After all the wailing and gnashing of teeth on the JSE in 2018, the all share index (Alsi) was down around 11.4%. To put things in perspective, that wasn’t half as bad as the financial crisis meltdown in 2008.
Still, the raw numbers do not fully convey that there was something ominous and foreboding about the local market in 2018 — and these investor jitters were still prevalent in the first few days of trading in the new year.
Last year, stocks that might be considered "default positions" offered little reassurance. Technology conglomerate Naspers — which, at a market value of R1.2-trillion, makes up nearly a fifth of the JSE’s entire value — fell 16%.
Other popular shares to haemorrhage included Standard Bank (down 8.6%), cellular services provider Vodacom (down 9.4%), insurer Discovery (down 14%) and life company Sanlam (down 8.3%).
Sasol, probably the stock owned by most South Africans, dropped 0.7%. But Coronation Fund Managers (a proxy for sentiment on the JSE) plunged over 40%, from R73.90 to R41.35. And Coronation has also started 2019 on a shaky footing, as it threatened to dip below the R40 mark.
The JSE Limited itself, which operates the largest local bourse (yes, there are a few smaller rivals now), rose by 7.6% in 2018, which probably reflects the fact that market volatility is a boon for trading volumes.
Still, the overriding sense is that investors have to hold tight for a bumpy ride, at least until after the elections in May. Already, radical and divisive political rhetoric is starting to make investors fret — which is clear from the ructions in the JSE’s property sector.
Looking back at 2018, the only real bright spots on the JSE were the resources index (up around 13%) and the (by now) small gold segment (up 5%). Industrials took a hammering, dropping around 20% — a worrying development because this corner of the market is often seen as a barometer of the real economy. Construction and building firms were also hard hit, with Group Five, Aveng, Esor and Distribution & Warehousing Network battling to survive.
It’s easy to imagine this was a purely SA phenomenon. But the JSE was by no means the only bruised bourse in the world. The S&P 500 dipped 6%, and London’s FTSE 100 was off 12.5%. The DAX took an 18.5% tumble, and the Nikkei fell 12.5%. The rand did lose 16% to the dollar, however, which made the returns for foreign investors look worse.
It could have been even bleaker; you could have invested in bitcoin. Cryptocurrency acolytes ended up with black eyes in 2018 as the flagship bitcoin fell 74%, while ethereum lost 84%.
Of course, anything can happen in a single year. But the alarming fact remains that the JSE has not been conducive to building fortunes, or even reassuring retirement packages.
Over the past five years, the JSE’s Alsi has grown less than 15% — a compound average growth rate of less than 3% a year.
Looking at the JSE’s top 40 stocks, it’s alarming to see that only a quarter managed a positive return during 2018. Only three of the top 40 stocks gained more than 10%: the mining heavyweights AngloGold (41%), Anglo American (26%) and BHP (21%).
Elsewhere, only financial stalwarts Old Mutual and Nedbank, retailer Clicks and private hospitals group Netcare managed anything close to an inflation-beating return.
The extent of some of the losses among the top 40 stocks certainly raises eyebrows. Pharmaceuticals giant Aspen tumbled more than 50%. Everyone’s favourite defensive stock, British American Tobacco (BAT), lost 43%, consumer goods giant Tiger Brands fell by the same amount and cellular services company MTN shed 35%.
Sprawling private hospitals business Mediclinic International (controlled by investment behemoth Remgro) endured a tough year, losing 43% from already low levels. Smaller rivals Netcare and (to a lesser extent) Life Healthcare fared little better.
With the value of BAT and Mediclinic shredded in 2018, Johann Rupert’s family fortune — as invested in Remgro and Reinet — fell by 18% and 20% respectively. The 16% fall in luxury goods business Richemont did not help either.
Nor did the popular retail sector make for happy shopping. Convenience store chain Spar was the best with a 2% shift, while fashion retailer Mr Price clung to a fractional gain. The rest were in the red. Fashion retailers Truworths and TFG were down almost 7% and 16% respectively, while supermarket chain Shoprite fell 15% and Woolworths shed 16%.
On the flip side, had you invested in the five biggest gainers on the JSE — excluding penny stocks and microcaps — you’d have netted a gain of close to 50%.
But honestly, who at the start of 2018 would have rustled up a portfolio of such disparate counters as alternative energy group Montauk (+56%), Anglo Platinum (+54%), Altron (+51%), AngloGold (43%) and dairy group Clover (+38%)?
Perhaps most heartening is that corporate activity has spurred the share prices of Altron (through a buy-in by turnaround experts) and dairy company Clover (through a possible takeover offer). Indeed, the increasing number of buyout offers, incidents of shareholder activism (in a variety of forms) and share buybacks suggests the market is close to the bottom.
History also suggests that the JSE tends to bounce back strongly after a negative year. Readers may remember that a catastrophic 2008 was followed by a 32% rebound in 2009; and older readers may even recall a 61.4% surge in 1999 after a drop in 1998 that was similar to that of 2018.
Looking to 2019, there will inevitably be the temptation to revisit the recovery prospects for popular stocks that have been beaten down — including Mediclinic, Coronation, Woolworths, MTN and Aspen. But investors, particularly those of the DIY investment ilk, might prefer to wait in the wings with cash in hand.
Allan Gray, one of the best-performing money managers over many years, has an interesting view about whether now is the right time to be buying stocks.
In a note to clients in December, Allan Gray gave a pertinent answer as to why its highly regarded Balanced Fund was not more heavily invested in cash.
While admitting that cash has been a superior investment of late, Allan Gray reminded people that equities had outperformed by a furlong over the longer term: over the past 20 years, local equities returned 12.5%, against 8.2% for cash. "The level of under-or overvaluation of equities at a point in time gives an indication of how equities will perform relative to cash over the subsequent three, four or five years," it said.
At current valuations, Allan Gray believes its equity portfolio will outperform the returns from cash over the next four years and provide solid real returns.
And here’s the pertinent bit: "Given this valuation discrepancy, we are selling the [Balanced] Fund’s cash holding to invest additional money into equities."
Certainly, the JSE is cheaper than it has been in ages. The p:e of the JSE’s Alsi is now 14.1 — cheaper than it has been in years, and much cheaper than the 19.7 multiple of a year ago.
The JSE was not the only bourse to battle, but the rand’s fall made the returns for foreign investors look worse
— What it means
As you’d expect, the FM’s Hot Stocks portfolio for 2018 makes grim reading. The average fall of 15.7% of the stocks we picked a year ago even underperformed the 11.4% loss on the wider JSE.
We had costly positions in small technology business Ansys (down 47.7%), Mediclinic (down 43%), industrial conglomerate Invicta (down 32%) and consumer giant Pioneer Foods (down 38%).
Our sole bright spot was empowerment group Grand Parade Investments (GPI), up 36%, which benefited from a bout of concerted shareholder activism. If there was a silver lining, it was that the FM portfolio had no complete blowouts. Many of our 2018 stock picks, ironically, could be poised for recovery this year.
Indeed, we have re-selected four companies for our portfolio for 2019: Naspers, construction firm WBHO, transport firm Super Group and retailer Mr Price.
This year’s selection leans towards enduring stalwarts — such as Standard Bank, Old Mutual, Sasol and Anglo American Platinum — which are cheaper than ever. Perhaps we could be accused of erring on the side of caution, with no X-factor shares. (But look where our selection of Etion/Ansys got us last year!)
However, we believe that, in what is expected to be a bumper recovery year for stocks, shares like Argent Industrial, private hospitals group Life Healthcare, financial services hub Peregrine and fishing group Oceana are likely to unlock plenty of value for investors.
ALTERNATIVE EXCHANGE
The JSE’s Alternative Exchange (AltX), which was established to nurture smaller or entrepreneurial companies, remained firmly in the doldrums in 2018.
It had a handful of new listings in 2017, but only financial services counter Mettle headed to the AltX (after being spun off from property group Tradehold) in 2018. Master Plastics, which was only recently relisted on the AltX after the departure of “parent company” Astrapak, opted to delist after a buyout offer from a private equity firm. And the truth is, not much else stirred on the AltX during a listless 2018.
If there was a positive to be taken out of the past year, then perhaps it was that the AltX still hosts a good number of interesting technology counters like the perennially profitable ISA Holdings and the dogged TeleMasters. There are also intriguing offerings from Alaris, SilverBridge, 4Sight and Etion.
It would be heartening — though unlikely — to see fledgling commodity companies coming to the AltX. Perhaps the AltX’s reputation can be reinforced in 2019 if certain of the “larger” counters — like fund manager Anchor, property group Frontier and investment companies Astoria and Universal Partners — find traction with their respective strategic endeavours. Recent share price movements also suggest counters like day hospital specialist Advanced Health and junior miner Jubilee might be worth monitoring in the year ahead.
Marc Hasenfuss
BANKS
Many fund managers believe the banking sector offers the best value on the JSE. Even though the recent results may not have been exciting, with earnings growth around the rate of inflation and little capital growth, the dividend yields — varying from 4.4% (FirstRand) to 7% (Absa) — are reasonable compensation. FirstRand is without question the quality operation, but it is too expensive.
An outlier is Capitec, on just a 2% dividend yield. It had a difficult year following the report from short seller Viceroy, as the price tumbled 20% to R800. But it rebounded to record highs of R1,138 in November.
Still, you’d imagine that Capitec’s 9-million clients will be susceptible to the attraction of the even cheaper banking fees that TymeBank and Bank Zero are expected to offer.
Nedbank still has to get the full benefit of its unbundling from Old Mutual, which increased its free float from 45% to 80%. Unlike Capitec, Nedbank is not wholly dependent on the retail market — in fact, just 40% of its loan book is in the personal and business banking sphere. It has a strong franchise in investment banking, and particularly commercial property.
Another outlier is Absa, on a 7% dividend yield and a p:e of just 9.3, but it is going through a very risky year. CEO Maria Ramos is preparing for retirement and there is lots of work still to do unravelling the Barclays systems and building the Absa brand outside SA.
Stephen Cranston
ENERGY
The energy sector had some towering highs and deep lows in 2018. Globally, coal fetched prices last seen in 2012 and the gas price was also relatively strong.
Consider the oil price. It began well, with Brent crude shooting past the $80 mark for the first time in more than four years as Opec tightened the taps to reduce global oil stockpiles. Some experts estimated that oil could go up to $100 a barrel, and violent protests flared in France over fuel prices.
In SA the ANC-led government stepped in to absorb one petrol price hike — a move last seen during apartheid.
But then the oil price plummeted below $60. Even an agreement by Opec to cut production by 1.2-million barrels a day did little to lift prices as shale oil production in the US surged. The oil price ended 2018 at $54 a barrel — below the $67 at which it started the year.
In SA, the government published the long-awaited draft integrated resource plan, which provides some guidelines for the country’s energy future.
Among other things, it should help kick-start the local gas industry.
But power utility Eskom remains the most dangerous risk to the economy. The utility is in a terrible state, financially and operationally, and load-shedding was reintroduced in 2018, at an immense cost to the economy. Load-shedding is likely to resume as economic activity starts up again in 2019.
Lisa Steyn
BUILDING AND CONSTRUCTION
The construction sector continues to face an uphill battle. It has been in a downward spiral since the global financial crisis a decade ago, with no hope for a quick recovery.
The sector’s iconic firms — Aveng, Group Five, Esor and Basil Read — are all shadows of their former selves in terms of revenue, performance and market value, despite a reputation for building world-class projects. Basil Read and Esor are in business rescue, while Aveng and Group Five have lost more than 99% of their value in the past five years.
The principal reason is the dearth of private and public sector spending in infrastructure. Given that 2019 is an election year, it is unlikely that the government will make huge commitments until the new administration settles into office. That may not happen until the latter part of the year.
So, in a sector that is battling a combination of paper-thin margins, tight liquidity and shrinking order books, there is little hope that the tide will turn any time soon. Given that state-owned enterprises (SOEs) are typically responsible for infrastructure spending, the near implosion at Eskom, Transnet and other SOEs is ominous.
While there is talk that the “new dawn” may signal a change, this has yet to translate into tangible investments. However, if President Cyril Ramaphosa wins a big majority, it could provide him with a mandate to begin spending again.
Siseko Njobeni
FINANCIAL SERVICES
2018 was an interesting year for financial services companies. The highlight was the separate listing of Quilter, a R39bn market cap heavyweight. It is the former Old Mutual Wealth business in the UK, and incorporates the bulk of the Skandia operation, which was bought in 2006. If the FM had aimed to predict winning shares over a five-year horizon, Quilter might well have been the pick. But any growth from Quilter over just one year could be wiped out by weaker sterling, and it is already the most expensive large share in the sector, on a p:e of 23, though it is still cheaper than its main UK rival, St James’s Place.
At the other extreme we find Alexander Forbes, a true value company on a p:e of 12.3 and a dividend yield of 7.4%. But things are likely to get worse before they get better for Alexander Forbes. New CEO Dawie de Villiers is likely to write off everything he can to start with a clean sheet. This means results to March 2019 are likely to look terrible. And plenty of organisations will be happy to eat the company’s lunch in what is likely to be a lengthy period of introspection.
Investec should unlock value when it offloads its asset management business in July, but these processes take time. If it is delayed, the market will show its impatience.
In contrast, Peregrine has already undergone two rounds of restructuring, spinning off noncore assets into Sandown Capital and selling its securities business.
Stephen Cranston
INDUSTRIALS
You wouldn’t have wanted to be an industrial company in SA in 2018.
Confidence in the sector dropped after the country slipped into a recession in the second quarter of the year, not helped by rising unemployment and constrained consumer spending.
Finally, in November, there was some light at the end of the tunnel. The Absa purchasing managers’ index, which tracks sentiment for industrial firms, rose to 49.5 index points in November, compared to 42.4 in October.
This was the first increase after three consecutive declines, but not enough to suggest the industry is out of the woods yet, as 50 points is considered neutral.
Still, the unfavourable market did not spell disaster for all the industrial blue chips. For instance, Bidvest’s diversified model shielded it from the full impact of the economic challenges in its home market.
As a result, the group, which celebrated its 30th anniversary in 2018, saw revenue increase 8.4% and dividends up by 13.2%.
KAP Industrial also produced a consistent performance. The company’s dividend per share has grown at a compound annual rate of 24% between 2013 and 2018, while its operating profit has risen 17%.
Understandably, KAP has been obsessed with creating distance between itself and its 25.92% shareholder Steinhoff. The best way to do that is to keep producing solid results.
Siseko Njobeni
INVESTMENT COMPANIES
It was a torrid time for investment companies in 2018. This would have rattled investors, who traditionally take solace in these diversified and dividend-spinning portfolios.
Three small counters bucked the dour trend thanks to corporate action that promoted the unlocking of value. These were Grand Parade Investments (up 36%), Stellar Capital Partners (+58%) and Sabvest (N-shares up 20%). As for the rest, it was downright ugly. Brait lost more than 30% from already weak levels, and agribusiness investor Zeder shed 35% as the aftereffects of a prolonged drought hampered its investments.
Empowerment investment companies also came under the cosh. Hosken Consolidated Investments lost 16%, Brimstone dropped 20%, recently listed African Rainbow Capital Investments shed 29% and African Empowerment Equity Investments was down 35%, despite separately listing Premier Fishing and Ayo.
Stellenbosch-based investment behemoth Remgro dropped 18% as its large investment in private hospitals group Mediclinic battled to recuperate speedily from overindulgence in poor acquisitions.
With market prices noticeably rejigged downwards and vendor expectations tempered, the question for 2019 is whether any of the mainstay investment counters, especially those with decent cash piles, have any enthusiasm for snapping up opportunities.
Marc Hasenfuss
FOOD AND BEVERAGES
There were times last year when certain counters in the JSE’s food sector looked appetising. And then, very suddenly, things looked distinctly iffy again.
Poultry group Astral Foods epitomises the year. It sped to a record high of R335 due to lower feed prices, and then it halved to R165 as the maize price edged up again.
The market had barely started angling again for fishing group Oceana — which touched a 12-month high of R94 — before sentiment slipped away when its largest investor said it planned to unbundle its shareholding. Equally, at consumer brands giant AVI, the prospect of a special dividend endeared it to the market initially. Then sentiment reversed, as the market questioned AVI’s (remarkable) ability to continue balancing market share growth and pricing.
The best performers were niche players: fishing group Sea Harvest grew 18%, while Quantum Foods’ heady mix of poultry, eggs and feeds earned it a share price gain of close to 30%. But strong stomachs will be needed again in 2019 with prospects for most food counters still unappetising.
Will a change of guard at sugar giant Tongaat Hulett sweeten returns, and can market leader Tiger Brands get its share price to roar again? Corporate action can be expected among fishing companies, with the fate of AVI’s shareholding in iconic hake business I&J piquing interest. Quantum, surely, will be subject to a takeover offer, possibly from Astral?
Marc Hasenfuss
LIFE INSURANCE
Between the Liberty cyberattack and the Momentum underwriting debacle, 2018 was not a great year for life insurers. The best news was the completion of the managed separation at Old Mutual. Peter Moyo now controls the whole African business from Joburg and no longer has to get approval from London. But it was an even better year for Sanlam, which took full control of Saham Finances in Morocco, giving it the excuse to raise more share capital and in the process increase its BEE holding to 18%.
Sanlam, however, has the same problem as FirstRand. As quality businesses they are both long-term holds, but considering Sanlam’s p:e of 15.6, there will always be something else to buy over the next year. Discovery, though a very different animal from Sanlam, also fits into the long-term buy, short-term uncertain category. It trades on a p:e of 17.7 but, but unlike its competitors, at least no-one would describe Discovery as “mature”.
The return of Hillie Meyer to Momentum early in 2018 was well received, but the longer he stays, the more problems he uncovers. David Munro at Liberty is restructuring a poor business but it is slow going. There is no evidence that the market has any confidence in him yet. So it is Old Mutual, for all its bungles overseas, that is the closest to growth at a reasonable price. Old Mutual’s SA operation has always been solidly profitable. So it is time to draw a line under the London days.
Stephen Cranston
MEDIA AND ENTERTAINMENT
Given that it makes up about a fifth of SA’s main bourse, media giant Naspers played an immense part in the JSE’s shoddy performance (down 11.4%) in 2018.
After soaring 70% the year before, Naspers’s share price headed south in 2018 as its main asset, Tencent, stumbled for the first time. The Chinese internet behemoth stalled partly because of US President Donald Trump’s trade war with China, partly due to an economic slowdown in that country, and partly due to a broader sell-off of major internet stocks. Still, analysts remained bullish about Naspers and Tencent’s prospects throughout the downturn. To many, both companies are now even more attractively priced given their prospects.
In the first half of 2019, Naspers will unbundle MultiChoice — a windfall for investors as the market ignored this asset in the group’s valuation. At the same time, Naspers is narrowing losses in its e-commerce business, and the company has a hefty cash pile that it can put to use.
The group’s peers in the media and entertainment segment are far less cash flush, and, being more orientated towards the lacklustre SA economy, remain exposed to greater risk.
At the same time, the much-needed shift to digital media is in full swing and share price declines have made them more attractive.
In 2018, Caxton lost 32% while Tiso Blackstar Group — owner of this magazine, Business Day and the Sunday Times — lost as much as 53%.
Nick Hedley
LISTED PROPERTY
Real estate investors are no doubt overjoyed to see the back of 2018. The SA listed property index tumbled nearly 30% in 2018 — the sector’s worst performance in 25 years. The decline was triggered by allegations of wrongdoing at the Resilient stable of companies, and investor sentiment was further dented by lower dividend growth due to weaker demand for retail, office and industrial space.
Against this background, German-focused Sirius Real Estate, the FM’s real estate pick in 2018, held up relatively well. Though the share price ended the year flat, the euro-based dividend yield pushed Sirius’s total return for 2018 to about 5%.
Unlike previous years, there no longer appears to be a defined theme regarding offshore property stocks outperforming local ones or vice versa. So our pick for 2019 is a counter that offers an equal mix of rand-based and hard currency exposure: Vukile Property Fund. Half of its R32.3bn property portfolio is located offshore, made up of Spanish retail parks and shopping centres. Vukile’s move into Spain was smart: it’s the only SA company that offers exposure to this high-growth region. In addition, Vukile’s SA portfolio includes quality malls such as Gugulethu Square in Cape Town and Dobsonville Mall in Soweto that cater mainly to lower-income shoppers, who have proved more resilient in the downturn than their higher-income, debt-ridden counterparts.
Joan Muller
MINING
Some commodities, such as coal, had it good during 2018. Others, like iron ore, enjoyed relative price stability. But a few were left behind in the boom.
Platinum producers struggled as the metal price plunged to levels last seen during the 2008 economic crisis, though higher prices for platinum group metals rhodium and palladium mitigated it to some extent. The fortunes of the companies differed too: while Anglo Platinum’s price rose 53.7% last year, Sibanye-Stillwater’s fell 35%
Gold prices trended lower for much of 2018, despite pervasive global uncertainty, but it has started 2019 brightly.
At Gold Fields’ only remaining SA asset, South Deep, defeat was declared and a major restructuring announced. In contrast, AngloGold Ashanti was one of the best performers on the JSE in 2018, rising 40.6%.
Despite the strain, some large deals were concluded.
Sibanye-Stillwater is on the way to concluding its purchase of the deeply troubled Lonmin. And a merger between Barrick Gold and Randgold Resources created the world’s largest gold producer.
For SA investors, there was finally some policy certainty too, as the government finalised the mining charter, widely viewed as a suitable compromise. Elsewhere in Africa, a rising tide of resource nationalism, especially in Tanzania and the Democratic Republic of Congo, continues to worry investors.
Lisa Steyn
TECHNOLOGY AND TELECOMS
For the second year in a row, technology and telecoms stocks took a hammering on the JSE, mirroring a weak showing by their international peers.
Regulatory troubles and a weak consumer environment plagued telecoms giants MTN (down 35%), Vodacom (down 9.4%) and Cell C-investor Blue Label (down 65%), though Telkom rebounded 36% after a sharp sell-off in 2017.
In the technology segment, EOH continued its downward spiral, losing more than half its value. Net1, the former social grants distributor, had an equally disastrous year, falling 66%. Datatec’s market value shrunk 52% after it sold off businesses.
Penny stock Ellies, which has lost 97% of its value over the past five years, fell further despite reporting its first annual profit in four years. AdaptIT, the FM’s 2018 pick, started the year strong but succumbed to the global tech sell-off, finishing the year 9% lower. The bloodbath was avoided by some stocks, such as MiX Telematics. It bucked the downward trend and gained 30%.
Don’t expect miracles in 2019. Telecoms companies still face regulatory and political risks, from Iran to West Africa and SA. MTN is yet to resolve all its issues in Nigeria, while all telecom companies will have to contend with new rules in their home market.
In the technology space, star performer MiX Telematics is not as cheap as it was, so there are no easy picks in this sector.
Nick Hedley
TOURISM & LEISURE
The tourism and leisure sector was hardly a party in 2018. Two counters — gaming giant Sun International and fast food franchiser Taste Holdings — needed to tap the market for fresh funding.
In Sun’s case, the market seems to be betting on a gradual recovery, while Taste appears to have bitten off more than it can chew in its bid to secure profit from its global brand licences of Starbucks and Domino’s.
Famous Brands — once the market f(l)avourite — confirmed that it had made a monumental error in chasing a gourmet burger business in the UK, while the stodgier Spur Corp worked hard to beef up its eponymous steakhouse franchise.
Gaming and horse racing group Phumelela slowed to a trot after its jockey Rian du Plessis stepped out of the saddle, while hotel group City Lodge traded stoically in an economy that depressed business travel activities. On paper, there are not too many possibilities for corporate action in 2019, especially in the concentrated gaming sector. But the FM is willing to bet that Taste gets bought out by its larger shareholders, and that Sun makes a plan to list its Latin American casino interests. It will also be interesting to see if Grand Parade Investments (GPI), as part of its value unlocking thrust, sells its influential stake in Spur. Alternatively, GPI might go the whole hog and sell its entire food business — including the Burger King master franchise for SA.
Marc Hasenfuss
TRANSPORT AND LOGISTICS
Transport companies reaped the whirlwind of the storm that hit SA consumers in 2018. The statistics of new vehicle sales, which provided increasingly grim reports, bear testimony to this pressure. The most recent report, from November, showed new vehicle sales dropped 4.6%.
This was no great surprise. SA’s consumer confidence index hit a low of just 7 in the third quarter of 2018 — a third of the level of 22 it hit in the second quarter.
Disposable income, already under pressure, was dealt another blow late last year when the SA Reserve Bank surprised experts by hiking interest rates 25 basis points. For transport companies, the impact is reduced margins, as contracts are likely to be signed at lower rates.
The fallout was evident among the JSE-listed transport companies. Imperial was rocked not only by the scandal that resulted in Mark Lamberti’s resignation, but also by a steep fall in its share price. SA still accounts for 55% of its revenue, so the depressed volumes took a toll. Its motor arm, Motus, remained “under pressure”, the company said.
Grindrod, which made its name in shipping, saw its share price halve, while Trencor fell more than 35%. The only transport firms that did well were Value Group (up 66%) and OneLogix (up around 20%).
Super Group, which, like Imperial, is geographically diverse, produced a middling result, with its price falling around 18.1%.
Siseko Njobeni
RETAIL COMPANIES
As with many sectors on the JSE, the past year wasn’t kind to the retail sector. A brief recession, rising fuel prices and an increase in the VAT rate burnt a hole in consumers’ collective wallet.
Previously bulletproof stocks took a hit because of it. Shoprite, for example, which hardly ever took a step back over the past decade, saw its shares fall 15%, TFG fell 15.8% and Truworths fell 6.7%.
Woolworths, already under the cosh after its disastrous Australian purchase of David Jones a few years back, fell another 15.6%.
Some others performed creditably, given the circumstances. Clicks actually managed to gain 5.7%, while food retailer Spar climbed a modest 2.1%. And cash clothing retailer Mr Price ended about even, up just 0.5%.
For Edcon, the country’s largest clothing retailer, it was an even worse year, as it faced the reality of running short of cash unless it can finalise a restructuring plan. Property companies, which rely on Edcon’s leases, will have their fingers crossed that such a deal can be inked soon.
But for investors, these contrasting fortunes illustrate that picking a winner in a besieged market isn’t easy. Some, like Mr Price, appear to have managed to adapt to the conditions — getting the mix of products and price right.
For 2019, it’ll be about those retailers who are able to grab market share and capitalise on any recovery in GDP. In this market, you are a winner if you just stay afloat.
Larry Claasen
HOSPITALS AND HEALTH CARE
SA’s biggest hospital groups weren’t immune from the virus that infected SA’s wider market in 2018.
To find growth and expand outside SA, Mediclinic, Netcare and Life Healthcare all shifted their focus to other countries. But this hasn’t provided the remedy they hoped for. Add that to regulatory obstacles, and you can see why they had a tough year.
In the almost three years since Mediclinic’s merger with Abu Dhabi-based Al Noor Hospitals Group, its share price has dropped about 74%. The performance of its Hirslanden operations in Switzerland has been disastrous, leading to an operating loss.
Netcare is also ailing. Its share price has dropped more than 24% in almost three years. The hospital group disposed of its controlling stake in BMI Healthcare in the UK in 2018, after a failed rent negotiation. This left it with no overseas operations — giving it a stronger footing but raising the question of how it will grow in SA’s stagnant market, where the insured lives population of 8.8-million hasn’t risen since 2014.
Life Healthcare has been hurt the least. Its stock inched up marginally in 2018, after it announced that it had found a buyer for its Max Healthcare stake in India. Still, over the past two years, its share price is down more than 23%. The group aims to become more of a health-care provider, shifting its focus from being solely a hospital business to growing its diagnostics and mental health-care portfolio.
Penelope Mashego
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