Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Investment fund wikipedia , lookup
Present value wikipedia , lookup
Greeks (finance) wikipedia , lookup
Financialization wikipedia , lookup
Public finance wikipedia , lookup
Mark-to-market accounting wikipedia , lookup
Financial economics wikipedia , lookup
Lattice model (finance) wikipedia , lookup
FIA Meeting 16 October 2012 Stefan Ampenberger (1908 - 1983), detail from “The Red Sun”, oil on board, Sanlam Art Collection. Economic reality IFO world economic climate survey Recent trends/themes Cheap shares became cheaper and relatively expensive shares remained expensive Global laggards cheap and underperforming Global equities sideways but volatile Asset performance driven by risk-off or risk-on Globally: risk-on and risk-off dictating Correlation can remain high for sustained periods All about expectations Policy measures and earnings expectations Earnings expectations – 2012 12 10 8 6 3Q 4 4Q 2 0 -2 -4 Europe Source: JP Morgan US Where do we invest OPM? Common answer... In assets where the value appreciate US bonds – multi-year bull market Source: I-Net US bonds – multi-year bull market Source: I-Net Global Equities Pattern Sideways with short cycles Source: I-Net Price Valuation – methodologies differ Source: Case Shiller US equities – valuation from all angles Valuation Metric Current Value Long term Avg. Ave Since 1991 Trailing PE 16.3 15.5 25.3 Normalised PE 24.3 18.0 29.7 Forward PE 15.4 14.9 23.7 Forward DY 2.3 4.5 2.1 ERP 4.11 4.23 0.99 US equities multi-year lows versus bonds Source: Case Shiller US equities multi-year lows versus bonds Source: Case Shiller ... and property? Expectations look reasonable A local update Macro context SA GDP – trend heading in the wrong direction 6 5 4 3 2 1 0 -1 -2 SA GDP % Source: I-Net Rand weakness – SA unique problems Source: I-Net Pattern JSE All Share – cyclical bull market Source: I-Net Price ALSI valuation, fair but... Source: I-Net, SPI The value dilemma in SA Sector/Share FY1 Consensus Earnings growth FY1 spot earnings growth Gold sector 32% 42% Platinum sector 23% -51% Sasol -3% 37% Anglo American 3% -15% Billiton -1% -12% Resource Sector 6% -5% Commodity prices – visible response to tough environment Source: I-Net Copper – very muted response Source: I-Net FINDI earnings – lower PMI suggest pressure Source: I-Net Case for positive but subdued returns A few share thoughts Share A – R2 to R155 Source: I-Net MTN – investment case summary 9-Oct-2012 • Diversified portfolio of businesses in growing economies • Penetration levels are low • Attractive dividend yield with an outlook for increased dividend pay-outs • Strong balance sheet with R7.7bn as at 30 June 2012 • Current price of R151 is a discount to our fair value of R175 MTN – diversified portfolio in growing economies MTN – capex and cash profile 35 50 30 40 30 25 20 20 10 15 0 10 -10 5 -20 0 -30 Capex Net (Debt)/Cash Share B – a clear winner R162 R5 Source: I-Net Shoprite – a winner but priced accordingly Price to sales ratio Source: Bloomberg Shoprite’s success story 9 45 8 40 7 35 6 5 30 4 25 3 20 15 1999 2 1 2000 2001 2002 2003 2004 2005 ROE Source: Bloomberg 2006 2007 P/B 2008 2009 2010 2011 Share C – should we forget about this one? Source: I-Net Astral – quality in tough industry • • • • • • • Delivering through the cycle returns of circa 30%. Through the cycle intrinsic value R200. Trading around R100 Delivered high quality earnings Good dividend payer historic dividend yield of 7.9%. 10 year average dividend yield is above 6%. Expected 2012FY dividend yield of 6.3% in extremely tough operating environment Astral – look through the cycle • The short term results expected to be poor • regional oversupply • increasing imports from Brazil • high input cost inflation • FMCG retail sector playing the producers off against each other. • Medium term balance likely to return • weaker producers out • demand catches up with supply • possible increase in tariffs on imports • input costs pressures moderate Astral – play on “normal” margins Astral operating profit margins 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Feed Overall Poultry Conclusion • Tough macro environment • No long term alternative – embrace risk • Equities likely to move modestly higher – volatile • Property remain important building block • Volatility a friend rather than enemy of long term investors