Update: 20 May
South African Health Insurers Plunge Amidst New Healthcare Legislation
Shares of South African medical insurers, led by Discovery, plummeted after President Cyril Ramaphosa announced plans to enact a controversial health bill despite opposition from businesses. Discovery saw a sharp decline of 7.4%, its largest since March, with other insurers such as Momentum Metropolitan Holdings, Sanlam, and Old Mutual also experiencing losses.
The proposed National Health Insurance (NHI) bill aims to establish universal healthcare through a government-run fund, prohibiting private sector financing for covered treatments. This move seeks to improve healthcare access for the 85% of South Africans lacking medical coverage. However, the bill threatens Discovery’s earnings, as its South African health division may no longer operate under the new regulations.
The announcement triggered a notable drop in South Africa’s healthcare providers index, with Netcare, a leading hospital operator, witnessing a 5.7% decline, the most since April 2023. Life Healthcare Ltd. also saw a 2% decrease in its shares. Critics argue that the bill’s implementation lacks proper cost assessment and could face legal challenges, raising concerns about its sustainability.
Calgro M3 Holdings Limited. (JSE: CGR)
Calgro M3, a residential property developer, delivered robust results for the year ended February 29, 2024, defying a difficult market environment. Here are the key highlights:
- Record Profit: The company achieved a record profit after tax of R196.8 million, up from R186.29 million in the previous year.
- Improved Profitability: Gross profit margin hit a record 27.25%, exceeding the typical range of 20% to 25%.
- First Dividend: Calgro M3 declared a maiden dividend of 9.49 cents per share, reflecting a commitment to shareholder returns.
- Project Delivery: 1,794 residential units were handed over during the year, with another 1,748 nearing completion.
While total revenue dipped 15.79% to R1.28 billion, Calgro M3 managed to improve gross profit within its residential projects to R330.63 million, reflecting a 26.62% margin. This success is attributed to diligent cost control, effective project management, and a strategic shift towards open-market housing sales.
Looking ahead, Calgro M3 is well-positioned with a stable net debt-to-equity ratio of 0.63, a robust project pipeline, and a focus on sustainable development practices.
Walmart Inc (NYSE: WMT)
In a positive sign for the retail industry, Walmart surpassed expectations in its first quarter, sending its stock to a record high of $64.22. Sales grew 3.9%, exceeding analyst predictions, with both online orders surging 22% and physical stores experiencing similar traffic and basket size increases. While inflation is a concern, with product range inflation rising 0.4%, Walmart anticipates it to hold steady and is confident in continued growth. This confidence is fueled by strong sales in discretionary categories like clothing and electronics, particularly among wealthier customers. However, Walmart isn’t neglecting budget-conscious shoppers, attracting them with a 45% increase in food and consumable rollbacks, leading to a focus on home cooking.
This well-rounded performance suggests Walmart may be gaining market share from competitors, and with a raised full-year forecast projecting net sales growth at the high end of its prior 3% to 4% range and adjusted profit per share exceeding expectations, the retail giant appears well-positioned for the coming months.
Sources: MoneyWeb; News24; SABC News.
Piece written by Trive Sales Trader, Kealeboga Molefe
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