while Spain has around 41 million. Look at a map of Europe for a moment. Spain cannot create the number of jobs it needs - the job seekers can only push one way - France.
Without oversimplying it - if you think a couple thousand Greeks know how to riot can you imagine what it will look like with a couple hundred thousand French and Spaniards venting their fury...
I would be watching these two economies very closely for changes in the social landscape.
African Bank Investments Limited (Abil)
This is one of my favoured banking shares in the South African market - great company in a great sector.
Anyway the share got slaughtered today - off about 5.5% to close at R32.15.
Those pricks at Deutsche Bank apparently put out a pretty negative analyst report earlier this week which didn't help sentiment which was a bit of a pre-cursor to the following trading update out of them today:
Shareholders are advised that headline earnings and headline earnings per share for the period are expected to decline by 2% relative to the R937 million and 116.6 cents per share respectively reported for the first six months of the 2009 financial year. The African Bank business unit is expected to report a decrease in headline earnings of 5%, whilst Ellerines is expected to report a 6% increase relative to the results reported for the six months to 31 March 2009.
A whole 2%... how frightening...
Well of course it is down, the country is still losing jobs (190000 in the last quarter). Guess what - you don't get a loan (even from Abil) if you don't have a job.
All these analysts are so focused on Ellerines - guess what trading has actually improved in the last six months... wankers.
Personally I still like the stock. While the rest of the big banks with their investment bankers (who can't even push the right buttons) have to worry about nasty politicians and regulators wanting to check out all their cavities, Abil can get on with the business of lending and THAT is what they are good at.
Monday, November 23, 2009
Comments on ABL
African Bank Investments Limited (Abil) for me has long been a popular choice in my investment portfolio. They're a good dividend payer (both the ords and the prefs) and they are one of the few financial services stocks who have really good growth prospects over the next two to four years.
I have read quite a lot of commentary today about how Ellerines is an albatross around the neck of Abil and how it is likely to continue to hurt them.
Don't get me wrong - in hindsight they have overpaid for the asset but just look at this for a moment and let's try and work this out.
As things stand revenue breaks down like this
That revenue line in these results is the key. A business that can generate R15bn in revenue - primarily cash can do whatever the hell it likes.
Have a look at the capital raisings that the bank has undertaken this year. I think it raised about R800m over the last 12-months.
In credit markets which have been squeezed that is not a bad going. In a business of this nature, if you can generate cash the funding (and cost of funding) will ultimately play ball.
Another key aspect for me is that the Ellerines they bought and the Ellerines they are trying to build are two very different animals. The group has admitted they have made mistakes and they've done things about it.
Instead of standing around and letting it fail they've attacked the problem and they are trying to address some of the challenges they are facing. If you have seen some of the plans around simplying the whole retail offering you will know that there is a strategy they are trying to execute.
The other point I would like to try and get across is that I don't believe Abil are trying to be furniture salesmen competing with the mainstream retailers. My sense is they would like a functional and workmanlike retail offering but stick to the business of lending - and managing the risk of lending
Conclusion
Maybe the ordinary shares are a little expensive at current levels (if you have a short-term investment outlook) but I don't think you can go too far wrong adding a few of the Abil preference shares to your portfolio.
I have read quite a lot of commentary today about how Ellerines is an albatross around the neck of Abil and how it is likely to continue to hurt them.
Don't get me wrong - in hindsight they have overpaid for the asset but just look at this for a moment and let's try and work this out.
As things stand revenue breaks down like this
- African Bank - R7.4bn
- Ellerines - R6.9bn
That revenue line in these results is the key. A business that can generate R15bn in revenue - primarily cash can do whatever the hell it likes.
Have a look at the capital raisings that the bank has undertaken this year. I think it raised about R800m over the last 12-months.
In credit markets which have been squeezed that is not a bad going. In a business of this nature, if you can generate cash the funding (and cost of funding) will ultimately play ball.
Another key aspect for me is that the Ellerines they bought and the Ellerines they are trying to build are two very different animals. The group has admitted they have made mistakes and they've done things about it.
Instead of standing around and letting it fail they've attacked the problem and they are trying to address some of the challenges they are facing. If you have seen some of the plans around simplying the whole retail offering you will know that there is a strategy they are trying to execute.
The other point I would like to try and get across is that I don't believe Abil are trying to be furniture salesmen competing with the mainstream retailers. My sense is they would like a functional and workmanlike retail offering but stick to the business of lending - and managing the risk of lending
Conclusion
Maybe the ordinary shares are a little expensive at current levels (if you have a short-term investment outlook) but I don't think you can go too far wrong adding a few of the Abil preference shares to your portfolio.
Wednesday, February 11, 2009
ABL / PSG
Seeing as my trading strategy has been booted out the window by market volatility in the last two weeks, I thought maybe it would be a chance to look at two fundamental stories which I've been looking at quite closely in the last few weeks - Abil and PSG.
Abil (ABL)
African Bank Investments Limited (Abil) has been my preferred banking sector share for the last few months.... although Standard Bank has also been catching the eye in recent weeks.
Disclosure - I'm a holder of Abil pref and ordinary shares.
African Bank released a trading update on Tuesday and it was pretty much more of the same - The banking / lending business is pumping and profitable while the Ellerines retail business is still weighing on them.
I decided to listen in on the analysts and investors conference call yesterday and walked away happy with the business.
Reading the numbers is one thing - listening to management is another thing altogether. Every time I listen to CEO Leon Kirkinis I get the impression that he's a guy in complete control of his business. He knows what he wants and he knows he has to keep his shareholders happy.
AND HE'S NOT A NUMBER CRUNCHER!
Listening to them chatting about the Ellerines business, the focus wasn't just on cutting costs but actually improving the Ellerines offering.
Some interesting comments were made about a bond book-building exercise which is due to commence on Monday and staying committed to lowering the dividend cover ratio over the next 3 years as previously guided...
I left the conference call confident that I could add more to my existing ABL positions.
PSG
Investment group PSG has been on my shopping list for a while, but some reason corporate action has bumped it up to the top of my radar screen.
This week, PSG announced it was A) Disposing of its interest in Channel Life to Sanlam for around R140m, B) It was buying the T-Sec securities business (about 10500 clients apparently) for an undisclosed sum...
Getting out of Channel Life now, shows management is prepared to rebalance the portfolio when needs be and gives PSG a few bucks in the bank for fresh acquisitions.
The T-Sec deal I reckon is sweet for them but the parties seem to be quite cagey on the transaction seeing as no figure was placed in the media and no disclosures have been made in any interviews...
Jannie Mouton has been piling into the company's shares for the last few months and he's highly regarded as being able to extract value for investors.
A business like PSG is known for its business savvy and if I remember correctly Mouton reckoned that if you had invested R1000 in PSG 10 years ago (This was at the company's last results presentation, pre the Sept / Oct crash), that investment with dividends reinvested would now be worth something like R360k which is definately better than a kick in the teeth...
I'd be a buyer at these levels...
Abil (ABL)
African Bank Investments Limited (Abil) has been my preferred banking sector share for the last few months.... although Standard Bank has also been catching the eye in recent weeks.
Disclosure - I'm a holder of Abil pref and ordinary shares.
African Bank released a trading update on Tuesday and it was pretty much more of the same - The banking / lending business is pumping and profitable while the Ellerines retail business is still weighing on them.
I decided to listen in on the analysts and investors conference call yesterday and walked away happy with the business.
Reading the numbers is one thing - listening to management is another thing altogether. Every time I listen to CEO Leon Kirkinis I get the impression that he's a guy in complete control of his business. He knows what he wants and he knows he has to keep his shareholders happy.
AND HE'S NOT A NUMBER CRUNCHER!
Listening to them chatting about the Ellerines business, the focus wasn't just on cutting costs but actually improving the Ellerines offering.
Some interesting comments were made about a bond book-building exercise which is due to commence on Monday and staying committed to lowering the dividend cover ratio over the next 3 years as previously guided...
I left the conference call confident that I could add more to my existing ABL positions.
PSG
Investment group PSG has been on my shopping list for a while, but some reason corporate action has bumped it up to the top of my radar screen.
This week, PSG announced it was A) Disposing of its interest in Channel Life to Sanlam for around R140m, B) It was buying the T-Sec securities business (about 10500 clients apparently) for an undisclosed sum...
Getting out of Channel Life now, shows management is prepared to rebalance the portfolio when needs be and gives PSG a few bucks in the bank for fresh acquisitions.
The T-Sec deal I reckon is sweet for them but the parties seem to be quite cagey on the transaction seeing as no figure was placed in the media and no disclosures have been made in any interviews...
Jannie Mouton has been piling into the company's shares for the last few months and he's highly regarded as being able to extract value for investors.
A business like PSG is known for its business savvy and if I remember correctly Mouton reckoned that if you had invested R1000 in PSG 10 years ago (This was at the company's last results presentation, pre the Sept / Oct crash), that investment with dividends reinvested would now be worth something like R360k which is definately better than a kick in the teeth...
I'd be a buyer at these levels...
Wednesday, December 3, 2008
Value picking
Even though I think there is a bit more downside risk (particularly in the US) I've been doing some small 'value' picking to add to my portfolio.
Below I've just outlined the companies that I've added and some of the thinking behind it:
ApexHi-B - Listed property as an asset class has to make up a portion of your overall portfolio. It provides some diversification and it provides some income. ApexHi and Growthpoint are my prefered property stocks and have subsequently added some to the portfolio.
DBXUS - Even with some downside risk to the US, a lower risk entry via an exchange traded fund that tracks the US market makes sense to me. Initially just trying to get some exposure to the US market and will continue to build up the position from these levels / below.
Grinrod - Shipping firm Grindrod has been under a hell of a lot of selling pressure in the last few months. That hasn't stopped the company directors piling into the stock. Even with the slowing global economy, Grindrod simply looks out and out cheap.
Abil - African Bank impressed me at their recent results announcement. I think the dividend yield on the stock is good, management look sharp and have a plan for the business and most importantly they are well capitalised so I've decided to add a few to my portfolio...
That's where I'm at at the moment. Might add some of the ZSHARESGOVI for a diversification component as well, but we'll see how things go.
Below I've just outlined the companies that I've added and some of the thinking behind it:
ApexHi-B - Listed property as an asset class has to make up a portion of your overall portfolio. It provides some diversification and it provides some income. ApexHi and Growthpoint are my prefered property stocks and have subsequently added some to the portfolio.
DBXUS - Even with some downside risk to the US, a lower risk entry via an exchange traded fund that tracks the US market makes sense to me. Initially just trying to get some exposure to the US market and will continue to build up the position from these levels / below.
Grinrod - Shipping firm Grindrod has been under a hell of a lot of selling pressure in the last few months. That hasn't stopped the company directors piling into the stock. Even with the slowing global economy, Grindrod simply looks out and out cheap.
Abil - African Bank impressed me at their recent results announcement. I think the dividend yield on the stock is good, management look sharp and have a plan for the business and most importantly they are well capitalised so I've decided to add a few to my portfolio...
That's where I'm at at the moment. Might add some of the ZSHARESGOVI for a diversification component as well, but we'll see how things go.
Monday, November 24, 2008
African Bank
Very quick blog post in this regard... South Africa's 'other' bank reported its full year results and once again they proved themselves the masters of risk management by keeping it simple and stupid.
By "The Other Bank" I of course refer to African Bank Investments Limited (ABIL - JSE:ABL).
This to me is a great, easy to understand and rewarding business to be involved. In a nutshell, they lend money that typically falls outside the ambit and risk models of the Big 4 banks.
supposedly these are supposed to be riskier clients but you never here the ABL guys yabbing about the tough environment and how difficult the NCA has made their lives or how tough it is to get ther money back.
They're a tough sharp bunch and at present the company is paying a dividend yield of just under 10%. Definately not the worst deal around and something I put in my share portfolio as something of a buy-and-hold investment....
The market liked the results and the share was up strongly about 6%
Just a thought - use it, don't use.
By "The Other Bank" I of course refer to African Bank Investments Limited (ABIL - JSE:ABL).
This to me is a great, easy to understand and rewarding business to be involved. In a nutshell, they lend money that typically falls outside the ambit and risk models of the Big 4 banks.
supposedly these are supposed to be riskier clients but you never here the ABL guys yabbing about the tough environment and how difficult the NCA has made their lives or how tough it is to get ther money back.
They're a tough sharp bunch and at present the company is paying a dividend yield of just under 10%. Definately not the worst deal around and something I put in my share portfolio as something of a buy-and-hold investment....
The market liked the results and the share was up strongly about 6%
Just a thought - use it, don't use.
Saturday, November 1, 2008
Shopping list
With equity markets finally taking a bit of a breather from the non-stop selling pressure, quite a few people have been talking about what shares are on their shopping lists.
You've seen my previous posts about not believing that we have seen the bottom of this sell-off so I thought I would take the time to touch on the 6 shares that are on my shopping list and provide some idea as to why I thought they were attractive.
BioScience Brands (BIO) - This is a high risk pick but I like the story and I think at its current levels it should be 'money for jam'now that new management has been installed and pushing for corporate action to build mass here. Given time I can see this share comfortably trebling.
ApexHi-B (APB) Units - A big part of my strategy has revolved around portfolio rebuilding and developing a consistent supply of income and dividends for reinvestment. My two prefered property picks were Apexhi-B and Growthpoint properties and APB happened to be next on my shopping list.
Deutsche Bank US index X-Tracker (DBXUS) - I'm a fan of exchange traded funds (ETF) and I've already taken a position in the Japanese markets, so I've hedged a bit with some exposure to the US market now. Quarterly US distributions and the US dollar 'hard currency' exposure are a theme in my portfolio.
African Bank Ltd (ABL) - Abil has been a favourite stock of mine, despite the segment of the market that they serve (micro-lending) / higher risk clients. Credit where credit is due - these guys have managed to handle risk better than any of the big four banks despite playing in a very tough segment of the market. The company is also very cash generative, generous with their dividends and are well positioned to buy up some nice assets should the opportunity present itself.
Grindrod (GND) - I've touched on my reasons why I like Grindrod in a previous post, so I'm not going to repeat it.
ZSHARESGOVI - This is another ETF that is issued by Investec. Basically this is tracking the South African bond market. For some exposure to the bond market, I think this is a nice way to split up the portfolio a bit.
Anyways that's where I'm looking - you probably won't find those on the shopping list of too many other institutional fund management experts (except maybe Grindrod), but I'm happy with those calls...
You've seen my previous posts about not believing that we have seen the bottom of this sell-off so I thought I would take the time to touch on the 6 shares that are on my shopping list and provide some idea as to why I thought they were attractive.
BioScience Brands (BIO) - This is a high risk pick but I like the story and I think at its current levels it should be 'money for jam'now that new management has been installed and pushing for corporate action to build mass here. Given time I can see this share comfortably trebling.
ApexHi-B (APB) Units - A big part of my strategy has revolved around portfolio rebuilding and developing a consistent supply of income and dividends for reinvestment. My two prefered property picks were Apexhi-B and Growthpoint properties and APB happened to be next on my shopping list.
Deutsche Bank US index X-Tracker (DBXUS) - I'm a fan of exchange traded funds (ETF) and I've already taken a position in the Japanese markets, so I've hedged a bit with some exposure to the US market now. Quarterly US distributions and the US dollar 'hard currency' exposure are a theme in my portfolio.
African Bank Ltd (ABL) - Abil has been a favourite stock of mine, despite the segment of the market that they serve (micro-lending) / higher risk clients. Credit where credit is due - these guys have managed to handle risk better than any of the big four banks despite playing in a very tough segment of the market. The company is also very cash generative, generous with their dividends and are well positioned to buy up some nice assets should the opportunity present itself.
Grindrod (GND) - I've touched on my reasons why I like Grindrod in a previous post, so I'm not going to repeat it.
ZSHARESGOVI - This is another ETF that is issued by Investec. Basically this is tracking the South African bond market. For some exposure to the bond market, I think this is a nice way to split up the portfolio a bit.
Anyways that's where I'm looking - you probably won't find those on the shopping list of too many other institutional fund management experts (except maybe Grindrod), but I'm happy with those calls...
Subscribe to:
Posts (Atom)
Posts
