Stock Watch - 11 May 2026

Added: 2026-05-11

[00:00:09][music] Welcome to Stock Watch with me, Ray Whitewood. Joining me to unpack your stock related questions today are Kiara Bilwe Nyana from Prime XBT and also Graeme Kerner from the Kerner Perspective. Be sure to send your question through via email to stockwatch atbdtv.co.za, via SMS on 4139 or on x at business8v using the hash stockwatch. Gentlemen, hi, good to be with you once again on this lovely Monday. Well, not so lovely because the Middle East once again Kiara Bilway is not working out so well and Trump has given them Iran the big thumbs down. So what's this doing for markets now? What's your take?

[00:00:58]>> Yeah, I know it's the ceasefire where people keep on firing at each other. And I think what what I'm looking at right now is just the difference in the ledger. And what I mean by that is the fi the world's financial ledger versus its energy ledger. And it's it seems like it's stacking up on one of the sides, which is the financial side.

[00:01:16]Because when you look at asset prices across the globe, specifically in the US, they're just stacking up like nothing is going wrong in the economy.

[00:01:25]And when we go back to the the the oil embargo in 1973 when just 5% of the world's oil was actually choked out, the the the preceding years were followed by bad recessions. So right now, is the market discounting the fact that the the Middle East war is going to end very quickly and that we're going to sneak out of a recession or it's just betting on the market and and it's just one big casino. It's hard to tell right now, Ray.

[00:01:51]>> Yeah, I mean Graeme, if you have a look at the oil share today, it's been down.

[00:01:56]Not dramatically. It has been down.

[00:01:58]We've had good results from quite a few today. I don't know. I I think maybe Graeme, the markets are starting to factor this all in actually.

[00:02:07]Yeah, I I think Ray, my what I'm battling with is is the age-old saying in the markets that markets hate uncertainty more than bad news. At the moment, we've really just got uncertainty. And I think the point that was just made is exactly right. It's as though the market's looking through this and saying it's going to be short and sharp and it's not going to have any material impact on growth. Um, but I'm not entirely sure that that's right.

[00:02:30]We've obviously had the Fed saying, you know, that they they won't respond, you know, uh, too aggressively against cost push in inflation. But the reality is, I think, um, the only thing that's really boying world markets right now has been spectacular earnings out of the US particularly. Um I think generally you know way way better than the market expected driven principally by by the technology cluster but uh generally the S&P 500 with almost everybody having well the by far the bulk of the market having reported we've got you know spectacular earnings growth much better than expected. Um yeah, so I think the market's got its tail up and and even elsewhere in the world, I think on average in Europe, we're looking at almost 10% uh earnings growth for for the year ending December 26. So for me, Ry, that's kind of what's what's dominating and the market sort of saying, well, the US is clearly looking for an offramp. The Trump administration doesn't want this war to continue for very long and that they will find a way out of it. But you know giving them you know uh the double thumbs down doesn't really you know promote the agenda of the of the offramp. So I think I I tend to agree. I think markets generally are a little bit calm about what's actually still a very difficult situation. And even if we get the straight opening tomorrow, you know, it's not going to you're not going to see diesel prices in South Africa and jet fuel prices come down in a hurry. Um you this will remain and and and I think that for me is the the key thing. The market's going to be a little bit too uh calm about this.

[00:04:06]>> Yeah. I mean Kuw I I I flew on on Friday, I think it was. I was off to Cape Town. Those prices are high. They really are high. This is not good for us. Is it not good whatsoever?

[00:04:20]>> It's not good at all. I mean, people are one thing about the price elasticity of demand is the moment the moment price go up too quickly, you'll start seeing the demand come down. and looking at what Discovery and Shaw has said about actually the higher oil prices have actually led to people driving less cuz when they did a survey amongst their clients and they're looking at the spending habits on on fuel, they just realize that people are just driving less. And that's what what's going to happen. And that's the second round effect on destruction demand because the more women people start driving less or cutting down elsewhere in order not to consume other goods, it's still going to come trickling down into the earnings. I mean right now earnings are great but they they historical earnings they I don't think they take into account what's going to happen in the future and people having to tighten their belts is really going to come and affect a lot of companies specifically on our JSE even though some of them make money offshore but I think it's going to be very catastrophic for for for the next round of earnings I think for some of our counters especially the marginal counters where they're just on the line between uh a loss and profit.

[00:05:32]>> Yeah, absolutely. You're right. We've got so many emails about that, but I think we've covered that. Now, here's one questions about Vodiccom and of course the results came out today. They look really rosy. They do. Shelley says, "Good results, but where do I invest?"

[00:05:48]And she lists them all. Vodiccom, CLC, MTN, Telkom. Where do you go with this?

[00:05:53]Because they all seem to have something special. Graeme, perhaps you want to tackle that one.

[00:05:59]Yeah, look, I think the results were good. I think um you know, mainly Egypt and one or two other geographies baying it. Um Ry, for me the the problem is long-term they particularly for those that have significant African operations, you think mainly about MTN and and increasingly um obviously Vodiccom, less so obviously CLC. The the reality of it is it's it's kind of a you saw it with MTN before in Nigeria. they are a they are a target. They are you know in in some geographies the single biggest taxpayers. So you know that you always get the feeling that they're at risk from from you know let's say uh budget balancing governments. Um but for me the the the concern is more fundamental and and you're seeing for example an explosion in data but prices are coming down. Um and you know how many people still phone on on a traditional line? Everybody's now using WhatsApp and you can do that through free Wi-Fi in a lot of places. So for me, I'm just not sure where the growth is going to going to come from and never mind the growth, just just actually holding on to the voice um and and data revenues that they've got. So for me, I I I don't see any of them, frankly, as really good long-term players. And and that's the first thing that we do when we look to invest. We say, is this a business we want to hold 5 years from now? And I can see a lot of disruption coming for uh for this the South African and the African um network operators. So I personally wouldn't play in any of them. I think um it's uh it's an industry that I think is going to see a lot of disruption and and their lunch stolen quite frankly.

[00:07:39]>> Okay. All right. Kiara Bilo their lunch beans stolen. Would you rather than go for a cell their results a while back?

[00:07:47]Fantastic. They're looking really good.

[00:07:50]they not in Egypt or elsewhere. Your thoughts?

[00:07:54]>> I think uh Grim is right. The the industry is ex growth, but I think there are some better players within the the the the top four. I don't like the companies like Salia and Telkom which exclusively operates in South Africa because if you look across all the earnings from all these from all the businesses, they're complaining about South African a lack of growth in South Africa. So it's it's a regulated utility which essentially no one really wants to pay for like Graeme said. But I think with with Vodiccom's results I think what was quite interesting with it is that they had some once- off effects I think in Ethiopia and as well as the east of Africa. But what really buoyed the results was a a a strong Egyptian pound and then you you add the fact that they contributed to that as well as >> Oh, we we losing you a little bit there at the moment. Hold on. We we're losing you a little bit. In fact, I'm going to let Graham just pick up the conversation on that while we just wiggle some wires or something over there. I suppose and Graeme, you were right in what you said.

[00:08:57]There is a lot of risk that goes with this. Not so much in Egypt, more so in what you've seen with MTN in Nigeria.

[00:09:04]And I suppose, yeah, you do have to be careful.

[00:09:08]>> Yeah. Look, I think the the the reality for me, Ray, is you can't be invested everywhere. U you know, paradoxically, for a long time, we were invested in into rain, which we thought was kind of the disruptor, but they too it'll be a case one day of Caesar is dead long of Caesar. Um, so you know, for me, you you you unless there's a compelling case to really invest in something, you sort of say, well, I'm not going to be there because I think it could be okay for a year or two. Well, I'm going to I'm going to pick the the least bad of the sector because I I I want to be there and the sector is running. So yeah, for me it's just really when when you say there's risk and uncertainty and and and you you you worry about a day when when Starlink starts operating in Africa, you know, against that backdrop, you ask yourself, well, do I really want to be there? Um shortterm, it looks great. The earnings are looking fantastic out of MGM. In fact, all of them. Um, arguably CLC has maybe got a bit of runway ahead, but yeah, if if if it doesn't sort of tick the investment grade box for me, I I sort of did not proceed. It's as simple as that.

[00:10:14]>> Yeah. Right, Kiara Bilway, let's test those wires once again. You were telling us about you're kind of agreeing with Graham. Let's uh I don't know. It's such a difficult one.

[00:10:27]>> It's it's really a difficult one and and it's hard to stay out of it. Uh because they're doing well. I mean most MTN is such a high beta play. You're just betting on Africa and all the risky environments that they operate in. But what I really find quite interesting is is the fintech divisions. I mean you see uh you're seeing u Vodiccom investing more into Safari and taking a sizable stake there and they say that if the investment pans out they may increase their stake and you're seeing the amount what Safari is doing on the ground. I mean, I I remember dealing with a project where Safariccom was bringing equity investing closer for its cell phone customers, integrating equity investing into its into its network.

[00:11:11]It's a payment solution. You go to look at MTN Momo as well, the fintech division, it's almost valued at 100 to 120 billion rand alone. So, I mean, I think they are reforming and repurposing their business for for for the financial revolution. But I I I think you stick to Vodiccom. The other three for me are too risky.

[00:11:32]>> All right, we have a few emails that have come through. Some peewware is asking with AI becoming the big thing across markets and Amazon benefiting from this. Is the Amazon stock worth still buying? And I think Graeme those are one of the that is one of the big concerns is when a stock is high because they're strong, will they grow more? So Graeme, >> well I think you've got to ask yourself what what is Amazon and we all know them as the online shopping portal but you know if you look at their web services business it's a that's a giant. So you know in a way the you know the hyperscalers um are participants in the AI spending boom but they are long-term beneficiaries of it as well. So um I think Amazon stands well placed to benefit from that. For me Ry it comes down to to price. So I would say that Amazon is very much investment grade if you look at them over the next few years. Um you know you're going to get decent earnings growth but you know it's not it's it's probably not the the 35% or 30%. So then you ask yourself what multiple am I am I prepared to pay and if you say right I'm happy to pay a 20 or 25 or a 28 or whatever you frankly you're coming down to the current share price almost reflecting those sort of valuations they say mid t mid20s to to late 20s so I think it's a great business but it it's run with all the AI beneficiaries so um you know it's not a case of you just buy the narrative the price you pay as I always say is really important so great business along with businesses like Microsoft and Alphabet, but you got to be very aware of the price you pay particularly because world well US markets are in record territory and they are riding the wave of of this AI, you know, wave. So I I think a little bit of caution is is maybe not un unwarranted.

[00:13:25]>> Now Kiara Bilway, your thoughts? My argument was it's really up there. Will you gain much from that? What are yours?

[00:13:35]>> I I concur with Grim. I I think it's it's a high quality business, but it's sitting at 52- week highs and and and and that's all you got to consider. What what are you really paying for it? I think when you when you do uh components of the business, Amazon Web Services, a really strong operating manage margins about 37.7, the silent profit engine, you're looking at the retail business also growing. I think Q1 growth of about 24.4%.

[00:14:04]I it's just the the valuation is just too high. I mean on a trailing PE basis it's at 32 times. So are you willing to pay that high of a premium for a very premium business? I think they they're just cheaper choices around the world which you could get the same the same exposure to the AI acceleration.

[00:14:23]>> Yeah. But looking at fintech at the moment Kiara Bilway I mean fintech if you can expand into that you can make a lot of money.

[00:14:33]Well, well, everyone is trying to move into that space and I think it's it's probably going to get quite crowded out.

[00:14:38]So it's it's it's about identifying identifying the unicorns and and what I mean by unicorns for me it's getting the companies that have that are fit for purpose that are solving problems and there are many there many and I as I said one one case in point is MTN Momo I mean Momo has such great geographical reach across just not just remittance alone it it it truly is a one-stop shop for future financial services and I think we have a couple of of tickers on our local on our local boards like Weaver Fintech which I think are playing in the in in in the micro lending space which I think will soon be regulated. I I'm more looking for fintech in the in fit for purpose. How do you solve problems today and one such is remittance and as I said MTN momo safari uh through Vodiccom is really a great player for me at the moment.

[00:15:36]>> Yeah. Right, Graeme, we're not going to talk about fintech because a little birdie told me what your stock pick is.

[00:15:42]So, we're just going to park that there for now. Then, Leslie, good results from Boxer, but how does this all relate to say pick and pay? Are there lessons to be learned here, Graeme? I mean, Boxer is doing really well after their first financial year. They've done very well.

[00:15:59]>> Yeah, very much so. Right. Um, so I think the the lesson learned is um read the writing on the wall. um you know invest in the DCs, do everything that's necessary to fund the growth in the business. Don't strip the cash out in the form of dividends. U you know I'm being critical of of decisions that were taken over a decade ago. But that that's the the reality and that's frankly what Shopright was doing. Um but it's not as though I would argue pick and pay didn't see this, you know, if you look at at at at the what what boxer delivered today.

[00:16:32]So I think the market clearly is is um doesn't believe the the pick and pay turnaround at least in the short term um because if memory serves uh pick and pay continues to trade at not a massive but at a discount to their to the value in in boxes. So um I think the the reality is in in an industry that's has been as fastly evolving um as food retail in South Africa you know sticking with the same model you asked for the lesson is uh is is a recipe for disaster. So um yeah I think that that really is the big lesson but right now it looks as though boxer um is trading really well wins at their back. The question though is once that once that execution has been done you know the roll out into townships for example you know what next whereas if I look at a company like shop I think there are next you know there's a unique clothing business there's you know the the baby business now they've got the pet nutrition and pet pet business as well um and they they're not resting on their laurels so I I think that's the that's the lesson you know um tool the business up and invest in its growth um M >> Kiara Bilway I never thought I would see pick and pay in a corner. I mean growing up they've always been so dominant in what they do for you. What is the lesson? I mean Graham did refer to a few things here but what is the lesson that perhaps boxer has got right and they got wrong?

[00:18:00]>> I I think you know pick and play needs to go back to the drawing board because I mean I I often ask myself these questions in my quiet moments. Why are people choosing checkers more than they choose peak and pay? And for me, I I I get back down to just innovation. I I I think the Shopright group is is quite innovative. I remember having coffee in Century City and I I I met quite an interesting person and she studied exoral sciences and I asked her where she works. She said she works for the Shopright group. Shopright group. Why do you web for the Shopright group when you're a financial mathematics expert?

[00:18:39]And she was like no they are they have a division just purely looking at economic order quantity looking when is the right time to go buy when is the right time to restock such that they they reduce their wastage line on the financial statements. That just tells you of a company that's often looking at the smallest things and therefore getting the execution risk down. Pick and pay needs to go back to the drawing board and think think about why do people choose other retailers more than they choose pick and pay. But if I have to speak to boxes results, great great results. I mean topline growth there 60 60 new stores which are being rolled out as I said into townships and I think that's where the niche is going to be.

[00:19:27]finding a discount retailer that that really has no frills about it and it understands its consumer and it gets the consumer what it needs. I mean the other day I had to leave uh uh the suburb I live in to go to the township because we were making African beer. Couldn't find any store around that was selling the ingredients and I had to go find a boxer in the township and that that for me shows why it's fit for purpose.

[00:19:55]>> Yeah, it's right there. right there.

[00:19:58]Good example, right? Cottoello says, "Hello, I'm currently looking at investing in healthcare or biotech stocks. We have an aging population, etc. Would you look at Aspen, perhaps Regeneron or higher risk biotech companies such as Turns Pharmaceuticals?" Graeme looking at pharmaceuticals, biotech companies, what are you looking at?

[00:20:24]Well, um, Aspen has disappointed us so many times that, you know, you sort of, even if you were bullish on it, you'd probably keep that quietly to yourself.

[00:20:32]So, um, yeah, but I mean, I'm speaking in just, but there's a level of seriousness in that, but, you know, we really don't have a significant farmer industry. If you want to invest in in um biotech or health tech, you know, the companies like Boston Scientific um, you know, just in a completely different league.

[00:20:51]Um, you know, right now the big thing of course is is weight loss and obesity and you know the benefits that that go with treating those and and right now GLP1 uh looks looks to be the place to be. Maybe Aspen does participate in that but you know just go to source go to Eli Lily and um and you know don't don't second guess all the other peripheral players.

[00:21:14]Um, you know, also they've got patents protection. They got new stuff coming online. So, I would rather look at that and you can probably argue for for for an investment in in in businesses like Striker as well. So, you know, the South African healthcare or sorry, farmer industry in biotech is really kind of nowhere. You have to go go offshore for that. And yeah, hopefully um the the the viewer has got an offshore capability, but I would go if you're looking bio biotech, I just go straight to Boston Scientific.

[00:21:44]>> There we go. I think that answers that question quite sufficiently actually. So Kiara Bilway, what is your stock pick for this fine Monday then?

[00:21:52]>> Yeah, I know I'm going London Caca futures and it just purely at adding some diversification into portfolios. uh looking at the fact that input costs are going up because fertilizer costs are going up. Also uh climatologists are saying that in West Africa, Ghana and Pivvoir, the it's El Nino season, meaning the yields on the crop of cacao is are going to yield yield less as well as there's a lot of competition for uh the labor import cost because people are moving into artisal mining in Cortiva and Ghana and you're getting a older generation of cacao farmers right now which is also yielding less. So, it's just playing on supply and demand dynamics on the London cacao futures market.

[00:22:36]>> Oh, that's interesting. All right. Okay.

[00:22:38]Graeme Ker, who's nodding his head, thinking about cocoa and coffee and chocolate. Uh, what are you pegging your your hat on this lovely Monday?

[00:22:47]>> Well, I'm going to be greedy if I may.

[00:22:49]I've got two, but I'll be very quick.

[00:22:50]Firstly, nice pass. Obviously you look all the way through the through the double discount which you got 40% on npress and 35 on process you know to 10 cent which I think is is a really good asset. So firstly on NASPA you go from one end of the market to the other you know Kabway was talking about the the the case for fintech um you know if you if you want to play that sort of mobile network uh fintech space there's a company called Octasia that provides the you know the the the back office so to speak for a lot of that I think Octasia is a really exciting business it's not a widow and orphan stock um but for people who like disruptive technology and fintech particularly I think Octa Asia is looking good and it's actually come off quite sign not significant it's come off a fair amount in the last couple of weeks. So I think under 18 rand looks really compelling to me.

[00:23:41]>> Yeah. Yeah. Fintech is the way to go at the moment. So the experts do tell us.

[00:23:46]Gentlemen, thank you so much. Good to chat to you on Stockwatch once again.

[00:23:49]Our time has flown. I'm afraid that does bring us to the end of the show. That's all for Stockwatch today. Thanks to our guests Kiara Bilwinana from Prime XBT and Graeme Kerner from the Kerner Perspective. Up next, the close.

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