The Amazon of Travel


Market Scorecard

It is not often that the JSE All-share goes against the flow of international markets. As election numbers came through showing a secure ANC and lower than expected EFF result, SA Inc started to surge. Banks and retailers both pushing higher, all while global markets were crashing due to a new chapter in the trade war. Even though the US market closed in the green on Friday, their market spent most of the day in the red. As it stands this morning, US futures are down 1%, commodity prices are lower and there is now no new date for the Chinese and the US to resume talks.

Our US broker sent us a research note over the weekend, from a US-based research firm, talking about how South African stocks look cheap and how there looks to be an opportunity to get some cheap stock. Hopefully now investors can remove the excuse of political uncertainty and get their cheque books out.

On Friday the JSE All-share closed up 0.50%, the S&P 500 closed up 0.37%, and the Nasdaq closed up 0.08%.

Company Corner


Michael’s Musings

On Thursday evening Booking Holdings or more commonly known as released their Q2 numbers. Even though the numbers were on the low side when compared to what analysts were expecting, the stock still jumped 5%. Makes for a nice change, the last few quarters their numbers were on the high side but the stock dropped anyway. Who knows what will happen to share prices in the short run.

Their gross bookings were up 2% to $25.4 billion but would have been up 8% in constant currencies. A strong dollar takes a big bite out of their numbers. Of that $25 billion, Booking’s revenue was $2.8 billion, a drop of 3% or an increase of 3% in constant currencies.

Management took advantage of the lower share price coming into this year by buying back 5% of their shares in 2019 alone. It is good to see management buying during these dips!

With a lot of the low hanging fruit in the industry already captured, top-line growth has slowed for the business to the high single figures. As the company becomes more established though, their margins should be able to improve. In Q1 alone, they paid Google over $1 billion to direct people to their site. Once you are part of the ecosystem though, they will no longer need the help of Google to drive traffic, much like Amazon. In the past quarter, they have seen an increasing number of clients coming directly to the site.

The share price has been flat for two years, but in that time the company has been growing their profits and buying back shares. Patient shareholders will be rewarded in time.


Bright’s Banter

MTN released their quarterly update for the period ending 31 March 2019. The group increased the total number of subscribers by 4 million to 236.6 million. Active data subscribers also increased by 2.6 million to a total of 81.3 million. While MoMo (mobile money) customers sit at 28.3 million.

All of this helped MTN increase group service revenues by 10% to R33.2 billion, a number that has been the guidance in the near-term. This increase in service revenues was thanks to continued expansion in voice, data and FinTech revenues which increased 5.9%, 18.3% and 30.6% respectively.

The regions that led the performance were essentially MTN’s biggest markets namely: Mzansi, Nigeria, and Ghana. MTN Mzansi has just over 24.1 million prepaid customers, down 5% quarter-on-quarter. Nigeria increased service revenues by 13.4% to R10.8 billion with margins of 53.3%. Byron wrote about MTN Ghana here.

Nigeria’s securities regulator approved MTN’s listing application for its Nigerian unit, valued at $5 billion, another African Unicorn! The company will register more than 20 billion shares in a direct listing by introduction. Remember the company has over 58 million subscribers in that market.

Jumia Technologies listed in New York recently, the listing diluted MTN’s shareholding from 29.7% to 18.9%. That stake is now worth just under $600 million or around 4% of MTN’s market cap. Not bad for a stake that was virtually valued at $0 by Mr. Market!

As part of broadening the fintech business, MTN also launched Africa’s first instant messaging platform ‘Ayoba’ in Ivory Coast and Cameroon with further expansion into other markets and the integration of payments planned in the second half of the year.

We like MTN because they are going back to first principles and focusing more on the core telecoms business. This is going to help MTN pay down some debt with the proceeds from the asset sales. Mcebisi Jonas is now the new chair of the board, who is going to help in the compliance and monitoring process as the company focuses more and more on operational excellence.

The share price of MTN has gone from lows of R76.06 to highs of around R107.76 between reporting of last years full-year numbers to these quarterly numbers, a big change in sentiment for the company’s securities. The past few years have been extremely volatile for this company but the worst is over I feel.

Our 10c Worth

One thing, from Paul

In an excellent and long Financial Times article over the weekend, Camilla Cavendish reviews the emergence of the ‘young-old’ society under the headline, Life Begins at 60.

Around the world, longevity is rising due to better lifestyles, fewer wars, safer cars, sensible driving and life-saving drugs. The incidence of dementia has fallen by a fifth in 20 years. This has created an extended middle aged group of people, the so-called ‘young-old’ who are very active and productive. This is totally different from 30 years ago. Of course this trend is more visible in richer, well-developed societies.

A number of studies around the world have identified exercise as the single most powerful predictor of whether we will age well. The fellow in the picture below, Gene Dykes, just set a new record for the marathon in the over 70 category: 2 hours 54 minutes and 23 seconds. I can tell you, that is flying!

These ‘young-old’ individuals are healthy and productive, and many do not wish to retire. They can be very valuable assets to the organisations in which they work. The retirement age in the corporate sector probably needs to be reconsidered?

Of course, if you are going to live very long, you need lots of savings. So get on it. Consume a bit less and send the surplus to your Vestact account.

You can read the full article here (may require a subscription) on the Business Day website.


Byron’s Beats

Sport has been dominated by men for generations. Nike has realised that this patriarchal set up has excluded half the population as consumers. Their campaign has pushed incredibly hard at creating exposure for female sports. And rightfully so.

Of course their main agenda is to sell more goods but the money they put into female sports not only incentivises more women to participate, it turns these female stars into role models for young girls around the globe. Sport gives people purpose and creates communities. And of course, it keeps you fit, happy and healthy. The positive knock on impacts are endless, especially for the marginalised in society.

Let’s also not forget how inspirational Caster Semenya has been globally, specifically in SA. She has brought people in South Africa from all walks of life together, fighting and believing in a common cause. And Nike has been supportive of her all the way. It must be a huge confidence boost to have such a powerful backer.

This article talks about Nike’s campaign. Watch the video, it will give you goosebumps!

Linkfest, Lap it up

Change might be slower than many hope for, but change is happening in the power generation space – Britain passes one week without coal power for first time since 1882

Imagine traveling at 400 km/h in a train! We will have to wait till 2030, but exciting technology. The very long nose helps the train enter tunnels and have less of an impact from the displacement of the air – World’s Fastest Bullet Train Starts High-Speed Tests

Vestact Out and About

Want to know what moved the market last week? Then watch Bright on Business Day’s – The Week That Was – 10 May

Signing off

The JSE All-share is higher this morning. Hong Kong is on holiday today, it is the day following the Birthday of the Buddha. South African earnings start to come through this week, there is labour data out tomorrow, retail sales on Wednesday, an interest rate decision next week and then the S&P decide about South Africa’s debt rating next week Friday. It is going to be a very busy May in South Africa.

Sent to you by Team Vestact.

Email us

Follow Michael, Byron, Bright and Paul on Twitter

078 533 1063

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s