Trading Day – Big Telkom earnings drop

Telkom’s latest trading statement reveals that the operator expects headline and basic earnings per share to decline by roughly 50% to between R1.25 and R1.57.

The decline was mainly due to Telkom’s changing mobile postpaid and prepaid mix, which had the impact of deferring revenue over 24 to 36 months.

Alibaba’s logistics arm, Cainiao announced the opening of its Latin American headquarters in Brazil.

The logistics business, which also operates in China, accounted for 6% of Alibaba’s revenue in the second quarter of 2022.

The S&P 500 closed 0.9% higher, and the Nasdaq climbed 1.9% on Friday.

The Nikkei 225 is down 1.1% in early morning trade, while the Hang Seng index rose 1.2%.

Locally, Vodacom profit declined to R8.07 billion despite growth in revenue and financial services.

Here is the biggest news of the day.

• Alibaba’s logistics arm, Cainiao announced the opening of its Latin American headquarters in Sao Paulo, Brazil. The company’s international e-commerce platform AliExpress recently turned to South Korea and Brazil, in addition to a years-long attempt to push into Europe. Alibaba said that Cainiao ships most of AliExpress’s orders from China to Brazil, claiming it operates eight charter flights weekly between the two countries. The logistics business, which also operates in China, accounted for 6% of Alibaba’s revenue in the second quarter of 2022. The company also said it aims to launch nine more distribution centers in seven states in Brazil.

• Vodacom profit shrank despite growth in revenue and financial services. Company revenue for the half-year period grew 7.7% to R53.7 billion, while financial services customers also showed promising growth of 10.2% to reach 63.1 million people. However, net profit declined 9% from last year to reach R8.07 billion. Earnings per share (EPS) declined by a similar margin to reach R4.57. Vodacom also decreased its interim dividend by 19% to R3.40 per share.

• Telkom expects a sharp drop in earnings. The company released a trading statement, expecting both headline and basic earnings per share to decline by roughly 50% to between R1.25 and R1.57. This was mainly due to Telkom’s changing mobile postpaid vs prepaid mix, which had the impact of deferring revenue over 24 – 36 months. The cost base for this is also increasing. Telkom’s interim results are due on 23 November.

• MC Mining non-executive director, Mathews Senosi, takes a huge stake in the company during rights issue. Senosi Group Investment Holdings (SGIH), an entity that is owned and controlled by Senosi, acquired nearly 57 million additional new ordinary shares under the rights issue. SGIH now holds a total of 95,357,455 ordinary MC Mining shares, representing close to 24% of the company’s issued capital.

• Transnet once again declared force majeure. A train carrying export coal on the rail line to Richards Bay derailed near Ulundi in KwaZulu-Natal on Tuesday morning. Transnet said work by its recovery teams had been significantly disrupted and delayed, allegedly because of violence and extortion efforts by the Ulundi Business Forum, which has been contracted to provide equipment to assist in the derailment recovery. The cause of the derailment had not been determined by Friday, but the company earlier in the week said the incident had “taken place against a backdrop of threats and disruptions” to its operations.

• UK GDP contracted 0.2% in the third quarter, marking the start of what many economists expect to be the country’s worst recession since the ’90s. Jeremy Hunt’s budget announcement on 17 November is expected to have a significant impact on the course of the UK economy, when he will try to convince investors that Britain can fix its public finances – and its credibility on economic policy – after Liz Truss’s brief spell as prime minister.