PPC: a margin miracle
I’ve chosen to focus on Gold Fields (JSE: GFI) and PPC (JSE: PPC) in Ghost Bites today, bringing you an interesting mix of deal news and the tough operating conditions in South African industrials.
I plan to do another Ghost Dive on my YouTube channel this week. If you’re not sure what that is, check out the most recent example where I did a retrospective on how Discovery (JSE: DSY) built Discovery Bank.
Keen to do more research on local stocks? Unlock the Stock is a wonderful way to do it. In the past few weeks, we’ve hosted CA Sales Holdings (JSE: CAA) and Redefine Properties (JSE: RDF) in separate sessions. This is a fantastic way to hear directly from management, with the subsequent Q&A session facilitated by yours truly and Mark Tobin of Coffee Microcaps. Get the latest videos here.
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Ghost Bites: Making sense of SENS
Gold Fields (JSE: GFI) kicked things off on Monday by responding to the weekend's media speculation. They confirmed that they’ve been engaging with Northern Star Resources for roughly six months, culminating in the submission of a non-binding, indicative and conditional proposal on 13 September 2026.
In the proposal, Gold Fields put forward terms for the acquisition of 100% of the company in exchange for a potential combination of shares and cash (various underlying Ts & Cs apply). If it went ahead under the proposed structure, Northern Star shareholders would have ended up owning approximately 33% of the combined group.
But the Northern Star board wasn’t keen to dance, with a letter on 24 September confirming that it “wasn’t appropriate” to engage further at this time.
Now, many corporate deals go through a stop-start process like this. So is this the end of the process, or merely the next step?
We don’t know for sure, but it helps Gold Fields that activist investor Elliott Investment Management has been building pressure at Northern Star since June. The terms put forward by Gold Fields will give shareholders in Northern Star something else to chew on, with large shareholders likely to ask the Northern Star board to defend and explain its position.
To be fair, a premium of 14% to Northern Star's closing share price on 25 September may not be juicy enough to force the board’s hand.
If a deal happens here (and it’s a very big “if”), it could create the world's second-largest listed gold producer, with around 80% of its exposure concentrated in Australia, North America and Chile. That’s an opportunity worth keeping an eye on!
At PPC (JSE: PPC), shareholders have to be content with revenue growth of just 1% for the five months to August 2026. Thankfully, the far more impressive number is EBITDA, which jumped by 40% for the period! Group margin expanded by 620 basis points to 22.1%.
It gets worrying for our country if you dig deeper, as revenue in South Africa and Botswana fell by 2%. There’s an ugly decline in volumes in that segment of 8%, giving us yet another painful illustration of the weak state of domestic infrastructure spending. The concerns around the deindustrialisation of South Africa won’t be put to bed by these numbers.
Nonetheless, PPC is leaning into this market. R3.1 billion is being invested in the new RK3 plant in the Western Cape to take advantage of regional demand. Cement is expensive to move around, so there are benefits to highly localised manufacturing.
The Zimbabwe business did the heavy lifting in this period. Volumes were up by 3%, so the 5% revenue growth in that segment has a healthy mix of price and volume. But the real excitement lies in segmental EBITDA margin, which jumped from 19.1% to 34.2% thanks to a strong operational performance in the country.
Even in South Africa and Botswana, EBITDA margin improved by 80 basis points to 16.7%.
There’s not much that PPC can do about external demand, but management has done a solid job here of controlling the controllables.
PPC isn’t expecting an improvement in near-term conditions in South Africa, so it will remain a game of inches in terms of trying to protect (and expand) EBITDA margin. In Zimbabwe, the second half of the year will be impacted by a planned plant shutdown, but the group expects the benefit of higher margins to carry into the latter half of the year.
At this stage, the group’s overall expectations for FY27 are unchanged from the guidance provided with the release of FY26 results.
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.
What every CFO should know about changing auditors
Changing auditors is not something most CFOs do often, but when the moment arrives, the decision can have far-reaching implications for governance, stakeholder confidence and the effectiveness of the audit process.
Yolandie Ferreira, Head of Africa for Forvis Mazars Africa, joined me to explore what companies should consider when appointing a new auditor and why the process is about much more than compliance.
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Global markets update with Shaun Murison
US stocks fell overnight as oil prices and Treasury yields rose. Global markets are on shaky ground as prospects for a peace deal in the Iran war have diminished and the probability of an October US rate hike has increased.
Crude prices jumped after US President Donald Trump rejected a peace deal and threatened to limit diesel exports. Prices did, however, pare gains on expectations that Qatari mediators will hold talks with the US and Iran in search of a possible deal.
Nvidia shares managed to gain despite weakness in the broader market and tech sector after the company announced a $150 billion share buyback.
Chinese stocks eked out gains after the country's cabinet pledged to increase countercyclical policy support. The Hang Seng and broader Asian equity benchmarks are, however, mostly lower this morning.
Amid the general risk off trade, oil prices remain elevated, as do the dollar and US Treasury yields, while precious metal prices remain under pressure.
The rand is weak and we expect a flat to lower open for the JSE All Share Index.
Key market events this week include US PCE inflation data tomorrow, as well as Micron results and US jobs data on Friday.
This update is provided by Shaun Murison, Senior Market Analyst at randswiss.com. Connect with him on LinkedIn here and follow him on X here.
Key Indicators:
USD/ZAR R16.41/$ | US 10yr 5.24% | Gold $4,144/oz | Platinum $1,716/oz | Brent Crude $106.92