Aspen drops 7%

This is one of the busiest weeks of the year in terms of market news, with a number of really important companies releasing results.

Covered today: Aspen, Sasol, Cashbuild, Brimstone, Sea Harvest and Sibanye-Stillwater, along with a selection of Nibbles.

Saved for later: The retail duo of Woolworths and TFG, as well as a look at how Motus is performing (I had an interesting chat with that management team yesterday). I still need to catch up on Sibanye-Stillwater and KAP as well.

If you’re looking for previous Ghost Bites content, then you’ll find all the mailers at this link.

There’s much to learn today and I do hope you enjoy it!

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Listen to it here and share it with someone who needs this message today.

Let’s begin with Aspen, which saw its share price close 7.4% lower yesterday in response to the release of earnings for the year ended June 2026.

The market punished the stock despite a somewhat heroic effort in H2 that saw second-half growth in EBITDA from continuing operations of 52%. In the context of normalised HEPS from continuing operations being down 24% at the halfway mark in the year, a full-year increase of 28% in that metric looks really impressive!

The group finds itself on a revenue treadmill at the moment, as they need to get the manufacturing facilities back on track after the loss of a major contract. This is going to be the major focus in FY27.

It can’t come a moment too soon, as there was immense pressure on Commercial Pharmaceuticals (the largest segment) to deliver in this period. Thankfully, it did.

A look at the segmental performance table shows constant currency growth in revenue and normalised EBITDA of 5% and 13% respectively in Commercial Pharmaceuticals. But Manufacturing is where it gets really interesting though, as normalised EBITDA was up by 21% despite revenue decreasing by 10% and gross profit dropping by 38%!

This is a good reminder that plenty of things happen between gross profit and EBITDA, with management’s efforts to restructure Manufacturing and reduce costs clearly paying off.

The greatest irony of all in the numbers is that Manufacturing’s adjusted EBITDA growth was better than we saw in Commercial Pharmaceuticals, despite the drop in revenue. This contributed positively to the growth in group adjusted EBITDA of 14%.

It’s been quite a ride for the company and its shareholders over the past year, especially in the aftermath of Aspen announcing the APAC disposal in December 2025:

These proceeds led to substantial share repurchases between 29 May and 31 August of 17% of shares that were in issue in December 2025 when the authority was granted. Interestingly, the average repurchase price paid was R148.17, but the share price closed at R145 on Wednesday after the release of results.

Looking ahead, the group is targeting “substantial double-digit growth” in constant currency normalised HEPS in FY27. The primary driver will be the Manufacturing segment, which Aspen believes will more than double normalised EBITDA vs. the prior year. The Commercial Pharmaceuticals portfolio is expected to achieve mid-single digit growth in revenue and normalised EBITDA.

The slowdown in growth in Commercial Pharmaceuticals is probably why the share price took a knock. Investors seem to be nervous of an upcoming year in which the battered and bruised Manufacturing segment needs to deliver the goods.

There’s also an element of profit-taking here, particularly after such a strong run this year with Aspen in the market repurchasing its shares.

This is one of those stocks where you need to zoom out though, as Aspen’s share price took an absolute hiding in April 2025 after announcing a material dispute with a contract manufacturing client. Shareholders from that period will no doubt remember watching the Aspen share price crash by more than 30% in a single day!

Onwards to another source of grey hair for many investors: Sasol. The total return on this stock over 5 years is 3.3% - not per year, but in total over five years i.e. including dividends!

Those who dated Sasol for a good time rather than a long time have been richly rewarded, with the stock up more than 90% on a year-to-date basis. Although the current share price of R201 is some way off the 52-week high of R242, this has been a period in which the geopolitical mess in energy markets has done wonders for refining margins in fuel.

To their credit, management hasn’t just sat back and watched the fuel prices do the work. For the year ended June 2026, sales volumes increased by 4% due to better production. Cost initiatives kept cash fixed costs in line with the prior year, driving a 17% increase in adjusted EBITDA and a 22% increase in cash flow from operations.

Refining margins more than doubled, helping the Fuels segment achieve a truly bonkers move in EBIT from R5.2 billion to R19.9 billion.

Let me pause there, as the move is even crazier than it looks. The prior year included a legal settlement benefit from Transnet of R5.5 billion in that segment. In other words, they’ve moved from a marginal loss in Fuels to EBIT of nearly R20 billion in that segment!

Not all the areas of the business have done well of course. For example, there’s a nasty move in Chemicals Africa due to the stronger rand. Overall though, it’s clearly been a great period for Sasol.

By now, you must be expecting an eyewatering move in free cash flow, especially as capex was 18% lower than the prior year due to the conclusion of major projects.

In practice, free cash flow actually decreased by 5% to R11.9 billion, although the R3.1 billion after-tax settlement from Transnet in the prior year is a major item that would need to be adjusted here. Still, even if you strip that out, the cash available to Sasol shareholders took a knock from working capital pressures in an environment of elevated fuel prices.

Speaking of returns to shareholders, the good news is that net debt was reduced by 11% to $3.3 billion (note the currency here). The target is to reduce net debt to below $3 billion, at which point there should be more cash available for equity investors.

Cashbuild added its name to the action on SENS yesterday, with results for the year ended June 2026 that tell a sorry tale. Despite revenue growth of 6%, HEPS was down by 8%. Even more irritating is gross profit increase of 8%, so things really went wrong between gross profit and HEPS.

One of the issues was operating expenses, which grew by 9% (or 7% if you exclude the losses on disposal of the Malawi subsidiary). A further problem was the effective tax rate, which jumped from 26.5% to 29.2%.

Perhaps worst of all, revenue for the 7 weeks since period end is only flat vs. the previous year. With clear inflationary pressure on costs, that’s a worrying trend. With the Price/Earnings multiple above 11x, there’s every chance that Cashbuild could slip into single-digit multiples here.

Brimstone Investment Corporation’s results for the six months to June 2026 show decent growth, with intrinsic NAV per share up by 11.7%. This is the metric that really matters at an investment holding company.

The largest underlying assets are the stakes of 16% in Oceana and 44.2% in Sea Harvest, collectively contributing nearly 72% of the gross value of the fund.

It was Oceana that really did the heavy lifting in the period under review, with the INAV per share up by 22.1% between December 2025 and June 2026. This more than offset the 10.3% decline in Sea Harvest.

There was also a significant positive valuation move at FPG Property Fund, a Western Cape retail focused fund in which Brimstone has a 10.0% stake.

On the same day, Sea Harvest released results for a challenging interim period, impacted by lower catch rates and one of the weakest industrial fishing seasons on record for anchovy.

Diversification only gets you so far unfortunately, with revenue down by 6% and gross profit down 8%.

It’s an impressive display of cost control that saw EBIT climb by 2% despite this pressure. Even better is the increase in HEPS from continuing operations of 14%, helped along by a decline in net debt and associated financing costs.

The disposal of Ladismith to Fairfield Dairy did wonders for the balance sheet here, with Sea Harvest deciding to focus on what it says on the tin: harvesting products from the sea. As many an uncle will tell you though, the fish don’t always bite the way they should.

Tharisa is speaking to bankers and potential investors as the company contemplates a $300 million bond issuance. They are looking to raise capital for development of the Karo Platinum Mine. Of course, there’s the eternal catch-all for bond proceeds as well: “general corporate purposes”.

Hammerson brings us another example of debt market activity, pricing a bond maturing in 2033 at an annual coupon of 5.875%, or 107 basis points above the Treasury Gilt maturing in the same year. Remember, this is a UK-based cost of debt. There was no shortage of investors available, with the issuance being more than four times covered. The group has raised this cash ahead of the maturity of a sustainability-linked bond in June 2027.

Do your own research and speak to your financial advisor. Nothing you read or listen to in Ghost Mail should be interpreted as financial advice. Every effort is made to avoid errors in Ghost Bites and related podcasts, but I am only human. Reading Ghost Bites isn’t a substitute for digging into the numbers and key details yourself.

Wall Street rebounded yesterday from its recent selloff, supported by renewed buying in AI related technology stocks. Dell gained after posting better than expected results, while Nvidia advanced on renewed AI infrastructure optimism. Gains across the market were broad based after less hawkish commentary from a Federal Reserve official offered some relief to the bond market and softened the dollar.

Broadcom's results after the bell beat consensus, though the share price weakened as the company's outlook fell short of bullish expectations.

ADP reported that private payrolls rose by just 38,000 in August, below the 47,000 consensus and the smallest gain since January. As a precursor to Friday's government payrolls data, the soft print marginally dimmed prospects for hawkish monetary policy and helped support yesterday's rebound.

Asian markets are flat to firmer, taking their lead from Wall Street. The dollar has softened following the ADP data and Fed commentary, helping lift metal prices, with gold up over $100 an ounce from yesterday's lows.

Oil prices are flat but remain elevated as military action in the Middle East intensifies to its worst levels in a few months. Renewed talks between the US and Iran appear a long way off.

The rand remains steady, and we expect a flat to slightly higher open for the JSE All Share Index. The sustainability of these gains will be tested this afternoon's data and Friday's non-farm payrolls report.

Weekly US jobless claims and July trade balance data are in focus this afternoon.

This update is provided by Shaun Murison, Senior Market Analyst at randswiss.com. Connect with him on LinkedIn here and follow him on X here.

Key Indicators: 

USD/ZAR R16.04/$ | US 10yr 4.77% | Gold $4,437/oz | Platinum $1,778/oz | Brent Crude $90.75