Piet Viljoen on MTN as telco massive fires on cylinders

Counterpoint Tag Fund manager Piet Viljoen makes his second look for the week on BizNews, days after going face to face with Magnus Heystek in a R500,000 funding narrate. Striking his money where his mouth is, Piet has disbursed the full preliminary funding into the Counterpoint Tag Fund. A few of the top holdings within the fund are deliberated, on a day where MTN launched an upbeat quarterly update, with the share at ranges final seen in 2015. Anglo American, one more substantial conserving within the fund, is discussed following the retirement of adorned mining executive Ticket Cutifani. Lastly, we touch on South African bonds, with Piet outlining the intellectual exact yield they provide relative to global counterparts. – Justin Rowe-Roberts, Funding correspondent.

On MTN’s quarterly trading update:

Successfully, I absorb that enterprise is firing on all cylinders. Revenues are rising, the series of subscribers is rising and the margins are rising. It is able to sell some non-core property to lower the debt. Issues look like going better in Nigeria. In varied words, it’s more uncomplicated to acquire money in a faraway places country there. So, the total issues folks had been nervous just a few year ago – when MTN used to be trading at R40/R50/R60 a share – are within the strategy of being resolved and the share designate shows that. It is a ways a substantial set up within the Counterpoint Tag Fund but we imagine it serene has some legs to head earlier than it is fully priced. It’s now not pretty at full designate yet.

On Afrimat management’s shrewd capital allocation:

Afrimat does that rare combination of ultimate operational management and inconceivable capital management. They lag the total companies well. They are very lean and at excessive margins, but then in addition they bewitch the money drift they generate from these companies and make investments them [wisely]. They started with some arena cloth companies and that construct of thing, and took that cash drift and invested in an iron ore enterprise doubtlessly about four or 5 years ago. Now with the iron ore designate having shot up right thru the last year to excessive ranges, they made loads of superprofits there but they’re using that to diversify into varied bulk mining property.

On the drivers of Sasol’s share designate:

I absorb the oil designate is possibly one of many smaller components within the meanwhile because they’ve hedged out most of the oil designate actions to give protection to their balance sheet from any downdraft on this planet designate. Of direction, Sasol is popular for its uncomfortable procyclical capital allocation. They’ve carried out it again right here because their balance sheet is beneath stress. They’d to hedge out the oil designate correct earlier than the oil designate ran up a lot. I don’t think they reduction critical from a elevated oil designate. What is more crucial of their lives is the margins they construct [from] reducing; in varied words, refining oil into varied chemicals. Those margins play a critical bigger role since they constructed the manufacturing facility in Louisiana in The usa. It is, sadly, critical less of an ‘oil play’ within the meanwhile than it is a ‘chemicals play’.

On Ticket Cutifani’s retirement:

I absorb the well-known thing is that it’s an inner succession; somebody from Anglo American is taking on. Duncan Wanblad [Cutifani’s successor] has experience all over a substantial vary of Anglo companies: copper, iron ore and varied strategic pursuits. He’s been uncovered to most of Anglo American’s operational companies and has lag many of them. He’s an skilled Anglo insider and that’s repeatedly a factual thing. No, it doesn’t construct me nervous in any appreciate that Ticket is leaving at this level because I absorb, as succession planning goes, they’ve carried out a in point of fact factual job right here.

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