Burstone's platform play

As I’ve said many times, my vision with Ghost Mail has always been to reduce the gap between institutional research and the insights readily available to retail investors.

When companies come on board to do Ghost Stories podcasts, they are contributing directly to closing that gap and creating a healthier market for all South Africans.

Burstone (JSE: BTN) is the latest example, with CEO Andrew Wooler joining me to unpack the platform strategy and how they use “other people’s money” to create value through capital-efficient transactions. We also discuss the launch of the Core Plus platform with Nedbank Property Partners, reflect on the Blackstone journey in Europe and dig into concepts like first-loss exposure and ring-fenced debt.

If you've ever wondered exactly what Burstone is building, this conversation is well worth your time.

Looking for something you’ve read recently? This link has all the previous editions of Ghost Mail (and Ghost Mail Weekender). Share it with your friends and bring them into the community!

Before we get into the details of the trading statement at Afrimat (JSE: AFT), it’s important to understand just how severely this share price has been smashed by the market in the past year or so:

I’m cherry-picking dates to make a point here, but the stock is trading at levels we last saw in February 2017.

Mining and materials groups tend to be a good idea for investors when absolutely nobody wants them, so the debate is whether Afrimat has truly bottomed yet. I have a position here that I’m not ready to add to just yet.

If you can imagine one of those days where everything feels like it’s going wrong in your life, then you’re on the right path to understand what the recent trading conditions have been like for Afrimat.

This is the exact wording from the trading statement: “Since listing in 2006, Afrimat has never faced trading conditions as challenging as those experienced during the six months ended 31 August 2026.”

Yikes.

At the bottom of the announcement, you’ll find that the company has swung from HEPS of 101.9 cents to a headline loss per share of between 55 and 60 cents.

Much of this is outside of their control, ranging from the state of the local smelting industry through to the 49.1% jump in shipping costs for iron ore. But where shareholders have attributed at least some blame is the Lafarge transaction, which in hindsight may have spread the group and the management team too thin.

This is the problem with brave deals: you just don’t know if the tide will go out at the exact moment that you chose to change your shorts.

One of the issues in iron ore has been the stronger rand. Our exporters (like Afrimat) enjoy a weaker rand. Instead, the stronger rand took mine-gate revenue per ton down by 16.4%. The domestic market didn’t give them much of a safety net because of the issues in the smelting and steel industries, particularly in Q1. Although a recovery began in Q2, domestic iron ore volumes were 36.5% lower.

Another ugly story is the cement business. Despite significant interventions to fix the assets acquired from Lafarge, the operation continued to be loss-making during the period. Backing a turnaround story is one thing when times are good, but it becomes quite another when the core business (iron ore) is under so much pressure.

The silver lining can be found in the aggregates and fly ash operations. Management is clinging to this performance to help justify the acquisition of the Lafarge quarries. Margins expanded and operating profits grew strongly, continuing the trend of the past few years. It’s just clearly not enough to offset the issues elsewhere in the group.

At least the balance sheet is in better shape after disposals of assets and the conversion of iron ore stockpiles into cash. The debt-to-equity position is below 50%, with the group targeting a level closer to 25%. Performance will surely need to improve for them to meet that target.

There are some other positive stories underneath all this, including additional manganese capacity. But the reality is simpler than that: Afrimat needs things to get better in the iron ore sector. The company is diversified, but not diversified enough for the earnings to withstand this amount of heat in the core business.

There’s been some massive buying of shares in Canal+ (JSE: CNP) by insiders and their associates. Across two such individuals, shares worth nearly R47 million were acquired.

A prescribed officer of Standard Bank (JSE: SBK) sold shares worth R4.2 million.

At AVI (JSE: AVI), two directors of two different major subsidiaries received share awards and sold the whole lot. It’s not uncommon to see this at divisional level, but it would obviously be a more positive signal to shareholders if they retained the non-taxable portion.

In contrast, recent share awards at Growthpoint (JSE: GRT) led to a different choice, with insiders selling only the taxable portion of the shares. That’s not as bullish as taking money out their pockets to buy shares in on-market trades, but it’s more bullish than selling the entire award.

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. This is not a complete review of SENS and does not replace the need for you to refer to company announcements and reports yourself. Every effort is made to avoid errors in Ghost Bites and related podcasts, but I am only human.

Global equity markets came under pressure yesterday as the selloff in bonds continued to lift Treasury yields, and both the Nasdaq and the S&P 500 retreated from record high territory.

Some of the risk aversion did, however, begin to unwind later in the session following the release of the minutes from the Fed's last policy meeting and a well received bond auction.

The minutes showed that while the last Fed decision was unanimous, views on its significance differed. Some members regarded the rate hike as a precautionary measure, while others saw it as only the first in a series of steps needed to tackle inflation driven by demand.

The dollar is flat this morning, having closed yesterday well off its intraday highs. Gold has recovered around $60 an ounce from yesterday's lows.

Oil prices, however, have continued to climb on the back of Houthi attacks on Saudi Arabia, logistical constraints and concerns over adverse weather forecasts for the Gulf region.

In Asia, Chinese markets are lower as they return from a week of holidays and catch up on geopolitical tensions and higher global yields. The Hang Seng is flat and the Nikkei is trading weaker this morning.

Locally, the rand has clawed back some of yesterday's losses against the dollar, and we expect a flat to marginally firmer open for the JSE All Share Index.

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 R16.66/$ | US 10yr 5.32% | Gold $4,121/oz | Platinum $1,662/oz | Brent Crude $102.77