Sasfin : Pfizer slashes revenue forecast

MARKET COMMENTARY

LOCAL MARKET COMMENTARY

The Johannesburg Stock Exchange All Share Index saw a 0.6% decrease to close at 72,919 points. African Bank Holdings made an important move to strengthen its lending business for a planned initial share sale in 2025. The bank acquired commercial property and capital equipment financing businesses from Sasfin Holdings units for R3.26 billion ($172 million). In other news, South Africa is addressing issues in its work-permit application process, which has been recognized as a hindrance to economic growth by President Cyril Ramaphosa's office.

EUROPEAN MARKET COMMENTARY

European stock markets closed lower on Friday, with the regional Stoxx 600 down 1%, mainly due to a 2.5% drop in tech stocks. However, oil and gas stocks saw a 1.2% increase as crude oil prices surged. In terms of inflation, France reported a 4.9% year-on-year increase in consumer prices in September, while Spain saw its annual inflation rise from 2.6% in August to 3.5% in September, although monthly inflation in Spain decreased from 0.5% to 0.3%.

US MARKET COMMENTARY

US stocks declined on Friday due to a significant increase in oil prices and concerns about rising inflation. It was a volatile week on Wall Street, with investors also closely monitoring Treasury yields. The 10-year Treasury yield dropped by approximately 9 basis points, standing at 4.62%, while the 2-year Treasury yield was about 1 basis point lower at 5.05%. Typically, yields and bond prices have an inverse relationship. Notably, JPMorgan Chase and Wells Fargo saw their quarterly profits exceed analysts' expectations, driven by higher interest rates. Wells Fargo's shares rose by 3%, and JPMorgan closed with a 1.5% gain. However, Citigroup's performance was less impressive, ending the day down by 0.2%.

ASIA MARKET COMMENTARY

Asia-Pacific markets had a slow start to the week with investors keeping an eye on important economic updates from China and Japan. China is set to reveal its third-quarter GDP figures, expected to show a 4.4% year-on-year growth, down from 6.3% in the previous quarter. The People's Bank of China didn't change its lending rate, while Japan's September inflation data is expected before its central bank's policy meeting later in the month. South Korea will also announce its rate decision. The Bank of Korea has maintained its 3.5% rate for five consecutive meetings since February.

CURRENCY MARKET COMMENTARY

The South African rand stabilized at the end of a volatile week, with upcoming attention on local inflation and retail sales data. This morning, the U.S. dollar was in demand amid increasing Middle East tensions, while investors awaited Federal Reserve Chair Jerome Powell's speech later in the week for insights into the central bank's interest rate stance. Meanwhile, the Israeli shekel weakened to an eight-year low in early Asian trading, following Prime Minister Benjamin Netanyahu's pledge to confront Hamas, which raised concerns about potential conflict in the Gaza Strip.

COMMODITY MARKET COMMENTARY

Gold prices dropped this morning due to technical selling, despite a 3% surge in the previous session driven by the Israel-Hamas conflict, which had led investors to seek the safe-haven of gold, pushing prices above $1,900. Meanwhile, oil prices declined earlier today, partially reversing Friday's gains as investors monitored the Israel-Hamas conflict to see if it escalates and involves other countries, potentially causing higher oil prices and negatively impacting the global economy.

LOCAL MARKETS

SASFIN HOLDINGS LIMITED (SFN) +40.0%

Sasfin Holdings has agreed to sell its Capital Equipment Finance (CEF) and Commercial Property Finance (CPF) businesses, along with various related shares and claims, to African Bank for an estimated total of R3.26 billion. The CEF and CPF transactions are subject to certain conditions and are expected to be completed by February 2024. The purchase price includes the value of loan books, goodwill, and other components. The proceeds from the sale will be used to strengthen Sasfin Holdings' core businesses. This strategic move comes as Sasfin aims to focus on its core strengths and improve its competitive positioning, while African Bank seeks to expand its business banking offerings. The transaction falls under the category of a Category 1 Transaction as per JSE Listings Requirements and requires shareholder approval, which will be sought through a circular. In summary, Sasfin Holdings is selling its CEF and CPF businesses to African Bank for around R3.26 billion to streamline its operations and focus on core strengths, while African Bank aims to diversify its business banking offerings. The deal is subject to various conditions and requires shareholder approval.

PREMIER GROUP LIMITED (PMR) -3.8%

In accordance with the Companies Act and JSE Limited Listings Requirements, Premier's shareholders are informed that Allan Gray's clients have acquired a 10.0021% interest in Premier's ordinary shares. The company has duly submitted the necessary notice to the Takeover Regulation Panel as required by law. Premier's board of directors takes responsibility for the accuracy of this information concerning the company and believes it to be true and complete.

STEINHOFF INTERNATIONAL HOLDINGS N.V. (SNH) 0.0%

The liquidators of Steinhoff International Holdings N.V. (SIHNV) have officially completed the liquidation process. As a result, SIHNV and its shares no longer exist. The Frankfurt Stock Exchange and the JSE Limited will proceed with the delisting process as previously communicated.

INTERNATIONAL COMPANIES

Pfizer (PFE) -2.5%

Pfizer has significantly lowered its full-year revenue forecast by 13%, citing lower sales of its COVID-19 vaccine and treatment. Despite achieving record revenues in 2021 and 2022, exceeding $100 billion last year, the company has experienced a decline in demand as vaccination rates dropped and population-wide immunity increased. Pfizer now anticipates 2023 revenues to range from $58 billion to $61 billion, down from the previous estimate of $67 billion to $70 billion, with the reduction primarily attributed to the performance of its COVID-19 products. The company will also incur a non-cash charge of $5.5 billion in the third quarter, including a write-off of $4.6 billion for Paxlovid and $900 million for vaccine inventory write-offs and other expenses.

Australia fines Musk's X platform (Unlisted)

An Australian regulator has imposed a fine of A$610,500 (approximately $386,000) on Elon Musk's social media platform, X, for not cooperating with an investigation into its anti-child abuse practices. X, formerly known as Twitter, faced scrutiny for its lenient content moderation policies, which led to advertisers pulling back. The e-Safety Commission fined the platform for failing to provide information regarding its response times to reports of child abuse material and the methods used for detection. While the fine is relatively small compared to the $44 billion Musk paid for the platform in October 2022, it represents a blow to the company's reputation, as it has struggled with declining revenue and the reinstatement of many banned accounts due to its lax content moderation.

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