Thursday , June 17 2021

4 South African shares to watch in 2019



Abba Stockbrokers & Portfolio Management's chief investment strategist Craig Fiffer shared his four shares in 2019.

Below Pheiffer details his peaks, offering a short description of why you should be looking to invest.


Anheuser-Busch InBev (AB InBev)

Global brewing giant AB InBev took a significant debt to acquire SABMiller for over $ 100 billion. In 2016 and the last reading, the group's debt amounted to $ 108 billion.

When calculating the debt-to-earnings ratio, the company's net debt / EBITDA ratio equals 4.9x. Anything over 2h would raise analyst questions, but with the large generating of company cash flows, the 4.9x should be reduced to 2 times over the next two to three years.

As the company extracts the SABMiller transaction (and generates the proposed acquisition efficiency), no major deals will be envisaged.

The board recently reduced dividend payments to redirect part of the cash flow towards debt reduction, leaving AB InBev as the average payer of the dividend rather than the big payer of the dividend.

The strength of this global company, which produces seven of the top ten beers in the world, is in margins and cash flows, and investors just have to overcome their time before the company complements its organic growth with further acquisitions.

The list in Brussels proved to be much worse than the US, as the euro lost its dollar base, making AB InBev's European and South African list look attractive.


Sappi

From a debt company focused on graphic paper used in glossy magazines and office photocopiers, Sappi burst through its long branches to become a global powerhouse in the wood fiber market as well as in the market for packaging and packaging. special papers,

Sappi is the world's leading manufacturer of wood pulp, cellulose used in clothing and textiles, food, pharmaceutical and other household products. Sappi's products are sold in more than 150 countries, with almost half of its sales (48%) being generated in Europe (South Africa and North America contribute 26% of sales in the group).

Printed and written documents still account for 62% of sales in the group, but only 29% of the Group's operating profit.

The largest share of the operating profit (54%) has the specialized pulp with specialties and wrapping papers, contributing the other 17%.

Since production problems have affected the latest earnings results, the next year is expected to see better profit growth.

With 3% plus dividend yield and Bloomberg consensus ahead of P / E just below 8x, the company expects to have a good margin of safety with regard to its rating and this is the attraction of this company.


Select n Pay

While consumers and households are not expected to resume abruptly in 2019, some retailers stand out over others at the moment.

Pick n Pay moved to focus and catch up with peers in terms of fresh produce and an efficient distribution network.

It has been a job for many years and there have been many years of frustration for investors.

There was a recent wave, and the company's own successes were supplemented by some of his colleagues' stumbling blocks. The net effect is that Pick n Pay earns market share from the market leaders Marketrite and Woolworths.

This is a company that is still expected to report a rate of annual growth over the next three years to teenagers with a dividend yield of more than 3%.

The company often trades on a premium market assessment, but at the current levels it looks much cheaper than its own historical rating over the past five years.


Naspers

After rallying high in 2017, achieving a record level above R4000, dividing Novus and returning more than 70% to shareholders, the 2018 was a disappointment for the Naspers as the share returned a small portion of the profits for 2017.

Much of the fall in Naspers' stock price could have been due to the fall in Chinese Tencent's favorability, which represents more than 100% of Naspers's share of the valuation of the shares.

Tencent fell under the battle, as revenues slowed down on the back of Chinese regulators who tightened the new versions of the games.

This limited ability of Tencent to launch and monetize new games and maintain revenue inertia. It is unlikely that this regulatory barrier will be overcome soon and will affect short-term revenue growth.

Nevertheless, it must be removed in time, and although there may be an industry reserve of new games to be reviewed by the regulator, this revenue channel should see accelerated growth again over time.

The Naspers story of 2018, however, is rather one of the internal reviews of operations and a more focused emphasis on the unlocking of the value embedded in the so-called "cross" (Naspers' own business).

To that end, Naspers decided to unblock Multichoice in 2019 to become a more targeted internet investor and player.

In December Naspers registers on the A2X exchange and is constantly looking for ways to reduce the significant discount that Naspers trades on the net asset value. This sharp and continuous management focus and the prospect of a better growth in Tencent's revenue over time still make this share hold.


Read: This is the average salary in South Africa in early 2019


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