PGM stocks: Still worth a look on weakness

0:00You're listening to the Money Web Now podcast series with Simon Brown. Live streamed every weekday at 6.30 a.m. It's Friday, 4 September. We got US unemployment daughter, due to 30 this afternoon. I'm Simon Brown coming at you. Lavon Loud from the Money Web with Global Headquarters in Johannesburg, South Africa. I'm on leave next week. Doodoo will be standing in all week for me. On the show today for him idea from a momentum, discovery results, really good numbers in the bank, hits profit, what next. I mean, do they now mature into that? They've been in building stage for decades. And then implants, really good results, no surprises. PGM miners print money. Do they have any value? Does a female ever prefer in this space? Journalists on the risk to your end consumers spending as the Iranian war drags on and oil remains elevated.

1:00And thoughts from me on AI usage have expanded the skills of the last six months or so and update in that regard. Its podcast is brought to you by Stand Lab asset management. Invest in more global opportunities through their partnership with JP Morgan asset management. Learning headlines money web, three signs, S-com is not yet out of the woods. Despite its return to profitability, the power utility is facing smothering debt and governance problems. Fortunately, the Netherlands Central Bank moved 86 tons of gold out of America because of geopolitical unrest. Money markets use was green, SMP 1.1% higher, Nesdaq a little higher at 1.2 ap, East mostly green, Sydney down 4.4% Hong Kong almost a percent higher, sorry Hong Kong just over 2% higher, Tokyo almost a percent up and 10 cent 3% up. Commodities green, gold futures 4519, Brent 95 75, Platinum 1814, Palladium 1425.

2:05The round is 1599.880,800. Top 40 opening call green open 190 points almost 0.2% higher. Money web now on the money also available on podcast. Telling now with for him a dear from momentum, for him I appreciate the early morning time the discovery results. I mean, there's been many ways it's been a long time coming. It kind of feels that they've been in building mode for every day. They've now got all cylinders firing. The bank is profitable at the same time. A good set of numbers from a business that is frankly looking well placed at this point in time, notwithstanding obviously it operates in a tough consumer environment. Your thoughts on the results and the prospects for discovery. Morning Simon thanks for having me. Yes, agreed. I think it was quite a strong result. The market theme to respond well. The price was up almost 3%. There's a broadie beat consensus expectations. If we just take a closer look, there was strong growth of almost 17% in the normalized operating

3:09profit. If you look at the headline earnings, that increased by a healthy 21%. So that reduction of debt helped to lower the finance cost also helping to boost the bottom line. Looking at the return on equity that improved from 15.4% to 16.5%. You said all business units really did see good performance. I think what really stood out for me was discovery health, invest and insure. In particular, there was strong growth from vitality. So profit, they increased around 21%. Because of good growth in the UK, also progress in other international markets. Yes, of course, discovery bank has been that highlight. We are now seeing its reach normalized profit of 370 million rand. It's continuing to grow and scale since it's become profitable. I think the main focus it looks like for discovery is a growing forward will be the bank. As it continues to scale and execute what it calls its super bank strategy, where it's

4:12aiming to just move beyond that standalone bank to just further integrate the bank into that broader discovery ecosystem to just help boost long term growth for the bank and discover as a whole. And it feels like a business that is matured into itself. And reminded of Amazon, which for every day was always building things and generating revenue, but spending, spending, spending, spending. And then Amazon became hugely profitable. And it feels like discoveries kind of at that tipping point. They've spent literally decades on the spending side. Now they've got the platforms that can generate the revenues and longer term profits. Yes, exactly. And it looks like those investments that they are making is actually yielding results sooner than what they would have even expected. Discovery bank broke even a lot sooner than expected. It's showing better traction and scale. So it's definitely a very healthy return on investments that they are seeing here, particularly with regards to discovery. And also that investment, I would say, in vitality in the UK to see growth there.

5:15Absolutely. Let's switch to something completely different. Inplates mining, a different game entirely, but of course they're in the PGM space. Platinum, platinum, rodeo, palladium all moved higher in the period under review. And the numbers are staggering. I mean, you know, revenue up 58%. But they dividend up over 10X headline earnings per share 34. I mean, this is, I suppose, what we expect from a commodity miner when the commodity is booming. Yes, exactly. It was a very strong result. She had price a surged around 9% on the back of that. And yeah, so you know, we did see some improvements in the operational side of the business, but it was largely driven by that stronger PGM. Boss, the price, it helped reverse some of the implements. We saw it rust in bird last year, but excellent result. The hips increased from just 82 cents in 2025 to 25 ran 48. And then the free cash flow from 2 billion ran to 22 billion ran. Like you said, the dividend up massively.

6:17And it's not 82% of that free cash flow, which just shows how cash generates of this business has become. And this really is, I mean, you know, looking at the stock, I suppose, you know, my follow up is going to be as the opportunity. I suppose your question is, what do you think is going to happen to the PGMs? If they stay at current levels, profitability absolutely remains. And if it goes higher, well, then I mean, it just morphed to the bottom line. This is a call on on PGMs. How are you viewing the sector and with your team? So we're positive on the sector over the long term. I think we are still expecting there to be deficits in PGMs as the demand is forecasted to outstrip supply. Just due to its applications in that renewable energy sector. So I think it does position PGM miners like implants quite well over the longer term. Well, for now, we did see quite a sharp surge in the share price and the beginning of August and implacting particular. So perhaps one to wait on for a bit of a pullback, but yeah, positive on the broader sector. It was 180 and in August, it's our 245.

7:19We will leave it there. That's for him, a dear momentum, securities appreciate the early morning time. The standard flexible income fund is designed for pre and post retirement income and capital preservation needs. Retire without regret with stand-lib asset management. Money web now on the money. Telling about John Lewis, independent economist, John appreciate the time. I know you put out talking around the lack of a resolution to the Middle East conflict and sort of posing risks to the year end. Festive spending that we typically see in South Africa. Wednesday saw petrol up 134 cents diesel around 3. I mean, this is perhaps the single biggest concern and in that it directly removes money from the consumers pocket. We we we we we we traveling and it's just costing more and immediately it hurts and that is going to put pressure in the immediate and down the line. Yes, Simon. I think, you know, I'd hope for a resolution to the conflict by now and significantly lower oil prices,

8:20but we're not seeing it. We include this morning at 95. We should have lost looked, I think. So and and possible further petrol price hikes to come next month. It's early days that. But but I think this is the, you know, this is the problem. This whole conflict affects us in three different ways. First, there's a global growth impact. And the IMF does forecast slow global growth for this year than last year. That can affect our export demand for our exports and affect our economy and job creation. So that's the first direct impact. Then of course, there's the direct inflation. We impact we see it at the pump prices. Yeah. That's coming through. And then the general inflation, we impact of that, which can lead to interest rate hiking. And I think the saw will hike one further by another 25 basis points. So that takes the supposedly in come out by increasing the cost of servicing debt. So there's a there's a triple whammy. It doesn't mean recession and disaster, but it just looks more and more like as we move towards festive season consumer spend.

9:25That might be flat lining by the end of the year. If we don't get a resolution to this conflict fairly soon. We got the hike from sob in May 25 points. That was largely expected. Inflation peak to five. It's down at 4.3. But I think the true part about inflation is its volatile and remains well above the 3% target. Two meetings left this year, one later this month, one in November. And you're saying you're fairly confident. I mean, I mean, I'm not sure so. Has any choice yet. They want to remain relevant to the process. Inflation is going to be well outside the target. They might have paused at the last meeting, but it does look like one of those meetings is going to be a hike. And I think maybe the sooner rather than the later one. Yeah, it's tough to say exactly when they'll hike or whatever, but I do believe that one of the meetings there will be a hike. Because I think that's what we could see in when we get the next month's inflation numbers. We could see a rise again. It came down from five to 4.3%. Because you're on your capital price inflation slowed quite dramatically a month or two ago.

10:28But now that's reversed again. So you could see CPI inflation ticking up higher than the 4.3%. And then yes, that's probably the time I think for the SOB to hike another time. You're sorry. I mean, I am still looking at around 3% global growth for the year. But a lot of that on AI investment boom, which I'm not sure how much that Christians us. I mean, we don't have much AI here. It is fairly concentrated, you know, HVAC suppliers and, and, you know, daughter centers and, and the like. And we might not get much impact from that. As you say, our print may be not recession, but, but that growth is going to be lacking. Yeah, I mean, you know, if we look at export driven sectors already, I mean, manufacturing sectors in recession and the latest PMI new sales orders index, which is a leading indicates for the economy was down to 40 odd. Mining output growth in recent months has turned negative after a previous period of solid growth. Yeah. So those are heavily export dependent sectors and they're not looking good at the moment.

11:32So I think there is some negative impact from the world economy, possibly starting to filter into our numbers. And as you say, well, not only do we not benefit hugely from the AI investment boom, but that's two. There's a lot of speculation as to whether that's in the bubble now and the chickens might come home to roost their fairly soon. So that's an uncertain environment in itself. It's not just about the Iran war. So the global, the global economic environment is not in our favor. I don't think at the moment. Last question, household consumption lost you at 3.6 percent growth. You're looking for 1.6 this year. What disappears first from the spending? I mean, I mean, I imagine it's discretionary. It's going to be travel it. Maybe going to be holidays. It might be smaller turkeys on the Christmas table. I mean, households are going to be making stock decisions. And they're going to be finding those discretionary items and cutting or reducing. Yeah. I think the discretionary will firstly, the credit dependence demand, you know, the vehicle sales and the housing demand.

12:32I mean, that often normally slows when interest rates go up. So you see an impact there. But yes, when it comes to the discretionary spending. So holiday spending growth might be under holiday related spending growth might be under pressure because it's transport cost related. And that filters through to tourism accommodation to a certain degree. But then it's also postponable spending. That that work that you wanted to do on your house, that we're really seeing hardware, retail sales in negative territory. That you can often live in your house that needs a bit of repair for a bit longer. So postponables can also take a bit of a backseat during times like this. So I think that's what we're starting to see play out in some of these spending categories already. And probably more of that towards the end of the year. postponables. I hadn't thought of that of a sector, but absolutely. There's stuff which we can say, hey, that can happen later. We'll leave it there. John Lewis, independent economists, appreciate the early morning time.

13:32Let your money benefit from experience with stand-lib asset management. Find out about stand-lib global-select fund which follows an investment discipline that has delivered results for three decades. Money web now on the money. Friday thought for me on my personal AI usage. I chatted around, but it was back around Easter I think. So it's sort of around April. And I thought, you know, it's come from an update because, I mean, it's five months, but things are moving fast here. I use Anthropic Claude, specifically I'm using Opus 5.0. The Fable 5.0 or 5.1 has just came out. More than I need, and Charles might tokens. First thing, it's better and smarter. And I do think it lies to me less. Maybe I'm just getting, maybe I'm getting sort of, I don't know, a Stockholm syndrome. But certainly it does seem to be doing better. But it really is improving. I've got it running. I've taught it on to create a full company evaluations. We do the initial part, which will be a 30 or 40 page.

14:35It gives me pricings, gives me targets. We are tracking that. It's actually doing fairly well. Some spectacular winners and some spectacular losers. One of the losers we buy cars, Afrimat or two that are done poorly. But some have really done well. Famous brands, Kuru and others, which it's really done. So I'd spent a few months training Claude to do full valuation, mostly focusing on mid and small cap JC stocks. Initially, it was tricky at first, but we sorted the skills working well. It's now a 12 step process. Takes about an hour, hour and a half to run. It has built-in fact checking via a second and third party at an end. So Claude will take it off to, for example, Chachy PT, Groc, and one of the others to verify. That's always a huge part. It has a skeptical review process. In other words, we don't just trust what the machine puts out. And it's become incredibly robust. The disaster recovery document is some 200 pages.

15:37So it is giant and chunky and performing really, really well. Again, is it accurate in terms of what it is saying in places, yes, but that's what humans are, accurate in places. Yes, we'll have better details once you've had a full year and change of thrushed out. But that's been really, really good. I've also connected it to a JC data source. I'm using EOD HD. So I get historic data is now live. The data unfortunately is expensive, but it gives me, it gives me price data, but it gives me fundamental data as well, historic, fundamental data. And to be clear, this was the old problems I had with Claude. Back when we were still open 4.5, I think. It once just made up numbers. It couldn't find the numbers for a set of results. So it just simply made them up. Another term, it found I was doing it and I forget what the stock was, forget the stock, but it found a anchor research report and it just basically copied it.

16:37So we had to sort of explain to it that if you don't have data, be honest and don't copy other people's homework. But it's working well. I've now taught a technical analysis as well. We'll see how that works. I'm looking particularly for certain types. I'm looking at certain breakouts and the like. We'll see how that is again, the data from the eodhd.com website. Also, lots of sector reports and it's getting much better at that. Local and offshore. Go look at service stocks. What about banks? How the different gold miners stack up? Again, with your fact checking in place, again, with the skeptic in place, but certainly getting better from what I was doing earlier in the year and certainly getting a lot better on the local side. Initially, it was all sort of offshore more than anything. I've also built custom skills to automate key processes when new results come checking against previous. But I mean, the short answer is a lot has changed in the last six months, both in my usage.

17:42But also, I think Claude is just better. It should be right. In Opus 4.5, 4.6, we're now in 5.0, we've now got fable and the other models, of course, are also rolling out frontier. Also tried some Kimi K3. Really good. Not quite as good, but maybe the Kimi's back where Claude was back in April. Really strong. And of course, the Chinese models significantly cheaper. All in, becoming more useful. Real world useful, not just recipes and memes. Still, however, at all points, be checking, be careful and be double checking because it can make mistakes and things can go wildly wrong. Even if, I think it is perhaps lying less. That's it for today. We're chatting with Elisifrion yesterday. She, of course, MD at Merchant West Investment. We're talking Woolies. There's a doubles down on food. The new CEO, who to be clear, comes from food. Remember the previous CEO was a Levi fashion person.

18:45Oh, they're fashion, health and beauty still struggling. The new CEO is all about food and is really saying, you know what, the other bits of the business must prove their worth. Now, I don't think he can easily separate them out, but certainly he seems to think that the rest must come to the party. And we asked you, is Woolie's best at doing food only 40% said yes, food is great? Third said, nope, there's others that they do well. A bunch of you then said you have moved on from Woolies. Have your vote. Have your say, LinkedIn. The podcast is brought to you by a stand-alone asset management, invest in more certainty to navigate volatile market conditions. Relive every week their morning the money we have websites in the app, 630 AM, podcast just after 7. Thanks to my team, edit and book, click the call to you for listening. My guests for their time. My name is Simon Brown. This is MoneyWeb now. We'll chat again. Monday, I'll be at the beach. Do do standing in. You've been listening to another MoneyWeb now podcast, posted every week day at 7am on

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