PSG: performance fee pressure

All of a sudden, we had a properly busy day of updates!

Before we dig into the detail, I want to highlight the latest Magic Markets podcast. The team from Aylett & Co. joined us to explain why they believe that Bidcorp (JSE: BID) could be the best boring business in their portfolio. Listen to the discussion on YouTube or get it on Apple Podcasts / Spotify.

Another quick one before you dig in - Calgro M3 (JSE: CGR) will be on Unlock the Stock next week Thursday. As usual, attendance to the online event is free, giving you a chance to pose your questions to management. You simply need to register here to wear your analyst hat for an hour.

Sanlam (JSE: SLM) hosted a capital markets day yesterday. It’s an enormous presentation that I need to make time to work through. It might even inspire a Ghost Dive YouTube video!

Of course, given all the support that Satrix has given to Ghost Mail over the past few years, I thought I would check what the mothership has to say about its indexation business.

The deck reminds investors that Satrix is the largest indexation business in the country, with 38% CIS market share and more than R330 billion in assets under management. The revenue CAGR from 2020 to 2026 of 19% is the highest in the Sanlam Investments stable.

Another great statistic is that 25% of all SA CIS industry retail flows were captured by Satrix in the first half of the financial year (excluding fund of funds, money market and reinvestments).

It’s really great to see South Africans taking advantage of the opportunities presented by indexation.

Just this week, Kingsley Williams of Satrix wrote a piece on how rules-based funds are changing South Africa’s savings landscape. You can read it here to get a better understanding of why Satrix is growing at this rate.

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!

PSG Financial Services (JSE: KST) released results for the six months ended August 2026. The growth rates were lighter than investors have become accustomed to, with recurring HEPS up by only 5%.

This earnings growth is much lower than the increase in total assets under management of 15%, with performance fees being harder to come by than before. For more context, performance fees were 1.9% of headline earnings in this period vs. 7.3% in the prior period!

At segmental level, the lack of performance fees primarily impacted PSG Asset Management’s earnings. This segment’s recurring headline earnings fell by 5%.

PSG Wealth managed to perform in line with historical trends though, reminding us of the power of distribution in this industry (vs. just relying on market movements and performance fees). Headline earnings increased by 14%, a critically important jump for the largest segment in the group (contributing R464 million of R754 million in divisional headline earnings).

PSG Insure had a rough time. Gross written premium growth was 5%, but the Western Cape storms hurt their underwriting result. The investment income was also much lower than in the prior period. Recurring headline earnings fell by 16%.

It’s not possible for every period to be a perfect performance across the group.

PSG still managed to grow its earnings overall, while its return on equity of 26.5% remains at a lucrative level (albeit lower than the 28.6% that investors were spoilt with in the prior period).

The increase in the dividend of 10% is similar to the growth in recurring headline earnings excluding performance fees, showing you how they think about dividends. With the share price being a long way off the 52-week high, accelerated share repurchases might be the message that investors really want to see.

Equites Property Fund (JSE: EQU) released interim results for the six months to August 2026. The interim distribution increased by 5.1% for the period. The company has reaffirmed full-year guidance for growth of 5% to 7%, so the interim period has been right at the bottom of that run rate.

Equites has been disposing of UK-based assets and recycling the proceeds into South African projects. The company still has three remaining assets in the UK. Locally, there are six developments underway, with expected yields on cost of between 8% and 9%.

The loan-to-value ratio has come down sharply from 35.1% to 28.1%. This reflects the significant changes made to the portfolio and the usage of UK disposal proceeds for net debt settlement.

The net asset value per share increased by 4.5% between February and August, driven primarily by like-for-like valuation uplifts (especially in South Africa).

Mondi (JSE: MNP) released a trading update dealing with the third quarter of the 2026 financial year. If you exclude the fair value movements on the forestry assets, then underlying EBITDA decreased sequentially from €210 million to €196 million. This was due to maintenance shuts during the period.

Encouragingly, higher average selling prices helped offset input cost inflation. It seems as though Mondi is enjoying decent order books for certain grades of paper at least. The packaging business is generally seen as the best part of the Mondi business, with both Corrugated Packaging and Flexible Packaging enjoying positive pricing momentum.

Although Mondi has been the better performer over the last 12 months, drawing a five-year chart against Sappi (JSE: SAP) shows that both major companies in this sector have been struggling:

Famous Brands (JSE: FBR) released a trading statement for the six months ended August 2026. As you might expect, it’s been a difficult period of consumer pressure and elevated fuel prices. The results look slightly down at the midpoint, with a guided move in HEPS of between -13% and +7%.

In case you’re wondering why this triggered a trading statement (where the minimum move is 20%), the guidance for EPS is a decrease of between -33% and -13%. This is due to a large impairment in Botswana in response to the decision to reduce the shareholding in a business in that country from 51% to 30%.

The business in Botswana has been underperforming relative to expectations, with the crisis in the diamond market clearly reverberating through that consumer market.

Fairvest (JSE: FTA | JSE: FTB) ended the day on Thursday by announcing an accelerated bookbuild to raise approximately R500 million via the issuance of new B shares. The proceeds will be used for various retail acquisitions that are under negotiation. Based on how quickly these things are usually concluded, it’s likely that Fairvest will have the money locked in before the weekend.

Tharisa (JSE: THA) announced that Valterra Platinum (JSE: VAL) has agreed to purchase 50% of the PGM concentrate produced by the Tharisa Mine, thereby replacing Sibanye-Stillwater (JSE: SSW) as the offtake partner. In case you’re wondering, the other 50% of concentrate will still be purchased by Northam Platinum (JSE: NPH).

The PGM sector is a bit like the local retirement village: everyone knows everyone else!

Importantly, Tharisa and Valterra are collaborating to explore opportunities for fine chrome recovery and beneficiation at Valterra Platinum. This would use Tharisa’s exotically-named Vulcan X technology, which sounds like something that Iron Man built.

Sirius Real Estate (JSE: SRE) confirmed that its BBB investment grade credit rating has been reaffirmed by First Ratings, with a stable outlook. This is critically important for property funds that tap the debt capital markets in the ordinary course of business. It’s also a show of support from the ratings agency for the strategy focused on the UK and Germany.

And finally, a couple of director dealings:

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.

The dollar index softened overnight despite stronger than expected US inflation and spending data. US producer prices rose by the most in more than four years in September, retail sales beat expectations, and weekly jobless claims edged marginally higher.

Surprisingly, government bonds rallied, yields fell and the dollar corrected. Cautious remarks from Federal Reserve officials, a number of whom alluded to only one more rate hike in the current tightening cycle, towards the end of the year, seemed to have been a catalyst for the move.

Fears over AI debt financing look to have eased on the back of these comments.

This, together with an earnings beat from TSMC, sparked a rebound in AI related tech, with US markets closing well off intraday lows yesterday and futures firmer this morning.

Asian equity markets are following suit, trading mostly in positive territory, once again led by tech stocks and chipmakers.

The softer dollar is supporting metals, with gold and precious metals higher yesterday and extending gains today.

Oil prices found some short term relief after a US official said Washington is considering easing sanctions on "shadow fleet" tankers previously used to carry Russian, Iranian and Venezuelan crude. The plan would allow these vessels to transport oil that is not under sanction, adding shipping capacity and helping to bring down record freight costs. Sanctions on Russian and Iranian oil itself would remain in place.

The rand is firmer and we expect a positive 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 R16.47/$ | US 10yr 5.08% | Gold $4,175/oz | Platinum $1,636oz | Brent Crude $105.19