Star 2023-03-14

JSE-LISTED financial services group Absa, which raised dividends for the full year to December by more than 60%, warned yesterday that worse was still to come for the economy, which it projected would grow by less than 1% this year. The bank sees load shedding worse- ning and impairments intensifying in the year ahead. Impairments have worsened for South African banks such as Standard Bank and Absa in the past year, given tougher macro-economic conditions in the home market and in the region, where countries such as Ghana struggle with sovereign credit risks. Despite anticipating revenue growth in 2023, building on the R98.9 billion revenue for 2022, which was 15% stronger on the prior year, Absa is expecting “credit losses at the top end of its target range given…

MTN GROUP’S shares plunged more than 12% at some stage yesterday as its management team downgraded its margin guidance on its South African business. Its chief executive, Ralph Mupita, warned that if South Africa did not act to solve its problems it would become a failed nation. MTN shares closed the day 10.68% lower at R126.24, despite the diversified telcoms group reporting strong annuals for the year ended December 31, 2022, and saying it planned to spend R9 billion on its South African network. MTN revised its targeted core profit margin guidance for South Africa down to 37% from 39%, from 39% to 42% previously, due to higher-than-expected power costs, increased hubs and switches costs as a result of load shedding, higher network security and resilience costs, as well…

SOUTH African stocks traded lower for the fifth consecutive day yesterday, weighed down by choppy global risk sentiment and domestic weak economic outcomes triggered by intensified load shedding. The JSE All Share Index fell by 1.7% to more than a two-month low of 75 126 points, the fifth consecutive session of losses in line with major bourses. Contagion fears in the financial sector remain after US authorities stepped in to cap the fallout from the sudden collapse of Silicon Valley Bank (SVB), while traders reduced bets that the Federal Reserve will take a less aggressive monetary path. SVB is the largest US bank to have failed in over a decade. Its collapse added to worries that the already tighter lending environment and the upwards interest rate cycle could cause…

SHARES of The Foschini Group (TFG) dropped by almost 9% yesterday after the clothing retailer said it estimated that load shedding had reduced its TFG Africa’s retail turnover by approximately R1 billion in the 2023 financial year. The share price tumbled 8.88% to an intraday low of R85.62, but recovered to close 4.10% down to close at R90.12. In its trading update for the year ended March 31, 2023, the group said TFG Africa had lost about 120 000 trading hours during the two-month period due to continued load shedding across all provinces in South Africa, which represented 9.4 times the lost trading hours over the same period in the previous financial year. This equated to 345 000 lost trading hours for the 11 months ended…

AYO Technology Solutions’ (AYO) partnership with British Telecom South Africa (BTSA), and their different interpretations of the agreement between them in 2017, fell under the spotlight on the third day of the Public Investment Corporations’ (PIC) legal action against AYO yesterday. The PIC, the state-owned asset manager that invests mainly the Government Employee Pension Scheme funds, is attempting through the Western Cape High Court to recover about R4.3 billion it invested for a 29% stake in AYO, as part of a private placement prior to AYO listing on the JSE in December 2017. The PIC led the evidence about the BTSA relationship through most of yesterday, about the transfer of customers and shareholdings between the parties, as it sought to prove that AYO had overstated its relationship with BTSA, thereby…

SHARES in Sun International leapt more than 7% yesterday after it reported that while load shedding had impacted its costs, it had seen a strong recovery in its resorts and hotels business last year after Covid-19 restrictions were eased. Its shares closed 3.96% up at R34.40 on the JSE yesterday.. For the year ended December 31, 2022, the casino, gaming and hotel group said due to consumers going out and gambling, adjusted headline earnings grew from R110 million to R1.1 billion, with adjusted headline earnings growing from 44 cents per share in the prior year to adjusted headline earnings of 439c per share. The group reported earnings before interest, taxes, depreciation and amortisation (Ebidta) grew by 96% to R3.3 billion. The board declared a final gross…