To market to market to buy a fat pig. This week marks 100 years since the Bolsheviks seised control of Russia in the October Revolution. Depending on what calendar you use it either took place on the 25 October or the 7 November. Part of the process to consolidate power included a 5-year Russian civil war and the basic eradication of the bourgeoisie class through what was known as the Red Terror. The irony is that Lenin came from a wealthy middle-class family.
The Wall Street Journal had this to say (100 Years of Communism-and 100 Million Dead):
"If we add to this list the deaths caused by communist regimes that the Soviet Union created and supported—including those in Eastern Europe, China, Cuba, North Korea, Vietnam and Cambodia—the total number of victims is closer to 100 million. That makes communism the greatest catastrophe in human history."
I'm not sure if I would go as far as saying 'the greatest catastrophe in human history', there are a number of contenders for the title. History has shown though that communism has not worked and the system generally ends up spreading misery instead of lifting people out of poverty.
Market scorecard. The Dow set another intra-day high on the open yesterday, which thanks to daylight saving is at 16:30 our time instead of last week's 15:30. The Dow was up 0.04%, the S&P 500 was down 0.02%, the Nasdaq was down 0.27% and the All-share was up 0.35%. Brait released a trading statement after the market closed, showing that their NAV sits in a range of R65.50 and R67.50, representing a 12% decrease since their last NAV release. The New Look asset, which is the main reason for the shareholder pain recently, now has a zero value on their books. We will get the exact number next week Wednesday. The share is up around 5% this morning.
Company corner
Byron's Beats
It was a good year for Apple according to the stock market. The share price is up 60% from precisely 1-year ago. When those full-year results were released in November 2016 there were big concerns about a lack of innovation and how the jewel of the crown, the iPhone, was losing its shine. On the 2nd of November this year Apple released its full-year numbers for the year ending 30 September 2017, which painted a very different picture to these "expectations" from a year ago.
It sure was a busy year. Sales in China were disappointing, however everywhere else seemed to flourish. A stronger dollar had a negative impact on the numbers. Numerous fines and legal battles also took its toll on the biggest listed company in the world. The company announced an increase in its capital return program to $300 billion through to March 2019. Share repurchases will be responsible for $210 billion of that.
Sales increased by 6% to $229 billion. The graphic below shows you the geographic and product mix of these sales.
As you can see, sales in the Americas were solid (42% of sales), China not so much. Africa doesn't even get a mention. The iPhone was stable (nearly 217 million units sold) while 'services' and The Mac had a great year. The Other Products division which includes the watch also showed good progress.
From those $229 billion in sales the company made an incredible $48.4 billion in net income. Those margins are juicy! This equated to earnings per share of $9.27. Next year that number is expected to rise to $11.50. Trading at $175 a share, the stock trades at 15 times forward earnings. That is well below the market average, even before you consider the $260 billion in cash they are sitting on.
That was the year gone by, what does the future hold for Apple? The hype over the iPhone X is as heated as ever. Expect record sales when these go mainstream into the festive season. That vital part of the business is in good hands.
I am also excited about the services business that is slowly becoming more influential. Music, tv shows, movies, games, apps. That world is enormous, and Apple has over 1 billion activated devices in circulation with access to these services.
The watch also has huge potential. I am looking forward to seeing all the health benefits they can implement into that wearable device. There is still a long way to go to bring the watch up to standard, but we can afford to be patient while Apple churns out billions in its other divisions.
The Mac continues to steal market and profit share. Even more crucial is that it keeps bringing more people into the Apple network. Once you are in, it is hard to leave.
The future looks bright for this incredible company. Even after a 60% rise in the share price, we see massive value in the stock. This is a must-have in every portfolio.
Linkfest, lap it up
Michael's Musings
The problems of an ageing population is not a new topic. Visual Capitalist has two great infographics, showing the changing population age for Europe, and then North and South America - Animation: The Rapidly Aging Western World. As investors, healthcare is one of our main investment themes because of this trend of an ageing population.
Tencent's recent spin off China Literature Ltd soared on its IPO. It shows how valuable the Tencent ecosystem is - China Literature Soars inHong Kong Debut After Tencent Spinoff. The company can be compared to Amazon's Kindle division.
Home again, home again, jiggety-jog. Tencent in Honk Kong continues to set all-time highs, expect Naspers to do the same locally. Things are rather quiet today on the news front, the only thing on the cards is Oil Inventories from the US. Hopefully, for the consumer, they indicate supply is up and demand is down; current price for a barrel of Brent Crude is $63.38.
Sent to you by Team Vestact.
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