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Morning Note 24 April 2015 South Africa Market Review The JSE Africa All Share Index rose 0.7% on Thursday led by gains in resources and basic materials stocks, partly offset by declines in gold mining stocks. Market breadth was positive, with 89 gainers, 66 losers and 15 stocks remaining unchanged. Corporate News Investec Australia Property Fund entered into an agreement with SAS Trustee Corporation to acquire a new property at Glendenning for AUD19.2m. The acquisition is in line with the fund’s strategy to invest in high-quality assets. The acquisition will be funded from the existing debt facility. Earnings Announcement Click Group’s revenue rose 14.2% y/y to R11.2bn for the six months ended 28 February 2015, with 9.9% growth in retail sales and a 20.7% rise in UPD. Profit for the period increased to R438.6m from R389.9m. EPS rose to 182.2c from 158.5c, and HEPS increased to 183.5c from the 159.4c reported in the prior comparable period. The company declared an interim dividend of 65.5cps compared with 53.5cps in the previous comparable period. LTD: 26 June Kumba Iron Ore’s total production rose 7.0% y/y, while it fell 2.0% q/q to 12.2m tonnes for the first quarter ended 31 March 2015. The operating model’s implementation in the North mine continued to yield improved productivity. Production at the Sishen mine decreased 4.0% q/q to 8.9m tonnes, while production rose 9% q/q to 3.0m tones at Kolomela. Export sales volume rose 19.0% y/y to 12.9m tonnes, slightly better than expected. Anglo American Platinum’s total equivalent refined platinum production rose 50.0% y/y to 536.0k ounces for the quarter ended 31 March 2015. However, refined production was down 10% over the preceding quarter. On a quarterly basis production at Rustenburg and Mogalakwena was largely flat. Production at Union and Amandelbult disappointed as result of safety stoppages. Production from the joint venture operations was largely flat over the preceding quarter. Anglo American Plc’s diamond production fell 8% q/q to 7.7m carats, due to a change in mining area at the Venetia mine. Copper production fell 2% q/q to 171ktons, led by a negative performance at Collahausi due to the recent rain and flooding conditions in Chile. Export metallurgical coal production rose 17.0% y/y to 5.0m tonnes, while export thermal coal production rose 11.0% y/y to 8.7m tonnes. Nickel production was flat q/q to 6,700 tonnes. In addition, the company reduced its full year production guidance for diamonds, which is a crucial part of the business. MTN Group reported 1.8% q/q subscriber growth adding 4.1 million subscribers for the quarter ended 31 March 2015. South Africa experienced muted subscriber growth as a result of short term challenges. South African data revenue experienced growth of 21.8% y/y. Nigeria increased its subscriber base by 2.1% to 61.1m subscribers. Nigerian data revenue grew 17.0% y/y, however total minutes declined 2.4% y/y. Currency headwinds remain an issue with Nigeria, given a weakening macro-economic environment. Mobile Money continues to perform strongly. Equity Market – JSE Indices Close 23-Apr-15 22-Apr-15 % Chg % YTD 54,687 48,411 43,066 24,430 1,335 46,982 46,636 67,600 17,088 17.23 54,282 47,998 41,955 23,889 1,352 46,824 46,423 67,669 17,052 17.49 0.7 0.9 2.6 2.3 (1.3) 0.3 0.5 (0.1) 0.2 (1.5) 9.9 10.1 2.7 6.8 16.6 14.7 (0.1) 6.9 21.3 (22.2) All-Share Index Top 40 Resources 10 Basic Materials Gold Mining Financials Industrials Cons Goods Cons Services Volatility Top Daily Gainers and Laggards Gainers % Chg Laggards Net 1 UEPS Kumba Iron Ore Allied Electronics Lonmin Plc Zeder Investments 9.4 8.3 8.0 6.0 4.0 % Chg Hulamin Cashbuild Merafe Resources Rhodes Food Group Brait SE (13.4) (4.4) (3.9) (3.6) (3.6) All Share Index Performance 57 000 800 600 400 200 0 53 000 49 000 45 000 Apr-14 Jul-14 Oct-14 Jan-15 Volume (mn) Apr-15 JSE - LHS Government Bond Yields Bonds R204 (2018) US 10 Year US 30 Year 23-Apr-15 22-Apr-15 bps Chg 7.35 1.96 2.65 7.32 1.98 2.66 3.1 (2.1) (0.9) Economic & Money Market Data Economic CPI: March PPI: February M3: February PSCE: February Trade: February(ZARbn) Reserves: March (USDbn) Kagiso Manu. PMI : March Retail Sales : February % Y/Y 4.0 2.6 8.1 8.7 (8.5) 41.3 47.9 4.2 Interest rates JIBAR 3m JIBAR 6m JIBAR 1yr T-Bill 3m T-Bill 1yr Repo rate Prime Sabor % 6.12 6.83 7.45 5.89 6.18 5.75 9.25 5.71 Sasfin Securities Money Broking Rates (%) R 50,000 - R 99,999 R 100,000 - R 249,999 R 250,000 - R 499,999 > R 500,000 4.58 4.81 4.91 4.98 Rates are indicative only & subject to confirmation. For information on these & other Treasury products call Ana Pereira on (011) 809 7542. Sasfin Funds – NAV (23 April 2015) Fund Sasfin MET Prudential Sasfin MET Equity Sasfin MET Balanced Sasfin MET Stable Unit Price 3yr Return* 180.40 347.14 120.25 114.73 n/a 19.9 n/a n/a Bloomberg, Sasfin Securities * Annualised Page |1 Morning Note 24 April 2015 Argent Industrial estimates EPS for the year ended 31 March 2015 to rise within 4.0–7.0c from a loss per share of 211.4c reported previously. HEPS is expected to increase within 15.3–18.3c from the 14.6c reported in the previous comparable period. Results due: 25 June Hulamin expects both EPS and HEPS for the six months ended 30 June 2015 will be more than 20% lower than the previous comparable period. The company stated that manufacturing output has been severely impacted by electricity constraints. Results due: 27 July Economic Review South Africa’s private sector credit, producer price index and balance of trade data is scheduled to be released next week. Global Corporate News Altria Group reported net income of USD1.02bn, or USD0.52 per share, in Q1 2015 compared with USD1.18bn, or USD0.59 per share, in Q1 2014, as a result of a lower per-share contribution from its equity investment in SABMiller. Revenue increased 5.6% y/y to USD5.80bn in Q1 2015 from USD5.52bn in Q1 2014, above market expectations. Altria reaffirmed its guidance for adjusted earnings per share to be in a range of USD2.75 to USD2.8 in FY 2015. Equity Market Indices Dow Nasdaq S&P 500 Hang Seng Nikkei 225 FTSE 100 DAX ASX200 23-Apr-15 18,059 5,056 2,113 27,828 20,188 7,054 11,724 5,845 22-Apr-15 18,038 5,035 2,108 27,934 20,134 7,028 11,867 5,837 % Chg 0.1 0.4 0.2 (0.4) 0.3 0.4 (1.2) 0.1 % YTD 1.3 6.8 2.6 17.9 15.7 7.4 19.6 8.0 Earnings Calendar Date 29-Apr 29-Apr Company Aquarius Platinum Redefine International Plc Type Interim Interim Est. USD (0.02) - Commodities USD/OZ Gold Silver Platinum Palladium Brent(USD/bbl) Copper (USD/t) 62% Iron ore (USD/t) 23-Apr-15 1,194 16 1,137 771 62.6 5,943 49.49 22-Apr-15 1,187 16 1,129 756 60.5 5,902 49.30 % Chg 0.6 0.3 0.6 2.0 3.4 0.7 (0.4) % YTD 0.8 1.0 (5.9) (3.3) 12.3 (6.7) (37.2) Source: Bloomberg Exchange Rates Currency 23-Apr-15 22-Apr-15 %Chg % YTD Spot * Caterpillar’s reported net income of USD1.11bn, or USD1.81 per share, in Q1 2015 compared with USD922m, or USD1.44 per share, in Q1 2014. Analysts expected profit per share of USD1.35 in Q1 2015. Revenue declined 4% y/y to USD12.7bn in Q1 2015 from USD13.2bn in Q1 2014, better than the forecast of USD12.4bn. The company's outlook for revenues remained unchanged at about USD50bn and a profit expectation per share of USD4.70 in FY2015. USD ZAR GBP ZAR EUR ZAR CHF ZAR AUD ZAR EUR USD USD JPY 12.15 18.29 13.15 12.73 9.45 1.08 119.58 12.22 18.4 13.11 12.58 9.48 1.07 119.91 (0.6) (0.5) 0.3 1.2 (0.3) 0.9 (0.3) 5.0 1.5 (6.1) 9.4 (0.0) (10.5) (0.2) 12.13 18.36 13.20 12.73 9.47 1.08 119.29 Novartis’ net income from continuing operations declined to USD2.31bn, or USD0.96, in Q1 2015 from USD2.45bn, or USD0.99 per share, in Q1 2014. Revenues from continuing operations fell 7% y/y to USD11.9bn in Q1 2015. Analysts expected revenues of USD12.6bn and net income of USD2.9bn in Q1 2015. Ex-Dividend Stocks Dow Chemical’s net income increased to USD1.39bn, or USD1.18 per share, in Q1 2015 from USD964m, or USD0.79 per share, in Q1 2014, exceeding market expectations. Revenues dropped to USD12.37bn in Q1 2015 from USD14.46bn in Q1 2014, driven primarily by price declines, due to a lower oil price as well as currency headwinds. Date 4-May 4-May 4-May Company Times Media Group PSG Konsult PSG Group Dividend ZAr 30.0 ZAr 8.0 ZAr 145.0 Bloomberg *Spot prices as of 09:45AM Economic Review US initial jobless claims rose to 295,000 in the week ended 18 April from 294,000 in the previous week, higher than the expectations of 290,000. The four-week moving average of claims rose by 1,750 to 284,500 in the week ended 18 April. Meanwhile, the continuing claims rose 2.33m in the week ended 11 April from 2.28m in the prior comparable period. US new home sales declined 11.4% m/m to a seasonally adjusted annual rate of 481,000 in March from a revised 543,000 in February. Analysts expected sales to rise to 513,000 in March. US Markit manufacturing PMI dropped to 54.2 in April from 55.7 in March. Analysts expected the index to decline to 55.5 points. Page |2 Morning Note 24 April 2015 Eurozone’s Markit composite PMI fell to 53.5 in April from 54.0 in March, below expectations of 54.4 points. Manufacturing PMI dropped to 51.9 in April from 52.2 in March, falling short of expectations of 52.6 points. Services PMI declined to 53.7 in April from 54.2 in March, lower than the forecast of 54.5 points. Germany’s Markit composite PMI fell to 54.2 in April from 55.4 in March. France’s Markit composite PMI fell to 50.2 in April from 51.5 in March. Germany’s GFK consumer confidence index marginally rose to 10.1 points in May from 10.0 points in April, as low inflation buoyed households' income expectations. Analysts expected the index to rise to 10.2 points in May. France’s business confidence index rose to 101 pints in April from 99 points in March. Analysts expected the index to rise to 100 points in April. Meanwhile, the business confidence index for services fell to 92 in April from 93 in March. The overall business confidence remained unchanged at 96 in April. UK retail sales declined 0.5% m/m in March following a revised 0.6% m/m rise in February and worse than the forecast of 0.4% m/m gain, driven by a slump in petrol sales. On an annual basis, sales rose 4.2% in March, lower than a revised 5.4% gain in February. Retail sales excluding fuel grew 5.0% y/y in March from a revised 4.8% y/y in February. Sasfin Securities is a member of the JSE and a pioneer of private client portfolio management in South Africa, having roots dating back to 1890. Currently, Sasfin is one of South Africa’s leading wealth management and stock broking businesses with six branches across the country. Sasfin Securities’ products and services include execution-only stock broking, deal and advisory, referral managed and discretionary managed portfolio management services, custody and administration, and money broking. In addition to traditional stock broking and portfolio management, it offers a range of collective investment products, managed funds and funds of funds via its associate Sasfin Asset Managers. HELP DESK Altaaf Alli - 011 445 8036 Riaz Khan - 011 445 8040 Surette van Vollenstee - 011 445 8096 Email: [email protected] Commodity News Brent crude prices rose 3.4% after Saudi Arabia and its allies continued bombing in Yemen, increasing concerns about the security of Middle East oil supplies. Gold futures rose 0.6% as the dollar retreated on weaker-thanexpected US economic data. Copper edged up 0.7%. US soybean futures rose amid decline in concerns over a truckers strike in Brazil which could curb supplies to ports in the country's peak export season. US corn remained unchanged, while wheat gained on short-covering, however gains were restricted by ample supplies and slow demand. 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This report is neither an offer nor a solicitation to buy or sell, and is not intended to call attention to, or to market, or promote the services of SasSec. SasSec does not have a proprietary interest, other than a possible casual or arbitrage interest, in any of the listed companies referred to herein and no director of SasSec, unless otherwise stated in this report, is a director of the companies referred to herein. Sasfin Securities (Pty) Ltd, registered credit provider NCRCP 2948, member of the JSE and the Sasfin Group, Reg No. 1996/005886/07. Collective Investment Schemes in securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. Commissions and incentives may be paid and if so, would be included in the overall costs. The Unit Trust portfolios are licensed under the Metropolitan Collective Investments Scheme. Metropolitan Collective Investments is a full member of the Association for Savings & Investments SA. Page |3