Sasfin : Target ekes out slight growth in holiday-quarter sales

MARKET COMMENTARY

LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange yesterday, the Top-40 and broader All-Share indices were up almost 0.3% to 71,693 and 77,733 points, respectively.This as recent data showed that unemployment decreased from 32.9% to 32.7% in the final three months of 2022. In January, South Africa reported a trade deficit of 23.05 billion rand ($1.25 billion), compared to a revised surplus of 4.99 billion rand in December. Additionally, the country experienced a budget deficit of 88.80 billion rand ($4.82 billion) in January, compared to a deficit of 65.93 billion rand in the same month in the previous year.

EUROPEAN MARKET COMMENTARY

European markets closed lower yesterday following a mostly quiet session, with investors focusing on interest rates, new data, and corporate news. The pan-European Euro Stoxx 600 ended the day down 0.3% with healthcare stocks falling 1.5%. Some sectors saw gains, including banks, which rose 1.4%. Inflation figures from France and Spain came in higher than expected for February, with price increases accelerating on an annual and monthly basis in both countries.

US MARKET COMMENTARY

US stock markets struggled yesterday, with trading closing on a negative note. Investor confidence was impacted by a significant increase in Treasury yields, which raised concerns about the Federal Reserve maintaining higher rates for longer. Looking at companies, Occidental Petroleum experienced a 1% drop in their shares after reporting lower-than-expected Q4 earnings of $1.61 per share on $8.33 billion in revenue. Refinitiv had an estimated EPS of $1.80 and revenue of $8.66 billion.

ASIA MARKET COMMENTARY

Investors in the Asia-Pacific region assessed significant economic data today, with most markets trading higher. China's National Bureau of Statistics noted an increase in the official manufacturing purchasing managers' index to 52.6, the highest level since April 2012. Japan's au Jibun Bank private surveys showed the slowest factory activity in two and a half years in February while India is due to release private surveys on manufacturing activity later today. Elsewhere, South Korean markets are closed today.

COMMODITY MARKET COMMENTARY

Gold prices edged higher this morning while the dollar ticked up and investors braced for more US interest rate hikes amid stubbornly high inflation. Meanwhile, oil prices rose for a second day as reports of expanding manufacturing activity in China, the world's biggest crude importer, boosted the outlook for global fuel demand. However, the strong demand signal was offset by signs of rising crude stockpiles in the US, the world's biggest oil consumer and producer.

CURRENCY MARKET COMMENTARY

The rand strengthened yesterday after data showed that the country's unemployment rate declined for the fourth consecutive quarter in October-to-December last year. At the close, the rand traded at R18.36 against the US dollar, about 0.3% firmer. The safe-haven dollar showed signs of instability earlier today as news sparked an increase in risk-taking, causing the dollar to drop. China's manufacturing activity grew at a faster rate than expected, surpassing levels not seen since April 2012 causing the Chinese yuan and the Australian dollar to receive a boost from the optimistic economic data.

LOCAL COMPANIES

OCEANA GROUP LIMITED (OCE) +6.0%

The Group anticipates that its basic headline earnings per share (HEPS) and basic earnings per share (EPS) for the interim period ending 31 March 2023 will exceed the previous year's reported HEPS of 126.4 cents and EPS of 119.9 cents by more than 20%. This is primarily due to higher inventory levels, increased demand for canned fish, and strong pricing for fishmeal and fish oil in international markets. Despite the 33% rise in canned fish sales volumes to 3.5 million cartons, operating margins were lower than the previous year, primarily due to the weaker rand/US dollar exchange rate, necessitating a sales price increase at the end of January 2023.

WILSON BAYLY HOLMES (WBO) +4.0%

The Group saw a 15% increase in revenue from continuing operations to R10 billion (Dec 2021: R9 billion). Earnings per share from continuing operations were 829 cents (Dec 2021: 596 cents), while earnings per share from total operations were 641 cents (Dec 2021: Loss per share of 2,535 cents). Headline earnings per share from total operations were 630 cents (Dec 2021: Headline loss per share of 1,613 cents). No interim dividend was declared for the period ending 31 December 2022 (Dec 2021: Nil cents per share). The net asset value of the Group is R3.3 billion (Dec 2021: R4.2 billion), and the order book increased by 19% from R22 billion to R27 billion.

SIBANYE STILLWATER LIMITED (SSW) -3.0%

The company demonstrated a significant improvement in safety performance with all indicators showing progress, including a 75% reduction in the fatal injury frequency rate (FIFR). The balance sheet remains strong with net cash of R5.9bn (US$344m) and net cash: adjusted EBITDA at 0.14x. Profit for the period decreased to R19bn (US$1.2bn) compared to R33.8bn (US$2.3bn) in 2021. The final dividend of R3.5bn (US$191m) or 122 SA cents per share was declared, bringing the full-year dividend to R7.37bn (US$421m), equivalent to a 6% annual yield.

INTERNATIONAL COMPANIES

Target (TGT) +1.0%

Target beat Wall Street's earnings expectations for the first time in a year as holiday-quarter sales rose by about 1% YoY. The company expects comparable sales to range from a low single-digit decline to a low single-digit increase for fiscal 2023, with full-year earnings per share between $7.75 and $8.75, below Wall Street's estimates of $9.23 per share. Target's net income for the period fell 43% YoY to $876 million, with comparable sales rising 0.7%. Target's stock has fallen by nearly 40% from its all-time closing high, while its annual total revenue grew by about $31 billion, or nearly 40%, from fiscal 2019 to 2022.

Monster (MNST) -0.6%

In the most recent quarter, Monster Beverage reported earnings of $0.57 per share, falling short of the anticipated Zacks Consensus Estimate of $0.61 per share. This is a decrease from earnings of $0.60 per share in the same period last year, although these numbers have been adjusted to account for non-recurring items. The company had previously been expected to earn $0.58 per share, but exceeded expectations with earnings of $0.60 per share, resulting in a surprise of 3.45%. While Monster Beverage's revenues for the quarter that ended in December 2022 were $1.51 billion, the company missed the Zacks Consensus Estimate by 4.82%. This is in comparison to the prior year's revenues of $1.43 billion. Over the last four quarters, the company has surpassed consensus revenue estimates twice.

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