JSE old guard PPC, Shoprite, Sappi, LNF holding the fort

The JSE old guard — DRD Gold, PPC, Shoprite, Sappi and London Finance and Investment (LNF), who together comprise the bourse’s longest-listed companies — are still showing growth while the exchange is battling to keep entities listed.

Listed in 1895, DRD Gold, a key player in gold tailings retreatment, has shown stability, with its value up more than 340% in the past five years, adding R12.9bn to its market capitalisation in the period. 

In 2021, DRD Gold was motivated by a surge in the rand gold price to expand its footprint west of Johannesburg. The company acquired 250-million tonnes of tailings from Sibanye-Stillwater in exchange for shares, making Sibanye-Stillwater its dominant shareholder.

The acquisition near Carletonville set the stage for a regional consolidation initiative, aiming to rehabilitate dumps not only for DRD Gold but also for other companies.

CEO Niël Pretorius outlined plans for a new tailing deposition site on nonporous granite, alongside a larger recovery plant as part of the Far West Gold Recoveries project, which is already in its profitable first phase.

Despite a 10% rise in profit for the six months to December, DRD Gold experienced a 7% drop in output due to delays in commissioning new sites to replace depleting high-volume sites.

These delays were attributed to issues such as water usage licence processing, appeal proceedings by a community forum and community interference with construction projects. The company fell behind on starting four new gold tailings reclamation sites, initially scheduled to commence operations from October 2022.

Pretorius highlighted the socioeconomic challenges in areas where DRD Gold operates, such as Brakpan and Carletonville, including poor services, lack of jobs, inadequate healthcare and schools, and deteriorating infrastructure.

He said community interference had been a big obstacle, with incidents such as the blocking of access to construction sites for power lines from its solar plant to the Brakpan tailings facility.

PPC, a cement manufacturing giant listed in 1910, faces challenging times, leaving CEO Matias Cardarelli in a tight position trying to revitalise the company. With a market cap of R5.7bn and a share price of R3.60, the company has lost 28% in valuation over the past five years, amounting to a R2.6bn loss.

Despite reaching a peak in share price in October 2021 in the period in review, PPC has struggled with underperformance and profitability issues due to subdued construction activity and cement imports.

Cardarelli assumed office in December 2023. His turnaround plan, which is focused on improving profitability, involves a leaner operational model and better data management.

He said the company aimed to create a more agile structure and had seen a return to profitability in its Zimbabwean operations boosting its overall performance.

LNF, which listed in 1933, has the lowest market cap among the five reviewed companies at R374.489m, making it a penny stock. However, the company’s valuation value has grown more than 99% over the past five years.

Shoprite, a JSE darling among retail groups, has a market cap of R171.2bn, with its valuation having increased 83% in the past five years.

The company’s core SA supermarket business and LiquorShop have grown, and the Covid-19 impact was minimal, with an increase in total sales of 6.4% for the year ending June 2020.

Shoprite joined W23 Global, a venture capital fund designed to accelerate retail innovation, committing more than $25m. This partnership is expected to drive transformative changes in the grocery and sustainability sectors.

Sappi, a pulp and paper producer with a market cap of R32bn, has shown resilience. The company, listed in 1937, has gained R497m in valuation. Despite a dip during the pandemic, its share price has improved since February 2022.

The company recently sold Lanaken Mill’s land and assets, and reduced production capacity for graphic paper in Europe. CEO Stephen Binnie, cautioned about a dip in third-quarter earnings due to planned maintenance shutdowns.

The JSE is experiencing a spike in delistings, having halved in size in the past two decades. This week alone, Bell Equipment and Sasfin announced plans to go private, after Mediclinic and Distell in the previous year.

goban@businesslive.co.za