Classic Business

Anthony Clark, small-to medium cap analyst at Smalltalkdaily Research

Chantal Marx, head of equity research at FNB Wealth and Investments & Martin Harris, premium client manager IG SA

The question of getting alignment between shareholders and managers of businesses on the JSE and how to use appropriate incentives to achieve that was thrown into stark relief recently after chicken player RCL’s AGM on the one hand and Astral’s results on the other…. There are some pertinent comparisons which illustrate which companies are getting EVA right and which aren’t. Astral which utilizes EVA to incentivise all its employees was SA’s second largest chicken producer behind RCL Foods Rainbow Chickens. But a relentless focus has resulted in Astral now being SA largest producer with a 26% market share versus RCL Foods in second position with 20%. On virtually every measure Astral is a far superior investment to RCL, despite (some would say due to) RCL bolting on food (Foodcorp), Sugar and Logistics to its offering to reduce its exposure to the highly cyclical chicken industry. Astral has dramatically and consistently outperformed RCL in terms of Total Shareholder Returns and earned very substantially higher returns on capital. None of this becomes surprising given RCL executives have historically been incentivised with misaligned incentives like Profit before Tax which ignore the cost of shareholders capital. Michael Avery speaks to Chris Logan of Opportune Investments and David Holland of Fractal Value Advisors and Adjunct Professor at the University of Cape Town Business School, about CEO incentives: it’s not how much you pay, but how

Anthony Clark, small to medium cap analyst at Smalltalkdaily Research

Cobie Legrange, co-founder of RexSolom Invest

Education researcher Nompumelelo Mohohlwane

Jacobus Brink, head of investments at Novare

After crashing to an all-time low of five at the height of the COVID-19-induced lockdown in the second quarter, the RMB/BER Business Confidence Index (BCI) increased noticeably further from 24 in the third quarter to 40 in the fourth quarter – a welcome surprise. But, regardless of the improvement in sentiment, questions remain about its sustainability.

RMB economist SA Economist Siobhan Redford, speaks to Michael Avery about the sustainability of the bounce back in business confidence?

Wayne McCurrie, portfolio manager, FNB Wealth and Investments & Devin Shutte, head of investments at The Robert Group

The ratings agencies quickly sucked any of the precious little good mood energy out of the room following the third investor conference which wrapped up last week. It seems the ratings agencies, like the market, don’t believe that president’s economic recovery and reconstruction plan will lift growth meaningfully enough to curtail our rising debt requirements to fund the deficit in spending. Michael Avery speaks to Ann Bernstein, executive director of the Centre for Development and Enterprise, about where this leaves the country and what should be done to try and dig South Africa out of the ever deeper junk status hole.