Disney Shares Surge on Strong Q4 Earnings Beat and Optimistic Long-Term Guidance

LOCAL MARKET COMMENTARY

On Thursday, the Johannesburg Stock Exchange's Top 40 index was mostly unchanged, edging up 0.03% to 75,786 points, while the All Share Index rose slightly by 0.04% to close at 83,834 points. South Africa's mining output showed improvement in September, with a year-on-year increase of 4.7%, compared to a 0.3% rise in August. Harmony Gold, South Africa’s largest gold producer by volume, announced the appointment of Beyers Nel as its new chief executive officer, succeeding Peter Steenkamp, who is set to retire. Nel, a mining engineer with the company since 2003, will assume his role on January 1, 2025. Meanwhile, South African police were in a standoff on Thursday with hundreds of illegal miners reportedly underground in an abandoned shaft.

EUROPEAN MARKET COMMENTARY

European markets ended Thursday on a positive note as investors analysed a series of earnings results and fresh inflation data for potential insights into future interest rate reductions. The eurozone's GDP grew by 0.4% in the third quarter, in line with expectations, while employment saw an unexpected increase of 0.2%. According to European Central Bank Vice President Luis de Guindos, recent data suggests that inflation is on track to meet the ECB's 2% target. Additionally, the European Commission announced a €797.72 million ($840.24 million) fine against Meta Platforms, citing anticompetitive practices favouring Facebook Marketplace, confirming an earlier report by Reuters.

US MARKET COMMENTARY

Wall Street's main indices fell on Thursday after Federal Reserve Chair Jerome Powell signalled there is no urgency for another interest rate cut this year. Speaking at a Dallas Fed event, Powell noted that with steady economic growth, a strong job market, and inflation still above the 2% target, the Fed can take a cautious approach. His comments followed data showing a 0.2% monthly rise in the producer price index for October, with an annual increase of 2.4%, slightly above expectations. Additionally, jobless claims dropped by 4,000 to 217,000, lower than anticipated.

ASIA MARKET COMMENTARY

Asian markets showed mixed performance this morning as investors evaluated economic data from China and Japan. In China, October retail sales exceeded expectations, but industrial production and investment figures fell short of forecasts. The urban unemployment rate improved slightly, dropping to 5% from 5.1% in September. In Japan, third-quarter GDP grew by 0.3% year-on-year, marking a recovery after two consecutive quarters of decline. The quarter-on-quarter GDP increase was 0.2%, matching analysts' expectations.

CURRENCY MARKET COMMENTARY

South Africa's rand strengthened slightly on Thursday after four consecutive days of losses, as the U.S. dollar gained momentum following Donald Trump's election victory. The dollar was set for substantial weekly gains this morning, hovering near one-year highs. This surge was driven by a hawkish stance from the Federal Reserve Chair, which pushed short-term Treasury yields higher, leading to declines in both Wall Street and European market futures.

COMMODITY MARKET COMMENTARY

Gold prices remained subdued after reaching a two-month low on Thursday, weighed down by a strong rally in the U.S. dollar. Despite this, traders still hold out hope for a potential rate cut in December based on recent U.S. economic data. Meanwhile, oil prices dipped slightly this morning as concerns over oversupply and weaker demand, linked to the stronger dollar, offset the impact of a significant decline in U.S. fuel inventories.

Gold Fields Limited (GFI) -1.90%

In the third quarter of 2024, gold production was 510,000 ounces, a rise from 454,000 ounces in the previous quarter but lower than 542,000 ounces in Q3 2023. The total milled/treated volume was 10.2 million tonnes, slightly up from 9.9 million tonnes in the prior quarter. Revenue per ounce increased to $2,493, compared to $2,337 in Q2 2024 and $1,924 in Q3 2023. The all-in sustaining cost (AISC) was $1,694 per ounce, lower than the $1,751 in Q2 2024 but higher than $1,381 in Q3 2023. Net debt stood at $1.123 billion, with a net debt to EBITDA ratio of 0.47.

Sanlam Limited (SLM) +0.97%

Sanlam Group reported strong performance for the nine months ending September 30, 2024. Key highlights include a 15% increase in net result from financial services (NRFFS) and a 17% rise in net operational earnings. New business volumes in life insurance grew by 12%, with the net value of new business (VNB) up by 13%. The group also recorded net client cash flows (NCCF) of R40 billion, with a life insurance net new business margin of 2.81%. Overall, the company saw favourable growth and value creation across its operations.

MTN Group Limited (MTN) -3.12%

For the period, the company reported revenue of R1,487 million, up from R1,395 million in 2023. Distributable earnings per share decreased to 54.40 cents from 56.96 cents, while the dividend per share also declined to 48.96 cents from 51.26 cents. Basic earnings per share improved to 84.95 cents, compared to 65.41 cents last year. Headline earnings per share were 49.32 cents, down from 55.78 cents. The net asset value per share increased to R6.98, up from R6.64, and attributable comprehensive income rose to R774 million, compared to R588 million in 2023.

Telkom SA SOC Limited (TKG) +5.86%

For the six months ending September 30, 2024, basic earnings per share (EPS) are expected to increase by 5% to 15%, ranging between 210.2c and 230.2c, compared to 200.2c in the previous year. Adjusted EPS shows a significant rise of 60% to 70%, estimated between 320.3c and 340.3c. Headline earnings per share are projected to be in the range of 185.2c to 204.8c, reflecting a change of -5% to +5%. Adjusted headline EPS is expected to increase by 50% to 60%, reaching between 292.5c and 312.0c. The weighted average number of shares in issue increased to approximately 490.9 million.

Walt Disney Company (DIS) +6.23%

Walt Disney shares jumped on Thursday after the company reported better-than-expected quarterly earnings and provided strong future guidance. For the fiscal fourth quarter ending in September, Disney posted adjusted earnings of $1.14 per share, beating Wall Street's estimate of $1.10. Revenue came in at $22.6 billion, slightly above forecasts of $22.45 billion, with operating income up 23% year-over-year to $3.7 billion. Disney projected high single-digit adjusted EPS growth for fiscal 2025, despite $8 billion in capital expenditures, and plans a $3 billion stock buyback. The company also expects double-digit earnings growth in fiscal 2026 and 2027, driven by investments in theme parks, cruise ships, and streaming services.

ASML Holding N.V. (ASML) +6.99%

ASML, a leading maker of computer chip equipment, remains optimistic about sales growth over the next five years, driven by rising demand for advanced tools amid an AI boom. At its investor day, CEO Christophe Fouquet projected annual sales growth of 8% to 14% through 2029. ASML expects revenue between €44-60 billion ($46-$63 billion) by 2030, with gross margins steady at 56%-60%, consistent with previous forecasts. Despite U.S. and Dutch trade restrictions preventing sales of its EUV and most DUV lithography tools to China, ASML still relies heavily on its largest customer, TSMC, which uses these tools to manufacture AI chips for companies like Nvidia. ASML anticipates China's share of its total sales to drop to 20%, down from over 40% in recent quarters.

Do you prefer a full in-depth report you can read offline? Click here to download the full report