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The 5 o' Clock Shadow with Schalk Louw · Strictly Business

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You're listening to Strictly Business Podcast with Lindsay Williams.
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The JSC has closed its doors for another day, so it's time for the 5 o'clock
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shadow.
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And as always on a Wednesday, I speak to Skulk Lowe, Portfolio Manager at PSG
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Wealth Old Oak in Cape Town.
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Start where we would normally end, Skulk.
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What's the all-share index, please?
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Where did it close?
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Oh, JSC, what a day for them.
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But we'll get to that.
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You actually asked me.
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JSC today closed at 1.5.
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5% positive.
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I mean, it was a great bounce back.
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I mean, we opened up slightly positive this morning, and we sort of hoovered,
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hoovered up to that medium-term budget speech.
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Hoovered, yeah.
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Was it negative?
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I mean, with the government reopening, that's optimism,
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that sort of made markets in general
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fairly positive this morning um but i mean as i mentioned to you a little bit earlier
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i mean we i was in a
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another interview it's called lunchtime ish and i had an idea what the what what
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the markets did up
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to that stage you know which companies performed we still had a nice nice chat
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about retailers
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specifically on the back yeah but but it was a general chat uh i mean i'll do some
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name dropping
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with mr mr shapiro And he says, I mean,
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I think it's not for the widows and orphans, and he's not a trader, blah,
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blah, blah, all those disclaimers.
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And then he said, well, but he thinks we should be buying the Foshini Group.
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And he made a valid point.
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That's strange for him because he can't stand retailers.
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Well, he pretty much can't stand the South African economy.
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But he actually mentioned he actually is becoming… more bullish.
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Very good.
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And when you look at, you know, something like the Fushini Group, we quickly had a
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look while we were chatting,
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and we actually realized it's actually true.
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The Fushini Group yesterday closed at levels that we've last seen in the midst,
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in the,
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let's call it that worst-case scenario environment of COVID-19 then to
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2020. So we're not just at...
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12-month lows.
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It's a five-year low is what you're saying.
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It's literally a five-year low.
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So that's the backdrop.
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And when I now looked at markets as it closed, I mean, wow, man.
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And I still have the conversation on ShopRite.
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ShopRite at that stage didn't know if we're going to be positive today or
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negative.
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So it was really fighting to stay positive.
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Closed today at 2%.
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You're up.
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Peter, your Mr.
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Price is 1.62% up.
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In general, it was a really, really solid turnaround for, let's call it the typical
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SA inks.
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And banks, oh, banks, they absolutely loved it as well.
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Okay, we'll come to that in a second.
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So this is a good SA story, and that's aside from commodities, of course.
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And there was good commodities news in the MTBPS medium-term budget policy statement,
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which we'll touch on as well.
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But I want to talk to you about Woolies. And I want you to look back to August,
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what the price of Woolies was back in sort of August, early September time, when it
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was about to be,
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or was announced it would be leaving the MSCI index.
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Have you got that to hand, please, Scott?
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Yes, yes.
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Okay, if you take August, but if you look at, I don't know where you want to get to,
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because that's the same time you had that interview with Vicky, John Bacard.
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And on that stage, let's call it that late July,
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it actually closed at what's wrong about that, let's call it 48, 49 Rand levels.
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So it's rallied about, let's call it 9 to 10 Rand per share,
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which is around between 15 and 20% since the removal from the MSCI,
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which is something that that person that you mentioned touched upon.
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But one other thing, the reason that I...
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called him was because that he believed that the the people were being too
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negative
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towards uh south africa much too negative uh especially uh regarding an article i
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think in the
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wall street journal it may have been in the washington post i don't know but he
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was was bullish and given what we've seen in
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the the mini budget so-called pretty good i i think that everyone was in a pretty
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good mood and in fact the minister did
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say You know, it's very gratifying to see that his opposite number in the
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opposition,
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the shadow finance minister, didn't walk out during the speech.
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So everyone was sort of touchy-feely, very, very happy with each other.
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And bullish for SA, Skolt, can it last?
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Or will it be another government of national unity fizzle-out rally?
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I don't think so.
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I mean, anything can always happen with this GNU, this government of national
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unity.
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But I always say expect the unexpected.
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But I watch the budget speech.
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I felt an optimism that I didn't feel for many years.
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And it wasn't an overly optimism.
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It wasn't something like, oh, wow, we've got so much money.
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It's just going to be beautiful.
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We're going to take over the world.
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Not that type of speech.
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You know what it is?
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I think what you're trying to say is it wasn't horrible.
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No.
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No.
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And it was clear targets.
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We're talking about the debt.
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that still should pick this year.
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And they were fairly firm on that.
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And we should start seeing that the debt levels decrease next year.
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It was no, we should and could and might.
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It was firm.
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We were seeing debt peaking at this fiscal year, decreasing the next fiscal year.
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They were talking about the GDP levels.
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GDP levels, that's, again,
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upgraded our growth for this year and telling us that we should see it in.
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I think the big one was probably the expected one was the inflation numbers.
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But, I mean, we're not going to get into the medium budget speech.
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I know you've got a great interview lined up with 91,
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and they'll sort of look at all the numbers.
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They were pretty happy.
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I don't want to talk behind their back or get into trouble from governance or
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anything like that.
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but the two people that I interviewed were generally...
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sounding a little bit like you without saying it in such a forceful way that you
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always do.
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And that's why we love you, Skunk.
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You wear your heart on your sleeve, especially when it comes to South Africa,
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which is great.
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Okay.
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Yeah.
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Anyway, a good MTBV.
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So you were asking about Willis.
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I think Willis, let's just run through what, because there might be a few of your
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listeners out there that didn't see the
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trading update.
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So turnover up 6.2%.
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It was.
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If you look through the numbers itself,
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I would say it's not something that stood out again as something being mind-blowing.
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Wow, it was like 15 or 20 or whatever.
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It was just solid, solid numbers.
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Even from country roads, I mean, you and I, we've been vocal.
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We've been, you know,
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vocal on just get rid of the rubbish and just split the two companies.
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the food and then the fashion beauty and just it's just but this time around i
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looked through all the
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numbers looked stable i mean country roads up 3.3 percent suddenly things are a
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little bit more
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stable and as
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this gentleman we talked about earlier and and i think he mentioned something back in
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the interview that he
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values the the the the food business within willies I'd run about,
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I think he said 53 or something like that.
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Yes.
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And at that stage, as you mentioned, Woolies was trading at 50 Rand.
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So he said, well, you're pretty much getting the rest of Woolies for free.
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We did some calcs as well.
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We're actually a little bit more optimistic on that.
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We valued the food business around 56 Rand per share.
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And so it's actually a great… great opportunity.
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And I think just add to that, they add a share buyback of 6.9 million.
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So that's about 300 something million rands.
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It's got 350 million rands worth of share buybacks.
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Now, a company usually, you know, I've often said this on this podcast,
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a company that buys back their own shares, that's a very positive sign.
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Well, it's either positive.
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It's positive.
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Of course, it's positive because it reduces the pool.
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But the other thing is they haven't got anything else to do with the money at the
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moment, which sometimes if they keep on buying back,
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people say, wait a second, you've got to deploy this cash, this liquidity
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elsewhere.
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Do something.
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I know what I'd do with Woolies.
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I would take all the different clothing brands and everything and scrap them.
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And I'd have two.
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I'd have Woolies, classic.
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Which is the reasonably priced stuff.
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And I'd have Woolies Select, which is something that the scalp loads of this
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world would go for.
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You see what I mean?
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Yeah.
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No, it's a good idea.
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But be that as it may, it was a wonderful reaction of Mr.
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Marker today.
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I mean, the share price reacted 9% positive.
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And yeah, long may it last for the shareholders.
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I mean, this has been a company.
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That's been under a bit of pressure.
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And it seems like there's a bit of a pickup.
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But again, when I go through the numbers, it didn't look as if…
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The company is struggling, and I think one can extrapolate that again and say, well,
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then South Africa might just be picking up a little bit.
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And this is, again, a clothing, food retailer.
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And if they're picking up, then maybe the rest of the business are picking up as
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well.
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This has been a bit of a rum.
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Yeah, let's hope so.
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Fingers crossed.
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Let's move away from South Africa now.
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We are unreservedly, cautiously bullish.
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There you go.
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Unreservedly, cautiously bullish.
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on South Africa, particularly when you see some of the valuations,
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which if you've got a good company that's going through hard times at the moment,
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and you look back to its COVID numbers, like TFG,
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for example, then have a serious look at it.
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Don't plunge in, but have a serious look at it.
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Now, let's talk about commodities.
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The gold price went to, what did it go to?
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3,000.
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What am I talking about now?
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Where is it now, Scott?
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4,100.
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It went to
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4 400 wasn't that the high very very recently it's
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it i'll i'll bring it up this week 4 398 it went down to very close to 3
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900 so let's call it 4 400 to 3 900 rounding it up and down a
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500 dollar fall it's back now just below 4 200 a natural bounce back in what has
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been a long-term and bull market.
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Do you believe it?
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Yes.
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And some might argue that it's easy now to say, but you've asked me this question, I
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think, two or three weeks ago, and I told you, well,
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I only see this as a bit of profit-taking.
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I still very much believe that the business thesis or the investment thesis
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for being invested in gold is still very much
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intact.
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And I mentioned it, I didn't go and buy the weakness.
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I did not sell.
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So I'm really happy with these levels.
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We've seen two of our gold mines bring out updates yesterday and today.
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Anglo Gold, was it?
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Was Anglo Gold one?
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Yeah.
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Go on.
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Nice move.
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And Goldfields.
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Yeah.
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And Goldfields.
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What was interesting, so firstly, we've seen Anglo Gold yesterday coming out with
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a production report,
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and that production report looked phenomenal.
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I mean, and not just in a sense of...
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The fact that we're going to get to the free cash flow side.
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But I mean, this is typically what you want to see a gold mine do.
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They mined 682,000 ounces exactly a year ago in that quarter.
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And this, let's call it Q3 2025, they mined
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768,000 ounces of gold.
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That's a big move.
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17% up.
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17% up.
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That's just… Literally,
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that's just extra gold being mined in this quarter.
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That's exactly what you want to see a gold mine do when the gold price goes from
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$3,000 to $4,000.
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That's exactly what you want to see.
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And you and I have had this conversation as well.
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These gold mines are printing money.
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I mean, the amount of free cash flow that they've got is just phenomenal.
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So we've often said somewhere along the line,
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either we're going to see a string of acquisition announcements
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because effectively when you've got this amount of cash, similar to what you just
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said on the Woolies scenario,
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you either need to go and do transactions or you need to give the money back.
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Give the money back to the shareholders in forms of dividends.
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And they've made the announcement today that they...
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they can change the dividend policy.
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It's more a quarterly structure now, but more specifically, they're going to look
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at paying 50%
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of the free cash flow.
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Compared to yesterday, Goldfield is also giving a positive update,
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but they mentioned they're going to pay back 35% of the free cash flow.
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Tell me about the margins.
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This is what really gets me excited.
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Can you quickly give me...
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the margin they've gone from 683 000 ounces in the quarter uh the last year up
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to 700 and whatever you said yes
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tell me about the margins give it to me easy what did it cost them to get it out
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the ground and i'll have a look at the price today
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i love that okay let's let's let's use let's use agro gold because that's that's
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the the biggie for today man uh the
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movement that we've seen in angler gold let's give the end first you know five and
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a half percent up today you know while gold
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fields were down.
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So that's an interesting point.
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And I think, no, it's not strange.
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It's when the market says, well, the one company is going to give me 50% of the
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free cash flow.
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The other one is going to give me 35% of the free cash flow.
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That's a good enough reason.
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No, it's economics 101.
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But also, I mean, they did produce way more gold than gold fields over the same
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time.
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But yeah, I mean, you asked for it.
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So, so Angelo Gold mentioned.
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They've got two things.
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They've got the all-in sustainable cost and the all-in cost and all-withstandable
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cost.
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All-in sustainable cost for this period.
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Yes.
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$1,720 per hour.
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$1,700 versus its current price of, let's call it, $4,200.
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They're printing money, Skulk.
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They must get more out the ground, and they must make hay while this golden sun
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shines.
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That's it.
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That's it.
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And they're doing it.
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I mean, we know they're doing it.
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That's what they said they're doing.
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They've produced 17% more gold compared to one year ago.
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So, yeah, this is just a phenomenal story.
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And, you know, like I said, I think we're going to read more and more.
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It's going to be a topic which we're going to be discussing quite a bit in the next,
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let's call it, 6 to 12 months.
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Because I think we're going to see the results.
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I still firmly believe the gold price is going to remain stable at these levels.
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And then you're going to see some solid, solid set of returns.
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Not just results, not just only from Anglo Gold and Goldfields, but also, you know,
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the… The other, the Harmonies, the Durban Ruedepo,
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the Pan African, even Sabania's still water now.
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You know, 50% of the EBITDA now being made up of gold.
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So, yeah, it's really, really good news.
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Good news on the RAND now, because the dollar RAND is 17.09.
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That's a 0.4% fall for the US dollar.
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British pound against the RAND is 22.42.
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Euro RAND is 19.80 euro dollar.
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1.1585, more or less unchanged,
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but the dollar under pressure again after a period of strength, a little bit under
17:26
pressure anyway.
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British pound against the US dollar, 1.3120.
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Let's have a look at those commodities now with the gold price at 41.82, up one and a
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third percent or $56 an ounce.
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The platinum price is up $40 an ounce or two and a half percent to 16.39 and
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palladium 15.02,
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which is a near 2% gain.
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Not such good news on other commodities that are important to South Africa.
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And this is a good news commodity day for the Republic, because looking at crude
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oil,
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West Texas down 3.5% to 58.91.
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Yes, please.
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And Brent crude oil, $63.16, down 3.1%.
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The all-important copper price having a really good day as well, up 1.3%
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to $5.12 per pound.
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That's on the COMEX in New York Commodity Exchange.
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New York.
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I'll start putting the London Metal Exchange price in as well, which is
18:22
dollars per tonne, but not at the moment.
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Right, let's have a look at the South African bond market after the MTBPS.
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Oh, goodness me.
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Look at this thing.
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8.66 for the
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10-year. 15 basis points better from 8.81 on the closed yesterday to 8.66.
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It's having a lovely day.
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And the long end of the curve is 20 basis points better, you know, the 30-year, etc.
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The US bond market,
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we spoke two weeks ago and I said I thought we should be buying the yield,
18:53
selling the bond market at 4%.
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It went to about 4.16, 4.17.
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I was feeling good about it.
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Still in profit.
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4.06 and a half now, the US 10-year.
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S&P 500 futures.
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Someone said that the bubble might burst a couple of weeks, about 10 days ago or
19:11
something, and we had a bit of a wobble.
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Not so now.
19:15
Steady on the S&P futures for December 6872.
19:18
Can you believe what you're hearing there?
19:20
And Bitcoin is the final one.
19:22
Bitcoin was looking horrible.
19:24
It actually broke 100,000 for a while, went up to 107.
19:28
Now, 102.610.
19:30
It looks as though it's sell the rallies, this one.
19:33
Don't you think?
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I mean, we don't talk about crypto much, Skulk.
19:37
But watching the action of Bitcoin, it doesn't look good to me.
19:41
Now, I guess I'm not a Bitcoin follower,
19:44
so I'm not even going to try and I just remember it went to that let's go
19:50
120,000, went below the 100,000.
19:52
And it just you would have thought if the gold price now moving back to that
19:58
4,100, 4,000,
20:01
you would have most probably seen the let's call it the newer version of gold,
20:07
which it's been called a lot of times.
20:10
No.
20:10
Yeah.
20:11
Bitcoin moving in the same direction, but it's not.
20:13
It's struggling to keep its head above that $100,000 per Bitcoin mark.
20:18
So yeah, interesting movements there.
20:20
It is, yeah.
20:20
It really does look like sell the rallies.
20:22
I don't know anything about it either.
20:23
I just watch the price movements and look at the graphs, and it's not behaving well.
20:27
It's a sick market, as people used to say.
20:29
Right, that's it.
20:30
Scott, let's have a look at the ups and downs on the JSC.
20:33
You start today, please.
20:35
Okay, so just for interest, you actually mentioned an interesting thing.
20:39
uh uh Yeah, the oil retraced today.
20:43
And also we've mentioned the strong rally and the rand as well.
20:47
So immediately you would have thought rand stronger.
20:51
Well, no.
20:52
Cecil down.
20:54
But it wasn't.
20:55
I mean, it was sort of a general optimism on South African stocks.
20:59
Nice.
21:00
And that was up to something like 2.2% for the day.
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But you were asking the winners and losers.
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Let's concentrate on the winners.
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Willys, naturally, the big winner for today.
21:08
I mentioned it earlier, 8.7% up.
21:11
Another company that I actually love, it's a little small company called Udeco.
21:16
That was up 5.5% for today.
21:19
And then you had Anglo Gold, 5.5%.
21:22
Momentum, that was up 5.1%.
21:26
Redefine was up 5%.
21:28
So it was a good day and a bit of a mixed bag.
21:32
It's not something that's been dominated by gold stocks or platinum stocks.
21:36
It's quite a bit of a mixed bag.
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There's some gold in there.
21:40
There's some retailers and property stocks and some general industrial companies.
21:44
So that's a good sign.
21:45
Let's look at the downside.
21:49
We've had MTN, that actually dropped 2.3%.
21:53
Blue telecoms, that was down a further 2.2%.
21:57
With Suntum, interesting enough, that was down 1.5%.
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And then, what is it, Bytes Technologies, 1.2%.
22:07
Interesting enough, just outside the top five,
22:13
we actually had the JSE.
22:15
you would have thought on a day like today we spoke about it didn't we we spoke about
22:22
the JSC limited what's been going on there has it been
22:24
quietly doing its thing yeah we again me and David had a
22:29
conversation today on that and
22:31
we were sort of in agreeing that the JSC is a company you can actually have
22:38
a look at I'm not invested so let's just get the T's and C's out of there I'm not
22:44
invested but But you and I,
22:46
we've been following this daily trade.
22:48
And I'm going to mention the daily trade a little bit earlier again.
22:49
But you remember, you and I had this conversation, I think, beginning of last
22:53
year.
22:53
So it's about, let's just show off two years ago.
22:57
And we said that period between 2016, 2000, it was called 18, 19-ish,
23:04
we had an average daily trade of about $220 billion per day.
23:09
And on that stage, it's beginning of last year.
23:12
We struggled, you remember, we struggled to make a 20 billion.
23:17
Yeah, we were going 15, 17 most days, wasn't it?
23:19
Exactly, exactly.
23:21
And then it turned around and lately, I mean, we're doing easily, you know,
23:27
on a daily basis, we're doing, you know, close to 30 billion.
23:31
And then you said, well, let's look at the share price.
23:33
And it was quite disappointing to see.
23:36
So, I mean, I would just say this is an interesting one to be monitoring.
23:42
You're keeping me hanging here.
23:44
Let's hear the numbers, please.
23:46
The share price.
23:47
What has it done?
23:48
Give it to me.
23:49
Down 1%.
23:51
In a market that has been bullish.
23:54
I mean, the JSE all share really been running,
23:58
but the JSE actual share price down 1%.
24:02
Again, just maybe something to monitor.
24:04
We've heard today Fidelity Security, a Volvon's company,
24:08
they are planning to have an IPO.
24:12
on this company we've recently had optasia um there's going to be celci being listed
24:19
so there's
24:21
a few few new companies coming towards the the jse plus looking at volumes in general
24:26
picking up i
24:28
mean just maybe just maybe make a note let you and i we we're gonna we're gonna mark
24:32
this jc kind of trading at
24:34
135 round levels We're going to check this again.
24:37
Ask that Shapiro fellow next time you see him next week when you're on telly
24:41
together.
24:41
Just say, listen, when's your competition starting?
24:44
Because Lindsay and I are going to put the JSC Limited in your new competition.
24:50
Well, I am anyway.
24:51
Give us the indices, please.
24:53
All good news, I hope.
24:54
And also, tell me what the Platinums did, because we haven't mentioned them.
24:57
Please go ahead.
24:59
Okay, let's quickly have a look here.
25:02
yeah well i know sebastian stillwater had a whopper but actually that's that's
25:08
that's that's that's some some gold as well
25:10
uh impala platinum that was up 2.2 percent um northern platinum that was up
25:14
3.04 percent uh
25:17
if we look at volterra volterra 2.91 percent and as i mentioned um and
25:24
sebastian stillwater up 3.4
25:26
percent so pgm's rocking rocking the jse for sure um Talking about the JSC, I mean,
25:30
as you mentioned earlier, the JSC closed the day at 112,908 points.
25:35
That was up 1.55%.
25:38
Being led by the resource index, that was up 2.2%, slightly followed by the
25:45
financial index.
25:47
That was up just over 2%.
25:49
The asset property index, that was, let's call it fourth in line, third in line.
25:51
That was 1.6% up.
25:54
And industrials.
25:56
Maybe just struggling a bit with the stronger RAND.
25:59
That was up 0.87% for today.
26:03
And now the value traded, as mentioned, again, today, another 25 billion traded
26:09
through the market.
26:11
So, yeah, positive all in all.
26:13
Very good indeed, Skulk.
26:15
Thanks very much.
26:17
I've kept you late, but it was well worth it.
26:19
A really, really good day all around.
26:21
Everything came to the party.
26:23
Skulk, though, is a portfolio manager at PSG Wealth Old Oak in Cape Town.
26:24
And that was the 5 o'clock shadow.
26:26
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26:32
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