The dream combination of an improved operational performance and a substantial bounce in commodity prices has meant the cash has been gushing into Sibanye-Stillwater’s coffers at unprecedented speed.
This has enabled it to play Santa Claus with the dividend, dishing out the equivalent of an annualised yield of 10%, enough to grab the eye of the most jaded of investors. Focusing on the dividend may seem a little old school in this brave new world of meme stocks and TikTok investors, but at this level it’s real money.
Sibanye has managed to display this generosity while taking a 44% bite out of its gross debt, redeeming its 2022 corporate bond early and launching a R9.6bn share buyback scheme, after which the balance sheet will be in rude health. This will come in handy when the company starts placing its bets for the next stage of its evolution by joining the mass charge towards the commodities required for the green-energy economy.
You’re going to need sharp elbows to get near a decent project, now that the industry as a whole has identified the minerals of the future, followed shortly by the realisation that the Chinese are way ahead of the game and have established a position of dominance in areas such as battery metal supply. Manufacturers that are nervous of being entirely dependent on Chinese supply are clamouring for alternative supply lines. Sibanye has invested in the Keliber lithium project in Finland, is proposing the acquisition of the Sandouville nickel refinery in France and is looking at the potential of recycling.
Massmart: Game just not scoring
It must have been a steep learning curve on matters South African for Massmart CEO Mitchell Slape in the years since he was parachuted in from Walmart HQ in Bentonville, Arkansas, to fix the troubled subsidiary. It seems unlikely that the Walmart operational handbook will have a section on what to do when your stores and warehouses are systematically being emptied by punters who have no interest in troubling the cashiers, an issue that cost Massmart R1.3bn in stock during the period of civil unrest.
The good news for investors is that, despite all the chaos and the subdued economic environment, losses are narrowing, though a headline loss of R645.4m is still big enough to concentrate the mind. The group has managed to offload its persistently loss-making Cambridge Food, Rhino and Massfresh assets and appears to be making some progress in executing its turnaround strategy. Its Builders segment put in a decent performance, with sales up 24% and trading profit up from R214.3m to R607.6m, while Massmart Wholesale saw sales up 7% and trading profit up 70.4%.
The big problem, however, is Game, which shows little evidence of shaking off the perception that it’s a basket case. Sales were down 7.6% on the same six months last year, despite half of last year’s period being spent in full lockdown. Massmart points to constrained foot count in many malls, but this doesn’t seem to have been an issue for many of its competitors.
Perhaps the pertinent question is why anybody would decide to set foot in a Game when there are so many more appealing options.
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