PPC, Sun International set to recover from the global Covid-19 pandemic
Share this article:
Investment is a skill and an art which is accessible to anyone who spends a bit of time doing research and learning about the companies and products one can invest in.
Be clear on your time horizon and investment objectives and do your homework before parting with your money. While the views in this article should not be seen as advice, they may assist investors to unearth a few gems.
With the recent announcement by National Treasury that, from November 4, “the use of imported cement will be prohibited in all government projects”, the shares in PPC surged. After years of being undercut by international providers dumping excess, cheap cement into our at times fragile economy, the move was seen by the market as very positive.
PPC is the holding company for a group of companies which manufacture and distribute cement, lime, and limestone products throughout Southern Africa. The company is also closely linked to a number of related businesses, such as those manufacturing containers for cement.
PPC stands to benefit from the 12 special and 50 strategic infrastructure projects which are part of the infrastructure spending program looking to assist with the post pandemic recovery. With this renewed cash injection from the public sector, our construction industry is likely to get more active, which will have positive knock-on effects in the private sector.
From a geographic earnings point of view, almost 70 percent of PPC’s net revenue comes from South Africa, with the remaining 30 percent from the rest of Africa.
From a product segment, 89 percent of earnings comes from cement, while 11 percent comes from aggregates.
With increased interest coming from the Public Investment Corporation, which runs the government employees’ pension fund, this share may have ongoing, strong institutional support.
With the PPC price having already risen more than 900 percent from lows, there are suggestions it may be overbought in the short to medium term.
Another sector that has been hard hit during the global pandemic is leisure and tourism. There are green shoots indicating a potential remarkable turnaround, with many retail investors starting to tweet about their profits.
Sun International (SUI) is an investment holding company for a group of companies that operate in the entertainment and leisure industries. The group has casino resorts, hotels and casinos in Africa, Europe and North America.
Currently, SUI still has a negative Earnings Per Share of -10.45, but with December around the corner and many South Africans expressing an interest to break free from the shackles of lockdown, we could see many travelling to see loved ones over the festive season. This would provide a much-needed kicker to SUI’s bottom line.
Added to this development, the seasonality benefit is often reflected in a strong move in November and December in SUI’s share price. The group has demonstrated a strong ability to adhere to all Covid-19 legislation and protocols at manageable cost levels. If we do not see an increase in Covid-19 cases, or further lockdowns and travel restrictions, SUI and related companies are likely to deliver for investors.
EasyEquities, a digital trading desk.
*The views expressed here are not necessarily those of IOL or of title sites.