Weekly Update : 22 July

M&A activity at Bidvest picks up 

Bidvest Ltd (BVT-JSE) announced that the company has entered into an agreement to acquire 100% of Citron Hygiene LP from Birch Hill Equity Partners and other investors. The acquisition is subject to UK Competition and Markets Authority (CMA) approval, which is expected within five months of submission. The news comes shortly after subsidiary Bidvest Financial Services announced a formal disposal process for Bidvest Bank and FinGlobal, with management looking to identify suitable buyers by end of the 2024 calendar year.  

 

More challenges for embattled Sasol 

Sasol’s (SOL-JSE) natural gas business might be forced to refund its industrial clients after the Pretoria high court set aside National Energy Regulator of SA (Nersa) approval of the group’s maximum gas prices for March 2014 to June 2023. Business Day reports that the energy major, which has a monopoly in the sector, urged the court to ensure that if Nersa’s decision was deemed unlawful, the consequences of the ruling should apply prospectively. The group told the court that it had already refunded about R1.7bn to its customers due to the previous ruling that reversed the 2013 and 2017 price determinations. It said retrospective adjustments of the previous decisions caused great prejudice to its business operations. The legal challenge to the methodology used by the regulator was brought to court by the Industrial Gas Users Association of Southern Africa (Igua-SA), which represents industrial gas users such as Illovo, Nampak (NPK-JSE), Mondi (MNP-JSE) and ArcelorMittal SA (ACL-JSE). If Nersa’s new determination is lower than its original decision, it is likely to have financial implications for Sasol.  

 

NPN discount to NAV a buying opp? 

Naspers (NPN-JSE) may offer an attractive buying opportunity after recent moves where NPN underperformed Prosus (PRX-JSE), raising increased interest in the spread to Net Asset Value (NAV), particularly for NPN. NPN is now trading at its highest discount to NAV in 6 months and has gone from a 34% discount to NAV in Feb to 44% in July – that equates to underperforming its NAV by 15% over the past 4-5 months. This discount to NAV means the current market price per share is lower than the per-share value of the company’s underlying assets, suggesting the stock is undervalued based on book value and may offer an attractive buying opportunity. The NPN discount to PRX has increased to 10%, after dropping as low as 4% in the last few months. At these levels, NPN is starting to look interesting over PRX. 

   

Tesla likely to lose EV sector crown 

Sales data compiled by Bloomberg News shows that BYD Co. sold a record number of electric (EV) and hybrid cars in the second quarter as price cuts and new technology stoked consumers into purchases. China’s best-selling car brand sold nearly 1 million models over the period, solidifying a rebound after a slow start to the year. In terms of pure EVs, the Shenzhen-based auto giant’s quarterly sales of 426,000 units put it within striking distance of overtaking Tesla Inc. (TSLA-NASQ) as the biggest seller of EVs globally again.