Sun Life Exceeds Profit Expectations with Strong Growth in Canada and Asia

LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange, the blue-chip Top 40 index and the broader All Share index closed slightly down by about 0.1% and 0.2%, ending at 73,645 and 80,561 points, respectively. Oxford Economics Africa noted that domestic economic data is unlikely to improve much, with unemployment expected to remain around 32%, the mining sector facing supply constraints, and weak consumer demand affecting retail. Sasol Ltd announced it will report a full-year loss after writing down R55.1 billion ($3 billion) in the value of its chemicals and fuel assets due to weaker prices. Meanwhile, Gold Fields has agreed to purchase Canada’s Osisko Mining in a C$2.16 billion (R29 billion) deal, aiming to expand as gold prices surge.

EUROPEAN MARKET COMMENTARY

European stocks closed mixed on Monday, with the pan-European Stoxx 600 index ending the session flat as investors weighed whether the recent market downturn had stabilized. Attention is now turning to U.K. inflation data, set to be released on Wednesday. This will be the first inflation report since the Bank of England's recent 25-basis-point interest rate cut. Economists expect the headline inflation rate to rise slightly from 2% to 2.3%.

US MARKET COMMENTARY

Wall Street stocks closed mixed on Monday as investors prepared for key U.S. economic data this week, particularly the consumer price index (CPI), which will provide insights into the Federal Reserve's monetary policy outlook. The Dow Jones Industrial Average fell, while the S&P 500 and Nasdaq Composite indexes closed higher. Investors are eagerly awaiting Wednesday's CPI data, expected to show a 0.2% monthly rise in July, with the annual rate holding steady at 3%.

ASIA MARKET COMMENTARY

Asian stocks rose this morning, with Japanese shares leading the gains as markets reopened after a holiday and the yen remained stable. Japan's major indexes advanced amid news that the country’s parliament will hold a special session next week to discuss the Bank of Japan's recent interest rate hike. Additionally, Japan's producer price index increased by 3% in July, up from 2.9% in June. In Southeast Asia, Singapore reported a 2.9% economic growth in the second quarter, matching earlier estimates.

CURRENCY MARKET COMMENTARY

The South African rand strengthened on Monday as the week began, with investors focusing on key global and domestic economic data releases. Meanwhile, the U.S. dollar remained steady this morning, with investors waiting for U.S. economic data to gauge the likelihood of significant rate cuts. At the same time, a rally in Japanese stocks helped stabilize the yen, easing pressure on yen carry trades.

COMMODITY MARKET COMMENTARY

Gold prices climbed over 1% on Monday, reaching their highest level since August 2, as investors sought safe-haven assets ahead of this week's U.S. inflation data, which could influence the Federal Reserve's interest rate decisions. Meanwhile, oil prices dipped this morning, ending a five-day winning streak, as market attention shifted back to demand concerns following OPEC's decision to lower its 2024 demand growth forecast, driven by weaker expectations in China.

Sasol Limited (SOL) -1.33%

Sasol expects its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) for the year ending June 30, 2024, to drop by 2% to 17%, from R66.3 billion last year to between R54.7 billion and R64.7 billion. As a result, the company anticipates lower earnings per share (EPS) and headline earnings per share (HEPS) compared to the previous year. Specifically, the basic loss per share (LPS) is expected to be between R68.82 and R71.48, a significant drop from last year's EPS of R14.00. HEPS is projected to decrease by 59% to 77%, ranging from R12.28 to R21.95, while core headline earnings per share (CHEPS) are expected to decline by 9% to 27%, falling between R35.03 and R43.62, compared to R47.71 last year.

Montauk Renewables Inc. (MKR) -8.00%

For the six months ended June 30, 2024, the company saw a 13% increase in revenue to $82 125 000, and a significant 57% rise in EBITDA to $15 603 000. Headline earnings improved by 178% to $1 601 000, while earnings per share increased from a loss of $0.02 to a gain of $0.01, representing a 150% change. Headline earnings per common share also grew by 200% to $0.01. The net asset value per common share rose by 12% to $1.80. Despite these positive results, the directors have decided not to declare a final cash dividend, opting to allocate financial resources toward further developing the company’s operations portfolio.

Super Group Limited (SPG) -14.05%

A review of the financial results for the year ending June 30, 2024, shows that revenue is expected to increase slightly by 0% to 10%, ranging between R62.0 billion and R68.2 billion. Operating profit is projected to decline by up to 10%, falling between R3.62 billion and R4.0 billion. Headline earnings per share (HEPS) are expected to drop by 20% to 30%, while earnings per share (EPS) could see a significant decline, ranging from a loss of 19.2 cents to a gain of 28.9 cents per share.

CA Sales Holdings Limited (CAA) +2.25%

The Company reports that for the six months ending June 30, 2024, headline earnings per share (HEPS) are expected to rise by 17% to 22%, reaching between 42.65 cents and 44.47 cents, due to organic growth across all operations and new client acquisitions. However, earnings per share (EPS) are projected to decrease by 28% to 33%, falling to between 42.45 cents and 45.62 cents, mainly because of a one-time gain of R123.6 million from the prior year’s acquisition of the T&C Group in Namibia. Without this gain, the EPS would have shown an increase similar to the HEPS growth.

SunLife Insurance Company Limited (SUNLIFEINS) +1.77%

SunLife Financial, Canada's second-largest life insurer, exceeded analysts' expectations for quarterly profit, driven by strong sales in Canada and Asia, a key growth market. The company reported earnings of C$1.72 ($1.25) per share, above the forecasted C$1.58 per share, with underlying net income rising 8.7% to C$1 billion. Core earnings grew by 19% in Asia and 8% in Canada, while the U.S. business saw a 5% decline in core earnings due to challenges in its Dental insurance segment, impacted by Medicaid redeterminations and the end of the Public Health Emergency. The wealth asset management segment, which accounts for about 45% of overall earnings, saw a 9% increase, supported by higher fees. However, group health and protection businesses declined by 15%, while individual insurance sales jumped 31%.

Pandora A/S (PNDORA) +1.56%

Pandora, the world's largest jewellery maker, raised its full-year growth outlook on Monday, showing optimism despite challenges faced by other consumer goods companies. The company reported a rise in operating profit to 1.34 billion Danish crowns ($196.25 million) in the second quarter, up from 1.19 billion a year earlier, aligning with forecasts. Pandora also increased its full-year organic growth guidance to between 9% and 12%, up from the previous 8-10% forecast. The company maintained its operating margin guidance at around 25%.

Vestas Wind Systems A/S (VWS) -7.76%

Vestas, the world's largest wind turbine manufacturer, issued a warning of a second-quarter loss on Monday and revised down its full-year profit margin and revenue outlook, causing its shares to drop by 5%. The company’s usually strong service business is expected to incur a one-off hit of 300 million euros ($327.63 million) due to sustained inflation, increased repairs, upgrades, and operational inefficiencies. Vestas now forecasts a full-year operating profit margin of 4-5%, down from the previous 4-6%, and has narrowed its revenue outlook to 16.5-17.5 billion euros from the earlier 16-18 billion euros. After reporting an unexpected first-quarter loss earlier this year, Vestas expects a preliminary negative operating profit margin of 5.6% for the second quarter, with preliminary revenue at 3.3 billion euros, below the forecasted 3.8 billion euros. The company will release its final second-quarter earnings on August 14.

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