Stock Watch - 25 May 2026 | The Close

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[00:00:12]Welcome to Stock Arts with me, Ray White. Well, joining me to unpack your stock related questions today are Jonathan Fischer from PSG Wells, Stanton, Grayson, and Simon Brown from Just One Lap. Be sure to send your question through via email to [email protected].

[00:00:29]ca.za via SMS on 41392 or on X at business day TV using of course the hashtag stockwatch. Gentlemen, hi. Good to chat to you both again. All right, many many questions coming in. I think let's put this all into one question.

[00:00:46]General markets, oil has dropped. I saw $95 a barrel earlier on today. There's optimism with the miners also as well rising. What is your general, I think, take on this? In fact, Simon, let's start with you.

[00:01:01]>> Thanks. I think I mean, let's start with oil. I mean, I I you know, are we going to get peace between the US and Iran?

[00:01:07]Yes. Uh is it going to be fracturous and take time and lots of angry tweets? Also true. Um and I think that's what we're seeing in in the oil price right at this point. But I think there's some caveats here. I mean, there's been damage to infrastructure in in the Middle East and and that is going to take some time to get repaired. Uh structure for malls are not yet fully opened. We don't know what the status quo on that is. So, I think oil and I've got it on the screen right now, Brent, at 97 and some change. And I don't know, it's been a dis. It's not going back to the sort of 60s or 70s it was at the beginning of the year, but I think it can sort of maybe sit in the '9s for a while as we sort of thrash it out. There's apparently going to be some sort of 30 or 60day monatorum of understanding that would give both parties time to to work this through and and that of course assuming that happens and we we get some of peace in our time.

[00:02:04]Notwithstanding, it's going to be lumpy and and and shouty. That then plays into, you know, back to the story of, well, hey, this was all around commodities. We've got gold a bit higher and we've got the PGMs nicely moving as well.

[00:02:17]>> Yeah, that's the thing. Okay, Jonathan, I want to come to you on that. I mean, the Iranians are saying to Trump that he's not in touch with reality, which worries me a little bit. Are we not in the same cycle again that we've seen over the past couple of months? because quite frankly to me it's just groundhog day.

[00:02:35]>> I certainly hope not and you know as market participants and people investing in markets we don't want this war to continue. You know we want the war to end. We want the oil price to come down.

[00:02:50]We want resumption of fuel, oil, fertilizer to be moving out of the straight and things to get back to some type of normality. So, you know, there's a lot of egos here um on Trump's side, on the Iranian side, but ultimately I think everyone realizes that, you know, what's best for not just us, but for the world. And the bottom line is we got to end this war and um get back to some some type of normality.

[00:03:22]>> Yeah. You know, I think as Simon said, there are egos and anything can peeve Don Donald Trump off and uh, you know, he starts flexing his muscles or throwing horrible tweets out at night or whatever and, you know, things can just flip-flop, but I hope not.

[00:03:42]>> Yeah, >> I'm hoping not.

[00:03:44]>> Doesn't make sense. He'll he'll send those horrible tweets out. Then he will say, "I'm going to erase an entire civilization." And then in the next breath he says, "But for now, we'll keep the peace treaty going. We'll keep the ceasefire going." And I'm like, "Guy, guy, what are you doing?" All right. I mean, Simon Tabo's asking here, "Is it a good day to finally buy mining stocks?"

[00:04:04]Tabo says, "Will these metals shoot up primarily? If there is a peace process, well, then that's great. We're looking at these metals perhaps climbing. Is it a good time to buy if you haven't bought already?"

[00:04:17]I think I mean we've seen I mean for example implats are seen under some pressure uh goldfields as well which is weird in both I mean we've certainly seen a pull back in the PGMs um but I think implat perhaps a bit overdone it to the to the downside the PGM story I am less convinced around certainly there is a good story there I do think that the the current you know fuel prices around the world probably giving a little more help to to electric vehicles or or or or you know hybrids of of of that. I'm not sure that's going to be necessarily short-term and significant.

[00:04:52]I still like the gold story. It it you know the gold story is around uncertainty around concerns around inflation. Um and if anything the war in Iran has heightened all of those. Now we've seen gold what is 4,600 now. It peaked at 5600 back in January. Uh we have had reports of gold sales the last little while from some central banks.

[00:05:13]some cases simply just to raise money because war slashdefense depending where you sit is expensive but I do still like the the gold story. I don't think we're going to see the sort of doubling in prices that we saw last year but I think there's more upside and if we see that upside that will obviously flow into the the gold miners as well. I hold Angler gold or shanty in in in the space. Um, and what we got to understand is that the gold miners are probably producing gold, call it 2,000, there's around uh per ounce, they're currently getting 4,600, 4,400 an ounce, and they are just printing cash and we see a lot of that is going to come through in dividends.

[00:05:51]>> Yeah, Jonathan, is it time to climb onto the gold bus or have they missed the bus? Tabo is asking.

[00:05:59]>> I tend to agree. I think um you know as long as the gold price remains in the range of between 4,200 to 4 and a half at least certainly these gold mining companies um will be making huge amounts of profits going forward you know so if that does hold and I do believe it will hold then it's still worth looking buying these gold mining companies um you know Anglo gold's up 100% in the last Goldfields about 93% or thereabouts, SBA similar levels. Yes, they've all come down since the war started. But um if, as I mentioned, if the gold price maintains, let's say, at least above $4,000, these gold mining companies will still be printing a lot of money going forward. Um but more generally on general commodities, you know, those big mining um diversified miners have also done really well over the last year. Sure, they've come off since the war started um for obvious reasons, >> but um I still believe that there's a place to be invested in the likes of Anglo, BHP, um Glen Core, um you know, Anglo, you've got this big merger, corporate action happening with tech, and there's a big copper player >> going on. Copper's not going down anytime soon. It's also come off a little bit, >> but that's to be expected. You know, the world's worried that if this war doesn't come to an end soon, it is going to affect economic growth. It is going to affect inflation. And that's just what the market's been telling you the past couple of months.

[00:07:46]>> Yeah.

[00:07:46]>> But to answer the question, you know, it all goes back to when is the war going to end? When are we going to resume normality in the world as far as that goes? And at that point, you know, things should get better for for commodities, too. Um, so yeah, I do fancy commodities. I think one can go general. Um, have some gold in the play and a bit of platinum too.

[00:08:12]>> Yeah, now you're quite right. I mean, looking at some of the share prices today. Implat up over five, Voltera up over a five, Sabana up over a five, and the list goes on and goes on. And that's a little bit of sentiment that played through. It's as simple as that. But that does also turn my attention or our attention to what happens at 10 3 on Thursday afternoon. Simon, are we looking at an increase in the repo rate?

[00:08:37]What do what are we looking at?

[00:08:40]Yo, Ray, I can't believe I I can't believe we're getting an increase. Let me put the argument for an increase in the repo rate and then I'll tell you why I think not. The argument for is that inflation is 4%. My target is three with 1% ban on either side. We're at the top end of it. Uh you know, diesel might come down by five bucks next Wednesday, but there's 393 of extra government money in there uh that we're getting relief. So that pressure is not going to vanish in a hurry. Um and even if the war is over, we've still got that elevated uh fuel price is going to continue to hurt and we're going to start seeing those second order impacts coming through, food, transport, etc. All well and good and all of that would say yeah a quarter percent except again this is not a demanddriven now you know that hasn't had any impact on our MPC in the past lack of demand driven hasn't made them more aggressive certainly on the great cutting cycle 150 points to this in time a lot of folks will say this is the sort of first test of the new inflation target of 3% uh and therefore they need to respond I don't think so I don't think I really think they can miss the the the the mayor. I think they can, you know, let let's kick this can down to July. I I appreciate that that kicking cans down the road is never a good idea, but I think in this time there's an exception for it. I really think we can say let's wait to see what what things are looking like in July. It really could be fundamentally different. We could have an oil look as I said not back in the 70s probably not even back in the 80s but if it's settling in the sort of bottom half of 90s a different game ran back sub16 I would say if I were an NPC member I'm not I would vote for no change >> yeah Jonathan what would you vote for I mean Simon's right that fuel levy that was taken into account is going to disappear soonet is quite hawkish we know that he can stare at the camera and go no I'm not going to tolerate ate this inflation.

[00:10:44]What are we looking at?

[00:10:46]>> Well, I'm on I'm in Simon's camp. I wouldn't want them to. Um but, you know, just getting back to what's going to happen. I mean, you know, the governor was a guest speaker at our investment conference a few weeks ago and he said it's very difficult, you know, puts them in a very difficult position the current situation because of it being coming from supply and this is particularly difficult difficult because it's a supply shock. What he did say is that historically supply shocks do work their way through the system quite rapidly and quite quickly um and doesn't have a long-term effect. But then again, you know, as we were discussing before, if this thing drags out and drags out for months and months and months, well, then it's a different situation. then you do get those second round inflationary effects coming in and impacting general inflation across the board. So I would like it not to happen like I guess most market participants.

[00:11:54]Um but we'll have to wait and see um what their views are and how the vote goes.

[00:12:00]>> Yeah, >> I think the consensus is actually for a 25 bit cut uh increase, but I hope not.

[00:12:06]Sure, it didn't go either way those MPC members go and vote and well only they know but yeah few emails and expected I thought they would come in talking about pick and pay Sean Summers says I quote the turnaround is making progress Jonathan let's start with you do you have any pick and pay stock you want to tell us about we don't own it don't have it won't invest in it because a shocker of a result there I mean it wasn't unexpected Box has been the saving grace for this firm or for the company. But I mean, yeah, they did decrease their HEPS loss to 52 odd cents. Um, but I mean, yeah, I think the share price today I saw earlier was down like 7%. So, the market obviously not buying the story. Um, there's better stocks out there one can buy. One wants to be in that space like a Shopright. Um it's a difficult space to be in in the first place currently because the consumer market is in such a such a tough place. Um and these companies, you know, that are doing well are growing earnings in the low single to mid single digit uh growth rates, you know. So pick and pay, it's like a huge huge oil tanker that's really trying to turn around and it's not turning around. It's taking forever, longer than what we want. I hope they get it right, but it's a tough environment.

[00:13:40]>> Yeah. Well, Sean Summons, Sean Summers says that that oil tanker is turning around. He says, "Simon, your portfolio.

[00:13:47]Anything you want to tell us about pick and pay?"

[00:13:50]>> Oh, I do not hold pick and pay. Thank goodness. I'm a Shopright man. I've been I I hold pick and pay in the 90s. That's how long ago since I last held it. I got lots of thoughts. I mean the first is that you know as as Jonathan just said the turnaround is slow and we're now looking at apparently a financial year go 29 it was going to be 28 my memory suggests at one point there might have been a break even the target was 27 I can't remember but certainly it is slipping out that section 189 process with uh staff that is not going to be easy that is a massive risk for them uh this is going to be contentious if we see strike action or whatever the case may be uh uh from pick and pay that is going to absolutely hurt them both as a business but also just you know consumers not sure what the story is in terms of of of pick and pay the 10 billion rand uh you know the negative valuation relative to the box they're holding is indeed true uh but of course they've got lease liabilities that that are closer to 18 billion so you know at the end of the day it's a really really tough space and it is kind of binary if they come out and everything works roses and everything's fine and and and and the like there is a lot of upside. This is potentially a 40 plus rand share.

[00:15:04]Absolutely it is. But I worry about those risks and I think those risks are absolutely real and right now I think you're okay. So Shopright's been running but a little while ago you were picking it up at 270. Uh boxes come under a bit of pressure. You're probably better off holding one of those two. Pick and pay and pay is your high-risisk venture right now.

[00:15:25]>> Yeah. But rolling out these boxer stores as they're going to be doing, is that going to work out the way they think it is? What worries me, it just becomes a pick and pay.

[00:15:35]>> Simon, >> yeah, I I think I mean Box has got I think Boxers I mean they they're very much targeting different locations.

[00:15:43]They're targeting the different markets.

[00:15:44]I think there is space for Boxer to roll out. And let's be clear, you know, Shopright's been rolling out aggressively. Um always has been in some of their subbrands as well. Pick and Pay has got that in their liquor and their clothing. At the same time, um certainly there there is still a fairly aggressive roll out of of stores except from Pick and Pay who've of course been pulling back, who've been losing leases and and closing stores and and that's part of them being on that back foot where their immediate competitors are putting new stores out there uh and and you know we can throw you save into that, Shopright checkers and put Willies into it. They all rolling out and pick and pay is going the other way which means again I mean they're just losing market share.

[00:16:26]>> Yeah. Yeah. Okay. Let's leave pick and pay alone then for now. Jonathan Jen wants to know what does the panel think about Hoskin Consolidated Investments? I think the results are coming out tomorrow. HCI what are your thoughts?

[00:16:41]>> It's a good um diversified business. I think they came out with a trading update earlier um saying that their numbers should be out tomorrow.

[00:16:52]>> Okay.

[00:16:53]>> Um yeah, it's a good business. You know, they got diversified interest in media, e media, they've got gaming, uh Togo games, they've got hotels, uh Southern Sun, they got transport, and they got mining. Um they're not expensive. They're trading on a multiple of about seven times.

[00:17:12]price to book about 1.1.

[00:17:15]I think it's in with a chance. I think the risk is the oil venture and impact oil. That's the um volatile aspect of the business. But if they get that right, um it could be a game changer for them going forward. The share price has done really well over the past year or two years. Um but yeah, they they can continue growing their earnings at a reasonable rate. You know, this share can go I think they're about 175 or 180 now. They can go to two 210 something like that. Um so yeah, it's a good business. Um I I think it's it's worth a go. I don't have any we don't have any in the portfolio, but um having said that, it's not something that I wouldn't look at seriously. Okay, now that's interesting. Simon, would you like to add to that? They have a bit of a few questions about their gas business, but that's okay. They they put their spread is large, I would say. Your thoughts?

[00:18:19]>> Yeah, I mean, I agree with what Jonathan is saying. I don't have a heck lot to add. They they traded a nice discount to net asset value. That is a a trend we've seen locally and globally, you know, with with with with NASPAS, with Rem Grow, uh, with everyone these days. you trade at really chunky discounts to your your net asset values. Um and and the the the businesses that they hold is is nice and diverse. To my mind, the the oil and gas the market got very excited around that oil and gas with the Namibian coast. Uh it is a potentially huge deal, but it it it's going to be it's going to be a process. And you know, Namibia is doing everything they can to move it along uh uh speedily, but it it's it's it's going to take some time. is going to be a much long-term play more than anything else. But I it's not one I've ever massively watched very closely, but it is one as as Jonathan was saying, had a fairly good couple of months. I mean, it's run up maybe almost what 40 odd percent since uh late last year on on no real news at this point in time. Um and we certainly got I mean, we've got directors and shareholders who are and CEOs who are very much in it for the long term. So that gives you a sort of nice fair bit of underpinning.

[00:19:29]>> No, it does. It certainly does. Tabiso says PPC and a question mark. Jonathan, that's all I get. PPC and a question mark.

[00:19:39]>> So it's interesting. I mean, it's a it's commoditized business, uh, the cement business. But funny enough, PPC seems to be doing okay. Um, they came up with a trading update earlier. Their HEP's going to be up around 20%.

[00:19:56]Um the share price was up earlier today by just under 2%.

[00:20:02]And that it boils down to what they say improved operational efficiency in the business value of sales um and sustained cost control. Now, what's interesting with this one is at the beginning of this month, I think it was, um, there was a story floating around about this big German company called H Highleberg Materials, um, that's been rumored to be sniffing around at PPC and there was a big jump in the share price then. I don't know, I think it was like from five rand to about six rand or something like that.

[00:20:36]So, it was a big jump in one day based on that. um whether something comes out of that or not, who knows? So, there's a potential corporate action that could happen there or a formal offer put on the table. Um is there legs left in it? Well, if that is the case, certainly there's legs left in it, but that's uh you know, who knows? We don't know. Um probably something good to bet on, >> but yeah, it's a it's a competitive industry. um you know yeah so so depending you know they can continue if no bids come for this >> okay >> and they can continue growing at this kind of level 20% over the next couple of years then sure there's value there >> might be a bet on that all right gentlemen stock pick time Simon let's start with you what's your stock pick for this lovely Monday so >> I'm going with with Afromat which is kind of a bit cementy but but there are three parts to my Afromat story the one is obviously It is a bulk commodity deeply cyclical business and the question is are we at the low of the cycle and is the next leg up and the answer to that is almost certainly yes I just don't know when put it this way we're much closer to the bottom of the cycle than the top but I don't know when that turn is necessarily coming um you know on the PPC it's the same story the president talking about turning our country into a building site really happening yet but there's two other drivers in Afroat that get me interested one the nurse a decision around the chrome smelters and that should be out in the next month or so and if that gets a go ahead they can start selling their anthraite out of enamort the moment they're exporting that's not getting good prices and they're just basically exporting stock that they've got above ground they've halted all mining activity that anthraite could be an absolute kicker for them and then also with their lofage with cement cement division because of course all the quaries are great the cement division I'm fidden in the results of talking about you know strategic positioning and which I think as JC speak for they're looking to sell cement that'll take a year or two that could be another kicker so I think Afromat in the sort of mid30s uh looking interesting >> yeah few kickers there actually right Jonathan what is your stockic >> right I'm going to go for something quite different um it's an offshore ETF uh written by underwritten by black rockck it's called iShares Asia 50 ETF AI a nys is the code. This company tracks the 50 biggest uh market cap companies traded around Asia, all the various markets there. Um you know it's it's a nice diversifier. So firstly this is an offshore one. It's not listed on the JC. So one would have to buy it offshore in US dollars but it's a nice diversifier. Um, currently there's 53 stocks in it and some of the big names that your viewers might know would be Taiwan Semiconductor, Samsung, Alibaba, SKX to name a few. The biggest sector that it's um invested in is IT followed by financials. It funny enough is 50%. We've seen Samsung and SKI Onyx go through the roof. I think Samsung's up 100% this year. Um, just an idea. So, it gives you a nice diversification across uh tech financials in Asia away from the developed markets of Europe as well as US and so forth.

[00:24:19]>> Those are good. Those are strong. Those are really, really strong. Gentlemen, we out of time. The half hour has flown.

[00:24:26]Good to have both of you with us on Stockwatch this evening. and we'll chat to you both again next week. Thank you for the ideas. Been a great conversation. Thank you. And that's all for Stockwatch today. Thanks to our guest Jonathan Fischer from PSG Well, Santon Grayson and to Simon Brown from Just One Lap. Up next, the close