Eskom Loadshedding Monitor – May 2024
Key message: Higher planned maintenance through summer has improved the coal fleet performance. Lower unplanned outages have improved the loadshedding outlook.
Key message: Higher planned maintenance through summer has improved the coal fleet performance. Lower unplanned outages have improved the loadshedding outlook.
Key message: If the Steel Master Plan was followed as agreed by the parties involved, AMSA’s Newcastle plant would probably not have to close. This is a pattern for government – often sensible policy completely ignored.
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Key message: Outperformance in CY21 was driven by a general rapid recovery from the Covid lockdowns, with margins in particular recovering strongly as costs were cut. Activity levels are mostly still short of pre-Covid levels. We believe that the Mid Cap industrials still offer value relative to some of the larger companies.
A Deep Dive In this presentation we have an in-depth look at the South African Cement industry (including aggregates and ready-mix). Download presentation here
ADvTECH announced a solid 1H21 result with a 31% rise in normalised HEPS and a resumption of dividends (19c DPS). After six years of investment the company has slowed down capex spend and is focusing on increasing the utilisation rates of its schools. This is positively impacting margins, reducing debt and increasing free cash flow. Its Africa schools are for the first time positively contributing to EBIT and are poised for strong earnings growth. We see strong demand for private schooling and tertiary education in SA as the public sector offering is placed under huge strain and affordability gaps between ADvTECH and the public sector has narrowed considerably. We forecast 23% and 18% HEPS growth in FY21E and FY22E. We calculate a fair value range of R17.67-23.13/share.
Key message: It is clear that either significantly higher tariffs (politically sensitive) or debt relief is required for Eskom to become sustainable. The IPP program is starting the shift to green energy (good) but the financial burden (on top of paying off Medupi and Kusile) is high (bad). Concessional green finance could help ease these issues.
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Key message: NAAMSA has changed the way they report new vehicle sales by brand. Passenger and Light Commercial Vehicles are now grouped together. We have adjusted our tables and charts accordingly.