Taking Stock - Eskom made a profit of R83 million.

In todays taking stock, we look at how Eskom made a profit of R83 million in the six months to the end of September.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Local stocks ended higher yesterday, with the Top 40 index adding 0.11% and the benchmark All-Share index closing 0.16% higher (now at 59,509 index points). In an address on Monday, President Cyril Ramaphosa cautioned that given the rate of new infections over the last two weeks, there was a possibility that if the government did not act urgently “the second wave will be more severe than the first wave”. Meanwhile, Eskom made a profit of R83 million ($5.5 million) in the six months to the end of September as higher electricity tariffs offset lower sales during the COVID-19 pandemic, it said on Monday.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed higher Monday as market focus remains on negotiations between the UK and EU on a post-Brexit trade deal. In other news, Germany will go into a full lockdown over the Christmas period amid a rise in coronavirus deaths and infections. Nonessential shops and schools will close across the country starting Wednesday. London will enter England’s toughest tier of coronavirus restrictions from Wednesday, after the UK government identified a new variant of the virus that may be linked with the faster spread of cases in southern England.

 

 

US MARKET COMMENTARY

The Dow Jones Industrial Average and S&P 500 fell on Monday as fears of additional COVID-19 restrictions offset the optimism around a vaccine rollout. New York City Mayor Bill De Blasio warned earlier in the day that the city could experience a “full shutdown” soon. His comments put pressure on the Dow and S&P 500. Shares of companies that would benefit from the economy reopening lagged companies that thrived early on in the pandemic.

 

 

ASIAN MARKET COMMENTARY

Stocks in Asia were lower this morning as concerns over a coronavirus surge in multiple countries dulled optimism over the vaccine rollout in the US. China’s industrial production grew 7% year-on-year in November, the country’s National Bureau of Statistics announced Tuesday. Meanwhile, retail sales in China increased 5% in November as compared with a year ago. Shares in Australia were also lower, with the S&P/ASX 200 down 0.26%. Minutes from the Reserve Bank of Australia’s December policy meeting released Tuesday warned of the possibility of “an extended period of high unemployment”.

 

 

CURRENCY MARKET COMMENTARY

The rand firmed against a weaker dollar early on Monday, as progress regarding the rollout of a COVID-19 vaccine lifted riskier assets globally. At the close, the traded at R15.03 against the US dollar, 0.73% firmer than its New York close on Friday. Progress on coronavirus vaccines cheered risk sentiment, with the first shipments of Pfizer and BioNTech’s approved coronavirus vaccine in the United States on Sunday raising hopes for a faster economic recovery. The local currency was trading around R15.05 versus the dollar this morning, or 0.16% weaker.

 

 

COMMODITIES MARKET COMMENTARY

Gold prices were little changed this morning as investors took stock of surging COVID-19 cases, vaccines inoculations and negotiations over a US coronavirus fiscal relief package. Oil prices dipped in early trade today, with demand worries due to tighter lockdowns in Europe outweighing relief from vaccination rollouts and concerns about a flare-up of tension in the Middle East. London stepped up restrictions requiring bars and restaurants to close, as COVID-19 infection rates continued to rise sharply, which will dent fuel demand in the near term.

LOCAL COMPANIES

Chrometco (CMO) 0.0%

The junior chrome miner listed on the JSE AltX board said despite the COVID-19 related impact on operations during the period, it managed to generate a positive cash flow. However, the miner warned shareholders, should it experience another production disruption or a drop in the chrome price, it could fail to meet lender obligations as the group battles a liquidity crunch. At the end of the interim period, the miner’s liabilities exceeded its current assets by R615.3 million compare to its market cap of R127 million. Group revenue slipped 3% to R699.7 million compared to the R719.2 million in the previous year, while cash from operations were R87.1 million, but HEPS tumbled 743% to -2.95 cents.

 

Nutritional Holdings (NUT) 0.0%

The JSE-listed wellness group, which operates two divisions, namely food and cannabis, announced an increase of 537% in EBIT to R16.4 million, compared to the R3.7 million loss in the prior period. The group is currently moving its focus more to the legal cannabis market, as the global legal marijuana market is expected to grow to $73.6Bn (R1.2-trillion) by 2027, according to market research group Grand View Research, the group said in a previous statement. Group revenue jumped 102% to R33.72 million, with headline earnings per share surged 325% to 0.08 cents.

INTERNATIONAL COMPANIES

Hexo Corp (HEXO) +3.1%

Shares of Canadian cannabis group jumped 10% during Monday trading on Wall Street before closing 1% higher on the day, after the group reported Q1 earnings for the 2021 fiscal year. The group continues to advance toward profitability as its adjusted EBITDA improved for the sixth straight quarter, reducing the loss by 87% to $0.42 million compared to the $3.25 million previously. CEO Sebastien St-Louis: “Today’s record revenue performance reflects our commitment to providing consumers with high-quality products, at reasonable prices, for all occasions”.

 

Royal Dutch Shell (RDSA) -2.5%

The energy giant, together with Italian oil and gas group, Eni and their partners reached a $1.3Bn settlement with Kazakhstan, relating to a long-running revenue sharing dispute over the Karachaganak oil and gas fields. As the dispute is settled after more than five years, the venture can push ahead with a planned $1Bn expansion project "to support the output plateau”. The Karachaganak field, one of Kazakhstan’s biggest hydrocarbon deposits, with both Shell and Chevron calling the settlement a “very positive step” ensuring “fiscal certainty in Karachaganak”.

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Media, Sasfin Wealth

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