Sasol, Naspers and Capitec are some of the big names that have been selected by a variety of South Africa’s best fund managers as their preferred stock picks on the local bourse for 2022. The veteran equity analyst David Shapiro suggested that Naspers and Prosus could be a turnaround story as developments in China seem to have calmed somewhat. One of South Africa’s best performing fund managers in 2021, Piet Viljoen, hedged his bets and went with Sasol and embroiled real estate company Rebosis (Rebosis A shares). Banking oracle Kokkie Kooyman sided with JSE darling Capitec, despite valuation concerns, he believes that Gerrie Fourie and his team will continue to take market share. Lastly, Opportune Investments founder Chris Logan went with two risk adverse plays in Zeder and Stor-Age. – Justin Rowe-Roberts
David Shapiro: Naspers and Prosus
You’ve caught me by surprise. I love to look for shares that are being absolutely pummelled, and even though I wouldn’t buy it now, I’m going to give Prosus or Naspers my vote. Simply because I think things will stabilise in the year ahead in China, and I think you will find a recovery in Tencent. I think it’s gone too far despite all the concerns. Listen, this is a shootout. So, we’re taking a gamble, so I’m going to bet on a gamble.
Piet Viljoen: Sasol and Rebosis A
Okay, I’ll give you two picks. I’m going to hedge my bet somewhat. The one pick is Sasol. I think the world is not investing in oil and gas extraction enough to cope with a demand, which will still be there for years and years to come, despite the best efforts. The world will still need oil and I think we’ll see significantly higher oil prices because of the underinvestment in oil extraction capacity. That’s the one pick; and the other pick is a very small cap business.
It’s quite a stinky one and not well liked by people, but that’s why it’s cheap. It’s a property company and I’m well known for not liking property, so I’m taking this on purpose. It’s Rebosis A shares. It had distributable earnings now in the results today of over R2.00 per share. They haven’t distributed any dividends but the earnings are there and they say they’ve done a deal where they sold the company for multiples of the current share price.
Kokkie Kooyman: Capitec
Firstly, I think what we’ve got to bear in mind is that it is a tough choice at the moment. All the banks in South Africa are cheap. When preparing for this, I looked at the upsides and it is difficult. You’ve got Absa and Nedbank trading at low valuations, very low valuations. Owing to the uncertainty we are currently facing again with Omicron and all kinds of uncertainty in terms of growth, do we go into further lockdowns again? Does the economy contract? It’s always better in a time of uncertainty to be with your players that have a proven track record of being on the front foot. In South Africa, these would be FirstRand and Capitec. My pick in this circumstance is Capitec.
Chris Logan: Zeder and Stor-Age
I’ve gone with a low-risk pick in Zeder. I have opted for quite a low-risk play because I think there’s a high degree of uncertainty. Given the fact that markets have run hard, we are possibly faced with the rising interest rate environment, rising inflation and weak growth. Zeder should be largely immune to this. It’s about a R5bn market cap company trading at about R3,20. It has a net asset value of R4,50; within the R4,50 there’s about R1,30 of cash or near cash. They have been under cautionary announcement since April of this year, and this relates to receiving approaches, a number of approaches, to buy their investee companies. So far, they’ve sold one of them or announced via SENS the sale of one of them, the logistics company for about R1.5bn, which is just over a rand a share.
Stor-Age is a real estate investment trust (REIT) that’s involved in storage, as the name implies. It has shown itself to be immune to economic downturns and the pandemic. They recently reported great results. There are only nine other storage REITs globally, and they are by far the cheapest of all of them. They highlight that they are trading at half the rating in terms of price to net asset value of their UK peers. They’ve got about 40% of the asset price in the UK, where they are growing spectacularly. It’s on something like an 8.6% forward yield, which is growing as their distributions grow. So, it’s what I call a low-risk buy.
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