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We take a look at the Johannesburg Stock Exchange (JSE) trading statistics for the week ending 31 January 2020 and compare the numbers to that of a year ago. The last week's trading results shows the impact fears regarding the Coronavirus has on emerging markets such as South Africa
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Our highlight over the last week
End of last week struggling South African petrochemical giant SASOL release a trading statement which did not go down with shareholders. Below an extract of that trading statement
Trading Statement for the financial half year ended 31 December 2019
Sasol is expected to deliver a satisfactory set of operational results for the six months ended 31 December 2019, with a good volume, cost and working capital performance. The financial results were however impacted by a weak macroeconomic environment. This resulted in lower margins and operating profit.
Adjusted earnings before interest, tax, depreciation and amortisation (Adjusted EBITDA*) are expected to decline by between 22% and 32% from R26,8 billion in the prior half year. This results from a 9% decrease in the rand per barrel price of Brent crude oil, softer global chemical and refining margins and a negative EBITDA contribution from the Lake Charles Chemicals Project (LCCP). As the LCCP units progress through the sequential beneficial operation schedule, the costs associated with the relevant units are expensed while the gross margin contribution follows the planned volume ramp-up profile and inventory build. Earnings are further impacted by approximately R1,7 billion in additional depreciation charges and approximately R2 billion in finance charges for financial half year 2020 as the LCCP units reach beneficial operation.
Shareholders are accordingly advised that: -
Earnings per share (EPS) for the financial half year are expected to be between R5,37 and R7,76 per share. This is a decrease of between 68% and 78% from the prior half year EPS of R23,92;
- Headline earnings per share (HEPS) are expected to be between R4,79 and R7,11 per share. This is a decrease of between 69% and 79% from the prior half year HEPS of R23,25. There were no significant impairments recorded for the half year 2020;
- Core HEPS (CHEPS**) are expected to be between R7,90 and R10,04 per share. This is a decrease of between 53% and 63% from the prior half year CHEPS of R21,45.
We expect net debt to EBITDA to remain below 3,0 times and gearing to remain within the previous market guidance of 55% and 65% for financial half year 2020.
Lake Charles Chemicals Project update
Sasol provided an update on the impact of the explosion and fire at the low-density polyethylene (LDPE) unit on 24 January 2020. Mainly as a result of the aforementioned incident, Sasol has revised its guidance on the EBITDA contribution from the LCCP for the financial year 2020 to between US$50 million and US$100 million.
Read the full article here
Trading Statement for the financial half year ended 31 December 2019
Sasol is expected to deliver a satisfactory set of operational results for the six months ended 31 December 2019, with a good volume, cost and working capital performance. The financial results were however impacted by a weak macroeconomic environment. This resulted in lower margins and operating profit.
Adjusted earnings before interest, tax, depreciation and amortisation (Adjusted EBITDA*) are expected to decline by between 22% and 32% from R26,8 billion in the prior half year. This results from a 9% decrease in the rand per barrel price of Brent crude oil, softer global chemical and refining margins and a negative EBITDA contribution from the Lake Charles Chemicals Project (LCCP). As the LCCP units progress through the sequential beneficial operation schedule, the costs associated with the relevant units are expensed while the gross margin contribution follows the planned volume ramp-up profile and inventory build. Earnings are further impacted by approximately R1,7 billion in additional depreciation charges and approximately R2 billion in finance charges for financial half year 2020 as the LCCP units reach beneficial operation.
Shareholders are accordingly advised that: -
Earnings per share (EPS) for the financial half year are expected to be between R5,37 and R7,76 per share. This is a decrease of between 68% and 78% from the prior half year EPS of R23,92;
- Headline earnings per share (HEPS) are expected to be between R4,79 and R7,11 per share. This is a decrease of between 69% and 79% from the prior half year HEPS of R23,25. There were no significant impairments recorded for the half year 2020;
- Core HEPS (CHEPS**) are expected to be between R7,90 and R10,04 per share. This is a decrease of between 53% and 63% from the prior half year CHEPS of R21,45.
We expect net debt to EBITDA to remain below 3,0 times and gearing to remain within the previous market guidance of 55% and 65% for financial half year 2020.
Lake Charles Chemicals Project update
Sasol provided an update on the impact of the explosion and fire at the low-density polyethylene (LDPE) unit on 24 January 2020. Mainly as a result of the aforementioned incident, Sasol has revised its guidance on the EBITDA contribution from the LCCP for the financial year 2020 to between US$50 million and US$100 million.
Read the full article here
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JSE Trading Statistics for the week ending 31 January 2020
Number of trades:
Number of trades (2020): 1 427 761
Number of trades (2019): 1 571 492
% change year on year: -9.15%
Volume traded:
Volume traded (2020): 1 574 803 000
Volume of traded (2019): 1 712 054 000
% change year on year: -8.02%
Value of trades:
Value of trades (2020): R92 277 875 000
Value of trades (2019): R111 009 716 000
% change year on year: -16.87%
Foreign purchase/selling:
Net sales/Purchases (2020): -R6 524 229 000
Net sales/Purchases (2019): -R618 812 000
So year to date (YTD) foreigners have been net seller/buyers:
Net sales/Purchases (2020): -R8.271 billion
Net sales/Purchases (2019): -R14.788 billion
So a year ago foreigners were net sellers of SA listed shares to the value of -R14.778 billion for the YTD while this year they have been net sellers to the tune of -R8.271 billion in the year to date (YTD). While the numbers for this is year is a lot better than the previous year the fact is that foreigners remain net sellers of SA listed stocks and they have been for most of 2019, 2018 and 2017. However the strong sell off of SA listed shares by foreigners during the last week was mainly driven by fears around the Coronavirus and the impact it will have on China's growth and the demand for resources by China from emerging markets such as South Africa and the impact this will have on growth in South Africa and earnings of SA listed firms,
However the above still shows that foreign capital is still leaving South African equities in vast amounts. This while the South African government continues to try and convince investors that South Africa is open for business. But the large scale corruption, poor government service delivery, slow economic growth, restrictive labour laws, worries about property rights, crime and general public disorder in the forms of strikes and looting are keeping potential investors away from South Africa.
JSE total market capitalisation:
Market Cap (2020): R17.389 trillion
Market Cap (2019): R12.972 trillion
% change year on year: 34.05%
So as shown in the JSE total market capitalisation above, the value of the overall market capitalisation of the stocks listed on the JSE has increased significantly over the course of the last 12 months.
See our JSE Calendar tracker for more.
Key issues for the market and South Africa during 2020 will be:
Number of trades (2020): 1 427 761
Number of trades (2019): 1 571 492
% change year on year: -9.15%
Volume traded:
Volume traded (2020): 1 574 803 000
Volume of traded (2019): 1 712 054 000
% change year on year: -8.02%
Value of trades:
Value of trades (2020): R92 277 875 000
Value of trades (2019): R111 009 716 000
% change year on year: -16.87%
Foreign purchase/selling:
Net sales/Purchases (2020): -R6 524 229 000
Net sales/Purchases (2019): -R618 812 000
So year to date (YTD) foreigners have been net seller/buyers:
Net sales/Purchases (2020): -R8.271 billion
Net sales/Purchases (2019): -R14.788 billion
So a year ago foreigners were net sellers of SA listed shares to the value of -R14.778 billion for the YTD while this year they have been net sellers to the tune of -R8.271 billion in the year to date (YTD). While the numbers for this is year is a lot better than the previous year the fact is that foreigners remain net sellers of SA listed stocks and they have been for most of 2019, 2018 and 2017. However the strong sell off of SA listed shares by foreigners during the last week was mainly driven by fears around the Coronavirus and the impact it will have on China's growth and the demand for resources by China from emerging markets such as South Africa and the impact this will have on growth in South Africa and earnings of SA listed firms,
However the above still shows that foreign capital is still leaving South African equities in vast amounts. This while the South African government continues to try and convince investors that South Africa is open for business. But the large scale corruption, poor government service delivery, slow economic growth, restrictive labour laws, worries about property rights, crime and general public disorder in the forms of strikes and looting are keeping potential investors away from South Africa.
JSE total market capitalisation:
Market Cap (2020): R17.389 trillion
Market Cap (2019): R12.972 trillion
% change year on year: 34.05%
So as shown in the JSE total market capitalisation above, the value of the overall market capitalisation of the stocks listed on the JSE has increased significantly over the course of the last 12 months.
See our JSE Calendar tracker for more.
Key issues for the market and South Africa during 2020 will be:
- Exchange Rate (seems to be see sawing a lot. See our exchange rate page)
- Coronavirus and the impact it will have on Chinese demand for resources from South African commodity firms
- The impact of the two 25 bp cut announced by the South African Reserve Bank (SARB) monetary policy committee towards the end of 2019 and early 2020 and the impact will have on the Rand as well as the South African economy on the medium to long term. Additional interest rate cuts are now being discussed considering the muted inflation numbers published by Statistics South Africa yesterday and discussed earlier in this article
- ESKOM's financial woes and continued loadshedding and weaker than expected tax collections is forcing government to borrow more money, which is negatively affecting the South African exchange rate, and potential credit rating cuts coming for South Africa's government which pushes up the cost of borrowing, and this at a time when government is borrowing more and more
- Expropriation of land without compensation (EWC) has gone quiet in recent months but we are sure the EFF will bring it up again soon to get some airtime
- Potential expansionary monetary policy coming considering the very weak economic growth numbers
- Sluggish economic growth. See our SA GDP page and high levels of unemployment
- Additional tax increases that will likely be announced in the budget speech and how it will affect South African consumers spending patterns and potentially increase inflation levels as taxes were increased by rates higher than inflation. In particular lack of bracket creep relief and higher sin taxes, fuel levies and road accident fund levies will hurt consumers.