SA Stocks Brief - November 2013

• TBS: FY heps -3.8% (1624) vs sbge +3.8%(1754), Rev: R27bln vs sbge R28bln
• WHL: 20week Trading update: solid across the board - clothing l-f-l sales +9.4%, strong c.5% organic volume growth (vs. –ve low single digits implied by TRU and TFG recent updates). Food: l-f-l sales up 13.3%, 7.4% inflation, implying c.6% organic volume growth
• SHP: Investor presentation: management remain confident. Core SHP brand under some pressure, however Checkers and Newsave remain strong. Africa growth focus remains on Angola and Nigeria (interestingly, developed market acquisitions off the radar screen)
• PPC: FY normalized eps 214c vs cons 193c. Final div 118c (156c for the year). Revenue stood at R8.32bn, a 13.2% increase compared to the previous year. Diluted headline EPS rose 10.0% to R1.76 from a year earlier, helped by strong performance from its home market and Zimbabwe.
• AIP: trading update indicating FY heps to be between -17-18% lower (cons -9%)
• BAW : FY HEPS +26% at 860c vs guidance +20-30%. However, turnover is expected to rise between 18.0% and 19.0%, compared to last year.
• TKG : 1H heps +121.8% at 224.2c – looks well ahead market (FY HEPS cons expected at 268c vs 260c sbge)
• MSM: group l-f-l sales slowed from  5.5% in 1H to 2.8% in last 20 weeks, weighed by Massdiscounters (20wks c.1%), Masswarehouse/Makro (c.2%).  
• ILV: H1 hEPS +14%, guides FY 0%-10% on late season cane yield declines in Zambia & Mozambique, and “difficult sugar market conditions”.  
• RBP: strategic review in response to “deteriorating pricing environment” will cut R750m capex; defer drilling at BRPM; Styldrift. RBP has decided to upgrade and expand the existing concentrator plant at (BRPM). The upgrade initially would increase the existing concentrator capacity to 0.25mnt/month from 0.20mnt/month. The cost of the upgrade and expansion of the existing concentrator plant at BRPM is estimated at R2.00bn. RBP has renegotiated with IMP regarding the t's & c's of the 6 and 8 shaft royalty agreement concluded in 2010. It has agreed to substitute the royalty payment of 15.0% of revenue earned with a royalty payment linked to market conditions and therefore the profitability of the Impala Rustenburg operations.
• CML: FY EPS +110% bang in middle of guidance 100%-120%; AUM +45% to 492bn. Outlook on investment environment remains cautious.
• BCX: In its FY13 results, the company stated that its revenue was 5.9% higher at R6.17bn, compared to a year ago. However, diluted headline EPS dropped 12.1% to 34.10c from last year. Looking at acquisitions in Nigeria. 
• Truworths International: The retailer, in its business update for the 18 weeks ended 3 November 2013, indicated that group retail sales increased 7.0% to R3.50bn, compared to a 15.9% increase reported in the corresponding prior period. Like-for-like store retail sales grew 2.0%, compared to the same period prior year. Credit sales were 5.0% higher, while cash sales jumped 12.0% from the corresponding period last year. 
• Foschini Group: In its results for 1H14, the retailer announced that its revenue jumped 10.9% to R8.59bn, compared to the same period last year. Diluted headline EPS was 3.8% higher at R4.11 from the previous year. The company stated that it plans to more than double its African presence in the next five years.
• ACL: The steel producers, in its results for 3Q13, stated that its revenue stood at R8.79bn, a 15.5% increase compared to the same quarter previous year. It swung to a headline EPS of 50.00c compared to a loss of 42.00c/share posted in the corresponding period a year ago. The company expects weaker 4Q13 earnings due to poor demand.
• Sappi: The company, in its results for FY13, reported that its revenue came in at $5.93mn, a 6.6% drop compared to the previous year. It swung to a diluted headline loss of 6.00¢/share from EPS of 9.00¢ posted a year earlier, weighed down by weak demand in its main European markets. Separately, Sappi Fine Paper Europe, a division of the company, confirmed its investment plans over the next three years amounting to approximately EUR120.00mn for its two leading coated graphic paper mills.
• Oceana Group: The company, in its FY13 results, reported that its revenue stood at R5.00bn, a 7.5% increase compared to the previous year. Diluted headline EPS grew 5.6% annually to R4.43.
• AVI: The company, in its trading statement for 1H14, indicated that it expects consolidated EPS to increase by more than 20.0% from the same period previous year. Revised relationship with COTY. 
• NTC: The company, in its FY13 results, reported that its revenue increased 10.4% annually to R27.80bn. Diluted headline EPS advanced to R1.35 from R0.94 posted in the prior year, driven by a strong performance in its home market.
• BAW: In its results for FY13, the company stated that its revenue stood at R65.10bn, an 11.2% rise compared to the previous year. Diluted headline EPS jumped 26.8% to R8.56 from a year earlier, helped by the contribution from its recently acquired Bucyrus business and a strong performance from its logistics unit.
• TKG: The telecom company, in its results for 1H14, indicated that its revenue grew marginally to R16.48bn from the comparable period last year. Diluted headline EPS surged to R6.50 from R0.25 posted in the corresponding period a year ago, boosted by a weaker South African rand and lower payments to wireless operators. Separately, the company stated that it has given its CFO, Jacques Schindehutte, a R6.00mn interest-free loan to buy shares in the company while he was being probed for misconduct.
• Cadiz says it is leaner following turnaround plan: Financial services company, Cadiz Holdings, reported a diluted headline EPS from continuing operations of 1.50c for 1H14 from 1.20c a year ago. Headline earnings totaled R1.70mn, with diluted headline EPS 42.0% lower at 0.70c.
• Coal miner Keaton’s earnings soar on Vanggatfontein performance: Coal mining company, Keaton Energy, reported a 192.0% rise in headline EPS to 19.40c for 1H14, compared to a loss of 21.10c/share posted in the corresponding period a year ago.
• NPN: The company, in its trading statement for 1H14, indicated that it anticipates core headline EPS to be between 10.0% and 20.0% higher from the corresponding period prior year. Headline EPS is expected to rise between 5.0% and 15.0%, compared to the same period last year.
• MSM: The retailers, in its sales update for the 46 weeks ended 10 November 2013, stated that total sales increased 8.3% to R59.70bn, while comparable store sales grew 4.3%, from the same period last year. Sales in Massdiscounters, Masswarehouse and Massbuild rose 7.9%, 14.0% and 9.9%, respectively.
• ILV: In its results for 1H14, the sugar producing company reported that its revenue stood at R6.24bn, a 23.0% rise compared to the same period prior year. Diluted headline EPS increased to R1.90 from R1.67 posted in the same period last year, helped by an increase in sugar production. Separately, the company indicated that it expects FY14 EPS and headline EPS to be between flat and 10.0% higher from last year and warned that difficult sugar market conditions would negatively impact FY14 earnings.
• Spar Group: The company, in its results for FY13, stated that its revenue stood at R47.80bn, a 9.7% increase compared to the previous year. Diluted headline EPS jumped 13.9% annually to R6.50.
• MPC: The retailer, in its results for 1H14, reported that its revenue advanced 14.8% to R7.15bn from the comparable period prior year. Diluted headline EPS was 22.0% higher at R2.84, compared to the same period a year ago, driven by strong cash sales gains. Meanwhile, the company plans to open over 40 stores in 2H14.
• CML: The asset management company, in its results for FY13, stated that its revenue climbed to R3.64bn from R1.98bn recorded in the previous year. Diluted headline EPS jumped to R4.16 from R1.98 posted a year ago. However, the company expects a more difficult investment environment in future years.
• VOD: The telecom company, in its results for 1H14, reported that its revenue was 6.6% higher at R36.69bn, compared to the corresponding period prior year. Diluted headline EPS increased to R4.38 from R3.95 posted in the same period last year, boosted by increased data demand and the number of international users.
• LON: The platinum miner, in its results for FY13, stated that its revenue dropped 5.8% annually to $1.52bn. However, it reported a diluted headline EPS of 32.00¢, helped by higher production and improved margins. Separately, in its production report for 4Q13, it reported that platinum sales rose 23.7% to 0.29mn oz, while total platinum metal in concentrate production surged to 0.20mn oz from 0.11mn oz recorded in the corresponding quarter prior year. Palladium, Rhodium and Ruthenium production jumped 83.7%, 94.9% and 79.5%, respectively from a year ago.
• ABL: The banking company, in its FY13 results, indicated that interest income on advances came in at R11.96bn, a 20.6% rise compared to the previous year. However, headline EPS plunged to R0.45 from R3.78 posted a year ago, after writing down its furniture retail unit and a sharp increase in bad loans. Additionally, the company indicated that there is a risk of a further R800.00mn writedown at its Ellerines unit unless December 2013 sales allow the latter to return to profit in 1H14.
• TKG: In its trading statement for 1H14, the company stated that it anticipates basic EPS to be between R5.46 and R5.50 higher, compared to the restated numbers for same period previous year. Headline EPS is expected to be R6.22 and R6.28 higher from the restated numbers posted in the corresponding period a year ago.
• Tongaat Hulett: The company, in its results for 1H14, announced that its revenue stood at R7.85bn, a 6.2% increase compared to the same period prior year. However, diluted headline EPS slipped 1.2% to R5.86 from the previous year.
• Invicta Holdings: In its results for 1H14, the company stated that its revenue jumped to R5.13bn from R3.51bn recorded in the same period prior year. Diluted headline EPS was 17.8% higher at R3.51, compared to a year ago.
• LEW: The retailer, in its results for 1H14, indicated that its revenue grew 4.5% to R2.54bn from the comparable period last year. Diluted headline EPS advanced marginally to R4.17, compared to a year earlier.
• RBX: The company, in its results for 1H14, reported that its revenue jumped 14.6% to R3.22bn from the comparative period last year. However, diluted hEPS slipped marginally to 94.80c.
• Astral Foods: In its FY13 results, the company announced that its revenue increased 4.5% annually to R8.52bn. However, diluted headline EPS tumbled to R4.43 from R7.87 posted a year earlier, hurt by severe losses from its poultry division. Concluded wage negotiations with all its employees and labour unions at an average increase of 5.9%.
• CFR: The retailer, in its results for 1H14, stated that its revenue advanced 4.3% to EUR5.32bn, compared to the corresponding period last year. Diluted EPS rose 9.1% to EUR2.12 from a year earlier. Meanwhile, the company denied that it would sell any of its 20 brands, after its decision to review its brands sparked speculation that it could break up its fashion and leather-goods unit.
• NTC: In its trading statement for FY13, the company stated that it expects EPS to be between 211.0% and 221.0% higher, compared to the previous year. Headline EPS is expected to rise between 40.0% and 50.0% from a year ago.

Damodaran on naive value investing

On Valuation Myths:

"...some value investors rely on approaches for estimating value that are not only outdated, but simplistic. If your measure of value is to apply a constant PE (say 12) to next year’s earnings or to use a stable growth dividend discount model to value equity, you will never find a young, growth company to be a bargain. If you are creative in estimating value, willing to make assumptions about the future, persistent in tracking that value and patient in terms of timing (your buying and selling), there is no reason why you should not find growth companies to be bargains."