BROKERS’ NOTES: Buy HCI, ditch Cashbuild

Brendon Hubbard, portfolio manager at Clucas Gray 

BUY: Hosken Consolidated Investments 

Hosken Consolidated Investments (HCI) is an attractive share due to its 49.9% holding in Impact Oil & Gas. The latter holds stakes, together with TotalEnergies, in two oil blocks off the Namibian south coast, called Venus. Next year HCI plans to sell its stake in the Venus oilfield for $500m-$1bn. In addition to the Venus oilfield, Impact also owns stakes in other offshore oil deposits in South Africa in the Orange River Basin (south of Venus), and in the Transkei and Algoa fields. Also, it’s expected that parliament will expedite the promulgation of the Upstream Petroleum Resources Development Bill, which is required before any drilling offshore can begin on identified areas. 

SELL: Cashbuild 

The building supply sector is under pressure, and Cashbuild is no exception. After the Covid pandemic, there was a huge wave of home renovations in the country. But that didn’t last, and there is now a serious hangover in the renovations market, which is aggravated by South Africa’s grim macroeconomic situation.