JSE wonder drug (#404)

June 17, 2020

Simon Shares

• Here's a gem from the Herenya Capital Advisors Twitter account, albeit Remedica is up for sale and we've had lots of early hype on drugs that quickly fizzled out.

Ascendis Healths subsidiary Remedica manufactures Dexamethasone which apparently helps combat severe cases and is being approved by the NHS. pic.twitter.com/XUw9VPHwdg

— Herenya Capital Advisors (@HerenyaCapital) June 17, 2020

• That said, Aspen (JSE code: APN) issued a SENS stating "It is confirmed that Aspen owns rights to this product and distributes both injectables and/or tablets containing dexamethasone in a number of countries."
• But most importantly, is it really a new wonder drug to treat Covid-19 (dexamethasone). Because ouch, you need to already be in ICU and then if you're on a ventilator it saves 1:8 (12.5%) and of those needing oxygen, it saves 1:25 (4%). Aren't those very modest numbers?
• On MoneywebNOW yesterday I chatted with Easy Equities CEO, Charles Savage and he dropped some amazing stats. They're opening 1,500-2,000 new accounts a day against 12,000 in all of February. R1billion client money into Sasol at an average of 5500c and if half of those investors still hold Sasol they're sitting on almost R1billion profit!

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• Massmart (JSE code: MSM) trading update is as bleak as expected. They secured an R4billion inter-company loan from Walmart to keep them going and expect HEPS to be at least 50% lower. Missed liquor sales for the months of April and May are estimated to be approximately R2.3 billion lower compared to the previous year.
• Discovery* (JSE code: DSY) puts aside R3.3billion for Covid-19 hoping that it is enough money. Hits HEPS hard but they'll still make some R5.5billion of normalised HEPS. Chinese Ping An Health is, however, having a good Covid-19 as sales increase and the bank is doing well enough as it continues to grow clients and accounts.
• MultiChoice (JSE code: MCG) came out as I was recording last week and they were solid. They paid their first dividend and announced a tie-up with Netflix and Amazon streaming. But long-term challenges persist and they still buy content in hard currency and sell in soft.
• Very good results from Value Group that place the stock on a PE of around 5x and a dividend yield of just over 9% while they hold cash of almost 150c a share or over 35% of the share price.
• Zeder (JSE code: ZED) sold its shares in Quantum Foods (JSE code: QFH) for over R300million. So now what for Zeder? They have just over 80c cash per share, some 30% of the share price? A PSG delisting? A buying spree, dividends or a share-buy-back?
• Next Wednesday, 24 June, we get a revised budget from Minister Mboweni.
• The US is considering doing a US$1trillion infrastructure package.

* I hold ungeared positions.

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