Market Report - 29 May 2026 | Business Lunch

追加: 2026-05-30

[00:00:07]And joining us now to share his commentary on the day's market performance is Jan Petersen from Umtombo Wealth. Jan, thank you so much for your time today. Now, I don't know what to make of this optimism. I mean, on one hand, we are of course awaiting finalization of that ceasefire extension, but on the other hand, we're still hearing of attacks between the two nations. How are you making sense of it all?

[00:00:37]>> Hi, Ntsaleng. Thanks for having me back on the show.

[00:00:40]Yes, it is certainly an interesting headlines we're seeing, and I think we do have better prospects of a deal than we have had in a while.

[00:00:46]>> Mhm.

[00:00:46]>> If one is signed off by President Trump in particular in the next few days, you can expect to see some relief on oil prices and a relief rally in risk assets.

[00:00:55]Um but I would caution that one shouldn't get too excited too quickly until we ultimately start seeing some ships moving through the Strait of Hormuz.

[00:01:02]>> Mhm.

[00:01:03]>> I think there's still a lot that can go wrong before that. We have seen this movie now play out a few times over the last 2 months or so.

[00:01:09]Um Trump hasn't signed yet. We have seen his posts about asking Middle Eastern countries to sign the Abraham Accords, which not all of them might be keen for.

[00:01:18]We also know that Iran is not entirely happy with the continued conflict in Lebanon, which is one of the requirements. So, we do see still a lot of execution risk here and remain cautious on taking too high conviction view on normalization.

[00:01:30]>> Mhm. You're absolutely right there because sometimes it does seem like we're taking two steps forward and five steps back when it comes uh to um getting to a solution with that US-Iran war. Let's look at look at the local currency, which is trading at highs last seen in early uh March. Is it on the back of the optimism we are seeing uh with regards to the US-Iran ceasefire deal, or are we also seeing um the domestic picture playing a part here, especially after the SARB raised rates yesterday?

[00:02:05]>> It's a good question. I think certainly both of those are tailwinds for the currency.

[00:02:10]In my view, I think yesterday's move which we saw was probably largely driven by the the rate cut we had with the SARB once again ahead of the curve in terms of cutting Sorry, hiking rates.

[00:02:21]>> Yes.

[00:02:21]>> This is the rest of the world for being a bit more slow to do so.

[00:02:25]And as such benefiting the currency. I do think any kind of lower oil price movements and benefits and precious metal prices, we do know has a positive effect on strengthening the rand. And we're seeing a little bit of that continuing as well. I think if we were to get a positive outcome in terms of a ceasefire, then I'd I'd expect to see further strength there for the rand as well.

[00:02:46]>> Mhm.

[00:02:47]>> And the opposite is true if the deal falls through.

[00:02:49]>> Yeah, the rand has been pretty resilient throughout the year.

[00:02:53]Taking a look at some company news and kicking things off with Dis-Chem. There seems to be a disconnect between the top line and the bottom line, Yiannis. The share price taking a knock this afternoon. What have you made of that performance? I mean, that company of course has been transforming from just being a retail pharmacy chain and sort of integrating health care product. But that of course comes at a cost.

[00:03:23]>> No, absolutely. They certainly have done well to grow the top line there, 9.3% revenue growth. But yes, certainly not reflecting in the headline earnings growth being down 17% and 11% below consensus expectations.

[00:03:36]And I think what we are seeing there is, as you say, those investments into growth are coming at a cost.

[00:03:42]>> Mhm.

[00:03:42]>> They've invested a lot into their rewards program. They've invested into their their data program. And all of that is giving give some pressure on the cost line. So not quite seeing the the margin expansion coming through.

[00:03:54]>> Yeah.

[00:03:55]>> Um they have had a bit of issues in having recurring once-off issues in every period that they try to explain away. So ultimately we'll have to see whether they can start getting the the clean earnings growth coming through, but I do think ultimately a lot was priced in here. At close to a 27 times PE, market was pricing in a lot of growth. And our preference is with Clicks at this stage where a lot of bad news is priced in, a lot of one-off hits in the base now, higher quality, higher ROEs, more consistent growth historically compounding, which we see attractive at this stage.

[00:04:26]>> All right. Moving over to Nampak then, what have you made of that uh performance? Once-off uh costs also impacting earnings there. Um when those costs are included, earnings are down over 40% if I'm not mistaken, but when you remove those uh costs, we are seeing um earnings up on a normalized basis.

[00:04:47]There's also some strength coming through in its beverage units, uh particularly in South Africa and Angola.

[00:04:54]>> Yeah, certainly still a messy sort of result reflecting the transition that Nampak's undergoing. Um we do see it as promising as you say. There are good areas of strength in particular their SA business and Angola business.

[00:05:07]And I think the key benefit coming through here is uh we're seeing now the balance sheet strength improving. We're seeing substantial de-gearing and we're seeing the finance cost down 32%, net debt reduced 24% year-on-year. Um showing the benefit of the disposals and actions they've taken. So really that is going to help them going forward and we think ultimately the transition period is is positive for them, driven by strong demand in SA, so they're moving down that line from Angola to South Africa.

[00:05:35]Once that's done, which they're hoping for around about September of this year, we should start seeing benefits coming through on the operational line as well.

[00:05:43]And this is a business that can generate substantial free cash flow. And they have uh good value if they manage to execute on that.

[00:05:50]>> Mhm. All right, let's get your stock pick then. Where are you seeing value at the moment, Yianndre?

[00:05:56]>> At the moment, my stock pick is Signia.

[00:05:58]I think it is a fantastic business that is very undervalued and it is a lower risk investment case with potentially very high upside risk.

[00:06:07]We Signia is a business that is in the effectively investment and asset management space and they benefit from the continuous growth in AUM as the market grows as well as from getting inflows.

[00:06:19]We see it objectively valued at around about a 11 times forward PE multiple and dividend yield of 7 and 1/2% roughly.

[00:06:26]Looking forward, business that has very high free cash flow, low capex, higher ROEs in the region of mid 40% and if you think about this business not changing its rating at all, you collect that 7 and 1/2% dividend yield and north of 10% earnings growth which they've historically shown, you're really looking at a return in the high teens.

[00:06:47]If they any kind of re-rate or any kind of additional growth that is all additional upside.

[00:06:53]>> All right, let's leave it there, Yianndre. Thank you so much for your time and taking us through trade at midday. And that was Yianndre Petersil from Umthombo Wealth.