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Sasfin: Review – TFG buys online shopping and delivery Quench

MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Local stocks took a breather yesterday, reversing previous session gains as some uncertainty over Omicron lingered and South Africa saw an increase in COVID-19 reinfections due to the new variant. The Johannesburg All-Share Index closed down 0.25% at 71,021 index points, while the Top-40 Index fell 0.36%. Gold stocks led the declines, following lower bullion prices. Gold hit a one-month low on Thursday as comments from US Federal Reserve Chairman Jerome Powell on the need to control inflation bolstered bets for a quicker tightening of monetary policy and offset Omicron’s safe-haven inflows into bullion.

EUROPEAN MARKET COMMENTARY

European stocks fell in another volatile trading session on Thursday as concerns persisted over the omicron Covid variant. The pan-European Stoxx 600 fell 1.1%, with tech stocks plunging 3.8% to lead the losses as nearly all sectors and major exchanges slipped well into the red. Meanwhile, the unemployment rate across the common currency bloc continued to fall, reaching 7.3% of the labor force in October after, from 7.4% in September.

U.S. MARKET COMMENTARY

US stocks rebounded strongly on Thursday, after an omicron-led selloff in the previous session, as cyclical names recouped some of their recent losses. Airline, casino and energy stocks led the gains on Thursday, rebounding from Wednesday’s market rout. Delta Air Lines rose about 9.3%, MGM Resorts gained nearly 7.7% and Hilton Worldwide gained 7.4%. On the negative side, Apple shares fell after Bloomberg News reported that the tech giant was experiencing a slowdown in iPhone demand ahead of the all-important holiday season.

ASIAN MARKET COMMENTARY

Stocks in Asia Pacific were mixed earlier in the day after days of turbulent trading this week as investors continue to monitor the situation surrounding the omicron variant Covid. Chinese tech stocks in Hong Kong plunged after ride-hailing giant Didi announced on social media platform Weibo on Friday that it would begin taking steps to delist from the New York Stock Exchange – less than six months after its debut in the United States. The company also said in the statement that it would pursue a listing in Hong Kong.

CURRENCY MARKET COMMENTARY

The rand rebounded against a weaker dollar on Thursday after breaking the 4 p.m. mark again in the previous session as the coronavirus variant Omicron established itself as the dominant strain in South Africa. At the end of the session, the rand was trading around 15.94 rand per dollar, or 0.67% higher. Data from South Africa’s National Institute of Communicable Diseases showed on Wednesday that 74% of all virus genomes it had sequenced last month belonged to the new variant, with new cases doubling from Tuesday .

COMMODITY MARKET COMMENTARY

Oil prices soared this morning, extending gains after OPEC+ said it would consider supply additions ahead of its next scheduled meeting if the Omicron variant hits demand, but prices were still on the right track. way for a sixth week of decline. Gold was forecast for a third consecutive weekly decline today, weighed down by signals from Federal Reserve officials that the central bank may end its pandemic-era asset purchases and raise rates interest rate faster than expected to combat soaring inflation.

LOCAL COMPANIES

Rebosis Real Estate Fund (REB) 0.0%

Rebosis Property Fund declared no dividend on Thursday for its financial year ending August 31, 2021 – the third consecutive financial year for which the group has chosen not to. It comes as the debt-laden real estate meter continues to prioritize corporate deleveraging, particularly over the past year with the financial fallout from Covid-19 hitting the REIT harder than many. its JSE-listed peers. The payment of dividends or dividend per share is a key indicator of the financial performance of SA Reits. Under tax rules, a listed real estate meter must pay out at least 75% of distributable income in order to maintain REIT status. Rebosis’ decision not to pay a dividend also comes as the group failed to pass solvency and liquidity tests, which is a precondition for Reits to pay dividends. The group, founded by property entrepreneur Dr Sisa Ngebulana, reported a 10% drop in like-for-like net property income compared to its previous financial year (2020). “The distributable profit before tax [and] excluding single items [capitalised interest and operating expenses on deferred payment liability] is R83 million,” he added. Rebosis, which announced a proposed 6.3 billion rand deal to sell most of its portfolio of government-leased offices in October, however managed to increase its distributable income for its last financial year. “The higher distributable income is the result of lower group head office costs to R151 million [2020: R175 million] and lower financial charges related to bank facilities to R602 million [2020: R828 million], due to lower repo rates and repayment of facilities using proceeds from the sale of Medscheme,” he noted. The fund said the fair value of its property portfolio as of August 31, 2021 was R13.1 billion, representing 0.3% year-on-year growth. This excludes the disposal of its Medscheme building. It occurs despite the decline in net property income. The group said vacancies in its retail portfolio accounted for 9.8% of the portfolio, while the REIT is largely sovereign. The office portfolio recorded vacancy rates of 21.7%. This results in a combined average vacancy rate for the Rebosis portfolio of 17.3%, excluding office buildings slated for conversion into student accommodation. Rebosis said rental receipts on the portfolio improved to 103.9% for the period, although “the fund was forced to provide an additional R100 million [2020: R148 million] in rental dealerships [R27 million] and write-offs of bad debts [R73 million] to mostly smaller tenants who continue to struggle with the impact of Covid-19″. The group stressed that it suffered no damage to its retail portfolio following the July unrest in Gauteng and KwaZulu-Natal.

The Foschini Group (TFG) +1.6%

Fashion retailer TFG (The Foschini Group) is buying online shopping and delivery platform Quench through its Labs division, aiming to expand its e-commerce business. Many consumers are still choosing to shop online due to the Covid-19 pandemic, with goods being delivered to their doorstep. Quench knows a thing about accommodating change, as it’s one of the liquor delivery services that has turned to on-demand groceries and other essentials during shutdowns when alcohol was prohibited. “Through this acquisition, we gain access to fast and reliable delivery across South Africa, while achieving superior delivery unit economics. With 75% of orders currently fulfilled from stores, the micro- Quench carriers will become a critical enabler for our shipping since-store strategy,” said Claude Hannan, co-head of TFGLabs. TFG has 29 brands and retailers in fashion, jewelry, accessories, sportswear, housewares and furniture. It has more than 43,000 points of sale in 26 countries, with more than 26.4 million customers.

INTERNATIONAL COMPANIES

Global Didi (DIDI) -0.1%

Chinese ride-sharing giant Didi Global has announced plans to delist its shares from the New York Stock Exchange (NYSE) and transfer its listing to Hong Kong. The company has been under intense pressure since its US debut in July. Days after the initial public offering (IPO), Beijing announced a crackdown on overseas-listed tech companies. Earlier on Thursday, the US market watchdog unveiled tough new rules for Chinese companies listed in America. “After extensive research, the company will immediately begin delisting from the New York Stock Exchange and prepare for listing in Hong Kong,” the company said on its account on Weibo, China’s microblogging network. Twitter-like.

NVIDIA Corporation (NVDA) +2.2%

The United States Federal Trade Commission (FTC) is suing to block the $40 billion takeover of British chip designer Arm Holdings by American Nvidia. The US watchdog said the deal would give Nvidia, one of the world’s biggest chip companies, control of the technology and designs rival companies rely on to develop their own chips. It is the latest hurdle placed in the way of the takeover, two weeks after UK Digital Secretary Nadine Dorries ordered a full investigation on national security and competition grounds. The FTC alleges that the combined company would have the “means and incentive” to stifle innovation in next-generation technologies such as data centers and driver assistance systems in cars.

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