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The Finance Ghost: Sasol move is not exactly a breath of fresh air

The Finance Ghost: Sasol move is not exactly a breath of fresh air
The Finance Ghost
By The Finance Ghost
16 Jul 2023
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Under immense pressure for its emissions, Sasol tried to get an alternative emission limit from the regulators for the boilers at its Secunda operations. They weren’t interested.

Under the National Environment Management: Air Quality Act, Sasol is required to obtain atmospheric emission licences based on minimum emission standards. Although the company has spent more than R7-billion on emission reduction projects in the past five years, it still faces difficulties in achieving complete compliance.

Specifically, the major challenge lies in reducing sulphur dioxide emissions from the boilers at Secunda Operations. Sasol applied for an alternative emission load basis for these boilers, but the application was declined by the national air quality officer. Sasol plans to appeal against this decision to the Minister of Forestry, Fisheries and the Environment. Although Sasol has a roadmap in place to address this issue, it is clear that it cannot be resolved overnight.

‘Farewell, Bell,’ says Leon Goosen


The CEO of Bell Equipment, Leon Goosen, has resigned. He has been in the hot seat during a period of incredibly difficult global conditions, yet the performance at Bell has been exceptional. The share price is up about 200% since the pandemic lows and has risen more than 31% in the past 12 months.

He will be around until the end of December 2023 for a handover period, though no successor has been named yet.

Headline earnings per share for the interim period are expected to be at least 30% higher, which suggests a minimum of 273 cents for the interim period. That’s an appealing valuation multiple when annualised, as the share price is only R15.25.

The improved market conditions this year have been credited for this positive development. Bell’s cyclical nature, however, is why the market puts a stubbornly low multiple on the business. 

Invicta keeps on trucking


Invicta has announced further investment in Singapore by acquiring a 50% stake in KMP Far East, a business focused on heavy-duty diesel engine parts for industrial and agricultural machinery in Southeast Asia.

This move follows Invicta’s earlier acquisition of KMP in the UK and US.

Invicta has also acquired 100% of the shares of Imexpart Limited (Imex), an independent distributor of truck parts, in the UK.

This acquisition provides geographic diversification in line with Invicta’s strategy and offers opportunities to leverage the company’s strong procurement capabilities to improve gross margins at Imex.

Invicta shares are up by 7.8% in the past year, with swing traders having no doubt taken advantage of a channel between R26 and R29 that the share price has been stubbornly stuck in.

Tharisa: a taste of heavy metal


Tharisa has provided a quarterly production update, including news on the net cash balance that is a significant proportion of the market cap.

The company’s share price has suffered because of weakness in platinum group metal (PGM) prices, hitting a 52-week low of R16.70 in July. It has jumped by nearly 15% in the past week, though, because PGM prices improved as the dollar weakened.

Although Tharisa cannot control share prices or commodity pricing, it can manage its production and capital allocation. In the third quarter, PGM output increased by 7.9% compared with the preceding quarter (Q3 versus Q2), attributed to improved recoveries and a steady yield. However, chrome output declined by 6.4% despite stable grades, yield and recoveries.

The primary issue lies in pricing, as PGM prices experienced a 16.6% decrease in the third quarter. On the other hand, metallurgical-grade chrome prices saw a 7.8% increase during the same period.

Importantly, Tharisa’s cash position has improved, as cash on hand increased from $205.8-million in March 2023 to $242.6-million in June. The net cash position also rose from $101.1-million to $141.5-million during the same period.

The Karo project remains on track, and Tharisa expects to make a $135-million equity contribution throughout its duration. A recently concluded $130-million facility remains undrawn as of the reporting period.

Although the impact of PGM pricing on Tharisa’s share price cannot be ignored, the company offers favourable PGM exposure compared with other alternatives in the market thanks to the strength of the operations and the chrome exposure to help remove some volatility. Those who bought in the recent dip have been rewarded. DM

After years in investment banking by The Finance Ghost, his mother’s dire predictions came true: he became a ghost.

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.

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