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Our opinion on the current state of THARISA(THA)Tharisa (THA) is a mining company that mines and beneficiates platinum group metals (PGMs) and chrome. The company is listed in London and on the JSE. The Tharisa mine on the south-west limb of the Bushveld Igneous Complex (BIC) is an open-pit operation with an estimated life of 17 years. The company owns a subsidiary, Arxo Metals, which beneficiates chrome to produce high-grade chrome concentrates. The company is planning to expand into the Great Dyke area of Zimbabwe.
In our view, this is one of the best mining investments on the JSE with a cost of production well below current metals prices and some good options for expansion. The company has been involved in the Vulcan Plant, which will improve chrome recovery to 82% from 65% and cost $54,2m. The target is to reach 200,000 ounces of PGMs and 2 million tons of chrome ore production using a proprietary technology. The open-pit operation is relatively low-cost and does not have the problems associated with underground operations. The company is planning to build a 5MW furnace that will enable it to produce iron alloys rich in platinum group metals and would sell for a far better price.
On 5th October 2021, the company announced the cold commissioning of its Vulcan chrome beneficiation plant, which is expected to increase chrome recoveries by 20%. On 4th February 2022, the company announced that it had signed an agreement to implement a solar farm of more than 40 megawatts. On 27th March 2023, the company announced that it had raised $130m (about R2,3bn) in finance from ABSA and Soc Gen.
In its results for the year to 30th September 2023, the company reported PGM production down 19,3% and revenue down 5,3%. Headline earnings per share (HEPS) fell 31,1%. The company said, "The decline in reef mined primarily emanates from access restrictions to the open pit due to limitations on mining activities in close proximity to the nearby community, adverse weather conditions experienced as well as the processing of suboptimal reef horizons which were supplemented by purchased ROM ore to maintain plant throughput."
In a production update on the 3 months to 31st December 2023, the company reported mill throughput for PGMs and chrome up 8,7%, with chrome at a record 462,8 kilotons. The CEO, Phoevos Pouroulis, said, "We have made good operational improvements, with waste mining advances leading to better mining and plant performance, resulting in record quarterly chrome production."
In a production report for the second quarter ending on 31st March 2024, the company reported PGM output unchanged and the basket price received slightly down. At the end of the quarter, the company had cash of $184,6m and debt of $114m. The CEO said, "Operationally we performed well, building on a record first quarter and on track to meet guidance."
In a production report for the third quarter to 30th June 2024, the company reported PGM production of 36,9k ounces with the PGM basket price flat at $1391 per ounce. The company had cash on hand of $189,9m against debt of $97,7m. The company said, "Operationally we delivered as planned, with improved mining and plant recoveries resulting in overall PGM and chrome concentrate production increases."
Technically, the share is well-traded with over R356,000 worth of shares changing hands on average each day, which makes it practical for private investors. Since March 2024, the share price has been rising in line with the improved prospects for PGMs. We recommended waiting at least for a break up through the downward trendline before investigating further. That break came on 26th March 2024 at 1405c and the share has since moved up to 1950c. The share remains a risky commodity counter dependent on the international prices of the commodities which it produces. Our opinion on the current state of PICKNPAY(PIK)Pick 'n Pay (PIK) is a retail grocery chain with over 2000 stores, mostly in South Africa, but also in the rest of Africa. The company was started by Raymond Ackerman in 1967 and became the dominant grocery retailer over time, before being displaced by Shoprite/Checkers. Summers has once again resumed the role of CEO, following his stint at Pick n Pay as CEO between 1999 and 2007.
In its results for the 52 weeks to 25th February 2024, the company reported turnover up 5.4% and a headline loss of 203.06c compared with a profit of 259.25c in the previous year. The company said, "Trading profit declined 87.4% to R385.0 million, reflecting a R1.5 billion trading loss for Pick n Pay (a sharp reversal versus FY23's R1.3 billion profit), and a R1.9 billion trading profit for Boxer (R1.8 billion profit in FY23). The result was further impacted by a 198.8% increase in net interest paid to R701.8 million, as a result of higher gearing and increased interest rates."
Technically, Pick 'n Pay has been in a downward trend since 2016 and has lost substantial ground to Shoprite. On the latest results, it remains in a long-term downward trend. The link-up with Mr. D and Takealot should help the company to catch up in the online shopping market. To re-capitalise the business, it is planning to separately list Boxer and conduct a rights issue to raise R4bn in mid-2024. The rights issue was approved by shareholders at a general meeting on 26th June 2024. This would require the Ackerman family to inject R1bn to retain their position as 25% shareholders.
We recommended that you apply a 200-day simple moving average and wait for a clear upside break before investigating further. That break came on 27th May 2024 at a price of 2558c. The share has since moved up to 2739c. Despite this, the share remains risky. 
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Our opinion on the current state of LEWIS(LEW)Lewis (LEW) is a retailer of furniture and electrical appliances operating through 840 stores under the Lewis (492 stores), Beares (151 stores), Best Home (154 stores), and most recently, United Furniture Outlets (43 stores) brands. Of these, 134 are in neighboring countries. The company does 59.9% of its business on credit and offers customers credit insurance and other financial products. The plan is to increase the number of UFO stores from 39 to 70 over the next few years.
At current levels, the share is trading on a P/E of just 6.16, and the share price is well below its net asset value (NAV). The company's balance sheet remains debt-free, which is extraordinary among listed retailers in this post-COVID-19 period. The company is in the process of buying back 10% of its issued share capital. We have always said that this share represents a bargain. It will benefit directly from any increase in consumer spending. It is an extremely tightly managed company with no debt and a huge store footprint. It has been growing both organically and by acquisition.
Obviously, as a retailer of furniture and white goods, it is vulnerable to any economic downturn, but we see it as cheap right now and expect its share to rise as the economy improves. Certainly, it is one of the few retail outlets in South Africa which is doing reasonably well in the circumstances. The company is engaged in a share buy-back program in which it has so far bought back 29.9 million shares at an average price of R34.20 per share.
In its results for the year to 31st March 2024, the company reported merchandise sales up 4.7% and headline earnings per share (HEPS) up 7.1%. The company said, "The strong credit sales growth trend continued, with credit sales increasing by 15.8% and cash sales declining by 11.8%. Credit sales have grown at a compound annual rate of 16.9% over the past three years and now account for 66.2% of total merchandise sales (2023: 59.9%). The group has maintained its prudent credit granting criteria in the constrained spending environment and the credit application decline rate increased to 35.1% (2023: 34.7%)."
The modest results show that consumers are under pressure from high interest rates, but the end of loadshedding should be a benefit. This share remains one of the best-run businesses on the JSE at the moment. The company believes that it is under-valued on the JSE by 30% - and we think that is conservative. We added Lewis to the Winning Shares List (WSL) on 1st December 2023 at 4150c. It is now trading 38.5% higher at 5700c. Technically, the share has broken up through its downward trendline and is in a strong new upward trend. 
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Our opinion on the current state of BIDVEST(BVT)Bidvest (BVT) is a highly diversified South African company with dozens of subsidiaries. Its most notable investments include a 66% stake in Bidvest Namibia, which also owns a large property portfolio rented out to various Bidvest companies, and a 56.13% stake in Adcock Ingram. The company's subsidiaries are organized into six divisions: Services, Freight, Automotive, Office, Print & Commercial Products, Financial Services, and Electrical. The directors of each operating company are given considerable autonomy within this structure, provided they produce good returns.
This decentralized management style contrasts with most listed companies, which aim to retain their focus on a single area of business and constantly sell off or close down "non-core" businesses. Diversification of this sort reduces risk as different divisions can balance each other out when one is performing poorly while others perform well. Additionally, Bidvest is constantly making new acquisitions. The acquisition of PHS, the UK's largest cleaning service, was well-timed, coming immediately before the huge increase in demand for cleaning that followed COVID-19. The company's investment in alternative energy sources is seen as a potential profit generator.
In its results for the six months to 31st December 2023, the company reported revenue up 8.8% and headline earnings per share (HEPS) up 5.3%. The company stated, "Group NAV per share grew from R89.88 in the prior period to R100.08 as at 31 December 2023. Cash generated by operations almost doubled. We spent R3.2 billion on acquisitions, invested in maintaining and growing our asset base, as well as awarded our shareholders with a higher dividend."
On 3rd July 2024, the company announced that it would be looking for a buyer for Bidvest Bank and FinGlobal. At the same time, it announced the acquisition of Citron Hygiene LP. Bidvest now trades on a P/E of 15.23, but we believe it still represents good value at these levels. Technically, it has just emerged from an island formation and is on a strong recovery path. 
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