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Market Commentary
The Day Ahead for Wednesday 22 February 2017

US markets closed higher on Tuesday with the Dow Jones Industrial Average and the S&P500 adding 0.58% and 0.60% respectively, this on the back of corporate earnings as well as the naming of a new national security advisor. Eastern markets are trading slightly mixed this morning with the Hang Seng index stronger by 0.94% while the Nikkei is slightly weaker, down 0.01%. Tencent is trading in the black by 1.71% this morning whilst BHP Billiton has lost 0.67% thus far. The Australian ASX is stronger by 0.25%. Traders can expect a flat to positive start to trading on our local bourse this morning.

Market Commentary
Market Commentary for Tuesday 21 February 2017

Yesterday, local markets were relatively quiet with the All-Share Index rising by just 0.05%. The Resource sector managed to post gains of 0.46% but these were largely offset by the Financial Sector which declined 0.37% on the day. On the company front, there was a lot of activity, starting with Imperial which released its interim results for the six months ended 31 December 2016. The financial highlights showed that revenue was up 2% to R61.3 billion (42% foreign), operating profit rose 4% to R3.2 billion (36% foreign), core EPS declined 8% to 795 cents per share, HEPS dipped 15% to 682 cents per share while EPS fell 23% to 679 cents per share. The company also announced an interim cash dividend which was 14% lower at 320 cents per share. The company generated a return on equity of 13.2% and had a weighted average cost of capital of 10.0%. Anglogold also released results to 31 December 2016. These showed that free cash flow of $278m was up 97% from 2015 (after once-off bond redemption costs) the company’s high yield $1.25bn bond has been fully redeemed, reducing interest and improving free cash flow. The company reported production of 3.628Moz, which was within its original guidance. Total cash costs came in at $744oz, while all-in sustaining costs (AISC) were $986oz, also within the revised guidance. Adjusted headline earnings (AHE) of $143m, was up from $49m in 2015 and the company reported a reduced net debt level of $1.92bn. The net debt to Adjusted EBITDA ratio came in at 1.24 times while dividends are to resume after 3 year hiatus - ZAR 130 cents per share (approximately US 10 cents per share). Shoprite released interim results to 31 December 2016. These showed that trading profit was up 19.2% to R3.907 billion, turnover climbed 14.0% - from R62.519 billion to R71.297 billion and diluted headline earnings per share was up 15.5% to 460.0 cents. Shoprite declared a dividend per share of 180 cents, an increase of 15.4% over the 156 cents of the corresponding period. Cashbuild released a trading statement indicating that Cashbuild expects to announce that basic, headline, diluted basic and diluted headline earnings per share (“EPS”), for the six months ended 31 December 2016, to be between 38% and 48% higher than the prior comparative period. Shareholders are referred to a special resolution which was adopted on 30 November 2015, whereby 200,000 shares were repurchased by the company from the Cashbuild Empowerment Trust (“the BEE Transaction”). The related cost was provided for as a personnel expense in the group’s prior interim results. Excluding the impact of the prior period BEE Transaction, Cashbuild expects that basic, headline, diluted basic and diluted headline EPS, for the interim results, to be between 5% and 10% higher than the prior comparative period. Mediclinic released a trading update where CEO Danie Meintjes said, “During the year we have seen a good trading performance from our two largest platforms in Switzerland and Southern Africa in line with full year expectations for the full year 201617. The challenging environment in Abu Dhabi has unfortunately continued into the second half of the year. We are taking many steps to build the foundations for a successful, sustainable, long term business in the Middle East, leveraging our excellent reputation and operational performance in Dubai. One key step is the re-branding of our Abu Dhabi facilities to Mediclinic and we expect this project to be implemented during 201718.” The market didn’t take confidence in this trading update and we saw the counter sell off 4.6% on the day. Anglo American released preliminary results showing that net debt reduced 34% to $8.5 billion, driven by $2.6 billion attributable free cash flow and asset disposals, capital expenditure reduced by 37% to $2.5 billion and disposal proceeds of $1.8 billion were received. The company saw cost and volume improvements of $1.5 billion, net of headwinds, driven by production volumes which increased by 2% and unit costs which decreased by 9% in US dollar terms. Group underlying EBITDA increased by 25% to $6.1 billion, despite a 3% decrease in average prices and profit. Clover released a trading statement advising shareholders that the company now expects headline earnings and earnings for the period to be between 11.0% and 16.0% and between 7.1% and 12.1% lower, respectively, compared to the prior comparative period HEPS for the period are expected to be between 12.1% (14.20 cents) and 17.1% (20.05 cents) lower than HEPS of 116.96 cents reported for the comparative period. EPS for the period are anticipated to be between 8.3% (9.60 cents) and 13.3% (15.41 cents) lower than EPS of 116.07 cents reported for the comparative period. Pioneer Food Group released a trading statement advising shareholders that a reasonable degree of certainty exists that the earnings per share of the company for the six month period ending 31 March 2017 is expected to be between 38% and 55% lower than that reported in the previous corresponding period. Accordingly, earnings per share is expected to be between 252.1 and 347.3 cents per share compared to the 560.1 cents per share reported for the previous corresponding period. The headline earnings per share of the company for the six month period ending 31 March 2017 is expected to be between 38% and 55% lower than that reported in the previous corresponding period. Accordingly, headline earnings per share is expected to be between 250.2 and 345.0 cents per share compared to the 556.4 cents per share reported for the previous corresponding period. Tiger Brands released a trading update indicating that group turnover increased by 12% for the four month period ended 31 January 2017, compared with the corresponding period last year. Turnover in the corresponding period excludes the contribution from TBCG (DFM), which was disposed of with effect from 25 February 2016. The growth in turnover was driven by a solid domestic performance while weak trading conditions on the rest of the continent, coupled with a stronger rand, impacted Exports and International. Grindrod released a trading statement advising shareholders that the headline loss for the year ended 31 December 2016 is expected to be between R 455 million and R 465 million. Following the first half headline loss of R 381 million the result reflects a gradual improvement in volumes and rates in the second half of the year. The prior year reflected positive headline earnings of R 559 million. The total value traded for the day was R18.55bn.

News Articles
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Fin24.com | UK gained momentum at end of 2016
2/22/2017 12:07:04 PM

The UK economy has grown more than previously estimated in the final three months of 2016 but it may be the last hurrah.

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Fin24.com | Cecil the Lion, drought end SA wildlife price boom
2/22/2017 10:08:38 AM

Wildlife prices are tumbling in South Africa, as game breeders are squeezed by restrictions imposed following the killing of Cecil the lion, and the worst drought on record.

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Fin24.com | Wealthy German family makes play for Murray and Roberts
2/22/2017 9:04:12 AM

Germany’s Helmig family has been buying shares in Murray and Roberts as it explores combining the company with its own mining industry service provider, say people familiar with the matter.

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Fin24.com | Delays in nuclear projects drive costs - expert
2/22/2017 7:01:01 AM

Nuclear power plants operate cheaply and efficiently, however it is the construction of the plant which has the greatest bearing on the high costs, says an expert.

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Fin24.com | SEE: The full list of Pravin Gordhan's interests
2/21/2017 9:15:01 PM

Finance Minister Pravin Gordhan holds shares, from as little as R200 to R200 000, in a wide range of listed companies, he declared to parliament’s ethics committee.

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Fin24.com | Credit downgrade could increase cost of nuclear - expert
2/21/2017 8:00:46 PM

Losing the investment grade rating could make nuclear power more expensive, cautions an industry expert.

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Fin24.com | Rand likely to maintain strengthening bias
2/21/2017 7:50:28 PM

The appreciation in the rand over the past year has eased inflationary pressures, according to Overberg Asset Management.

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Fin24.com | Why minister axed Acsa board members
2/21/2017 7:26:58 PM

Transport Minister Dipuo Peters dismissed four board members of the Airports Company SA in order to strengthened it with people with the necessary skills, says her spokesperson.

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Fin24.com | Christo Wiese says he'll learn from failed merger talks
2/21/2017 6:41:04 PM

Shoprite chairperson Christo Wiese says the grocer has learned from failed merger talks with Steinhoff International and there are still ways that they can work together.

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Fin24.com | Eskom warns of new tender scam
2/21/2017 6:28:24 PM

Eskom warns members of the public about a new tender scam involving fraudulent orders and invitations issued to suppliers to tender for Eskom contracts.

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Fin24.com | Mining industry coming back from crisis
2/21/2017 6:27:56 PM

The speed of the mining recovery is faster than anything that’s been seen in the past decade.

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Fin24.com | FIC Bill: Zuma has one of two choices
2/21/2017 4:06:55 PM

Parliament has passed amendments to the Financial Intelligence Centre Bill, leaving the president with the choice to either sign it into law or refer it to the Constitutional Court.

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Fin24.com | Reject Citibank's rand-rig settlement - ANCWL
2/21/2017 1:31:14 PM

The ANC Women’s League has called on the Competition Commission to cancel a settlement it reached with Citibank over the financial institution’s participation in collusion.

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Fin24.com | Commissioner grilled on banks collusion, impact on rand
2/21/2017 1:20:01 PM

Although the rand is one of the most traded currencies in the world, there is no evidence yet that banks' collusive practices influenced its value, says the Competition Commissioner.

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Fin24.com | Anglo American swings back to profit
2/21/2017 11:38:54 AM

The mining giant has recorded a full-year profit attributable to equity shareholders of $1.6bn, marking a bounce-back from its $5.6bn loss reported in the prior year.

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Fin24.com | Second Harmony miner dies since start of 2017
2/21/2017 11:14:03 AM

Harmony Gold has announced that an employee was fatally injured at its Bambanani mine in Welkom, the company's second fatality this year.

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Fin24.com | Shoprite changes growth compass as Steinhoff talks fail
2/21/2017 11:06:08 AM

Shoprite Holdings will focus on expansion outside Africa after talks with Steinhoff International Holdings to create the continent’s biggest retailer fell apart.

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Fin24.com | Crunch time as Eskom faces break-up push
2/21/2017 9:51:50 AM

OUTA plans to lay a complaint with the Competition Commission to fine and unbundle Eskom, in a bid to undo what it described as the power utility’s “monopolistic control”.

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Fin24.com | Zuma-Gordhan battle takes centre stage in SA budget
2/21/2017 9:47:59 AM

A year after President Jacob Zuma began feuding with his Finance Minister Pravin Gordhan over control of the nation’s purse strings, the conflict appears to be coming to a head.

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Fin24.com | Gordhan says he’s ‘not indispensable'
2/21/2017 9:37:36 AM

In a broadcast interview, Finance Minister Pravin Gordhan has said he is not indispensable as he prepares to present the budget after almost a year of speculation that he might lose his job.

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SHP
Heads up: Shoprite 1H17 results - Rest of Africa drives strong performance
2/22/2017

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ARH
Heads up: ARB Holdings 1H17 results - long-term prospects positive, but short-term earnings at risk
2/22/2017

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SCP
Heads up: Stellar Capital Partners FY16 results - Can NAV grow at 15% pa from here?
2/21/2017

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ROC
Heads up: Rockcastle FY16 results- Making progress in a tougher environment
2/21/2017

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NEP
Heads up: NEPI FY16 results- Impressive portfolio growth
2/21/2017

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KIO
Heads up: Kumba Iron Ore FY16 results
2/20/2017

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CLH
Heads up: City Lodge 1H17 results - A tough six months
2/20/2017

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ADI
Heads up: Adapt IT 1H17 results - a soft patch, yes, a derailment of the investment case, no
2/16/2017

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WHL
Heads up: Woolworths Holdings Limited - interim results for the 26 weeks to 25 December 2016
2/16/2017

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More

AMS
Heads up: Anglo American Platinum FY16 results - Management deliver
2/16/2017

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Charts Indices Currencies Metals & Brent Oil Gainers & Losers
CHARTS
International Indices
Name Value Move
DJ Ind.  20,743.00   118.95  0.6%
DJ Trans  9,531.75   36.36  0.4%
NASDAQ  5,865.95   27.37  0.5%
NYSE S and P500 INDEX  2,365.38   14.22  0.6%
FTSE 100  7,287.02   12.19  0.2%
XETRA DAX INDEX  6,271.85   -81.89  -1.3%
DAX INDEX  11,978.87   11.38  0.1%
HONG KONG HANG SENG INDEX  24,201.96   238.33  1.0%
NIKKEI 225 INDEX  19,379.87   -1.57  0.0%
Major JSE Indices*
Name Value Move
OVERALL  52016   -570.36  -1.1%
TOP 40  45019   -536.78  -1.2%
ALL GOLD  1410   -29.99  -2.1%
INDUSTRIAL  66811   -402.62  -0.6%
FINANCIAL  14898   -191.43  -1.3%
RESOURCES  33046   -817.00  -2.4%
Delay = 15 minutes
Currencies
Name Value Move
ZAR/ / AUD  10.05   0.00 0.0%
ZAR/ / CHF  13.00   -0.09 -0.7%
USD/ / EUR  1.05   -0.01 -1.0%
ZAR/ / EUR  13.75   -0.09 -0.6%
USD/ / GB  1.24   0.00 -0.2%
ZAR/ / GBP  16.25   0.03 0.2%
YEN/ / ZAR  8.67   8.56 7,415.6%
JPY/ / USD  113.10   -0.58 -0.5%
ZAR/ / USD  13.12   0.08 0.6%
Precious Metals & Brent Oil
Name Value Move
Brent Oil  56.45   -0.25 -0.4%
Palladium  779.77   -1.23 -0.2%
Platinum  1,002.00   1.00 0.1%
Silver  17.99   0.05 0.3%
Gold  1,237.57   2.07 0.2%
Top 5 Gainers -- Delayed
SABLE PLATINUM LTD  31.9
Money Web Holdings Ltd  25.0
Insimbi Ref & Alloy Su  18.1
Gold Brands Inv Ltd  14.3
Workforce Holdings Ltd  13.2
Top 5 Losers -- Delayed
Rockwell Diamonds Inc  -42.4
Forbes & Manhatt Coal  -16.7
Ecsponent Limited  -15.4
Adrenna Property Grp L  -15.4
Jasco Electron Hldgs L  -12.1

PRICES (15 minute delay)

CoreShares Global Prop : GLPROP 3315  -35 | Food & Drug Retailers : FOOR 77414  -58 | Sovereign Food Inv Ltd : SOV 820  -10 | Grindrod Ltd : GND 1397  23 | Db x-trackers Col in U : DBXUS 2917  -57 |

SENS (15 minute delay)

| NQ1A17 : Symbol [NQF1D7]| SHPIHH : SHPIHH - Interim Dividend Declared| CAT : Symbol [CAT]| AVL : Unaudited condensed consolidated interim financial statements for the six months| SHPCB : Availability of the Parent Guarantor Interim Results| DAW : Change to the board - resignation of independent non-executive director| MEI : Directorate change| IPL10 : Symbol [IPL8]| ADE : Announcement regarding Adcock Ingram interim results announcement for the six mon| SHPCB : Notice to Bondholders regarding the Conversion Notice for Shoprite Investments| GFC04 : Availability of the Guarantor Interim Results| ASR : Results for the half-year ended 31 December 2016| RP005 : Symbol [RPS001]| FRBI33 : FRBI33 - Listing of Tap Issue| AET : Update re business rescue proceedings of Holdings and further cautionary announce| BTC093 : Symbol [BTC164]| VUN : Acquisition by Vunani of a further 30% shareholding in Fairheads through its hold| CZA : Holdings in Company| MUR : Update - Market Activity in Murray & Roberts' ordinary shares| MUR : Notice of acquisition of Murray & Roberts securities| CSP500 : Listing of 837 406 additional CSP500 Securities| MNY : MONEYWEB/AFRICAN MEDIA/COGNITION - Renewal of Joint Cautionary Announcement| CGN : COGNITION/AFRICAN MEDIA/MONEYWEB - Renewal of Joint Cautionary Announcement| AME : AFRICAN MEDIA/COGNITION/MONEYWEB - Renewal of Joint Cautionary Announcement| CSP500 : Listing of 86 584 additional CSP500 Securities| WIL : Additional Share Listing - Share Incentive and Share Option Scheme| PAN : Interim unaudited results for the six months ended 31 December 2016| CCO : Audited Preliminary Results for the Year Ended 31 December 2016| AWA : Dividend for the quarter ended 31 December 2016 - Salient dates and tax treatment| ECSP20 : Symbol [ECSP20]| NT1 : Notification of reporting person dealings in Net1 securities| GRF : Unaudited interim results of the six months ended 31 December 2016| ECSP1 : Symbol [ECSP7]| AIP : Unaudited group interim resultsfor the six months ended 31 December 2016 and cash| TPC : Unaudited condensed interim group results for the six months to 31 December 2016| JSE : [06:31:01]: Start of Day. Group <1> - Please wait, downloading details