WorldWideMarkets — Episode 684 Transcript (1 July 2026)

Runtime: 23:23. Speaker: Simon Brown. Raw transcript — sponsor is Shyft (not “Shift”).

Simon Brown (00:01) Worldwide market this week. Bending spoons gonna be the biggest tech IPO in Europe this year. NASPASS process results looking good, frankly. Microsoft looking dismal, but opportunity Efromat just looking, frankly, ugly all around, and we’ve got stocks on the move. Simon Brown. This is World Wide Markets episode 684 for 1 July. And I am recording this on Tuesday, just after my lunch. Worldwide Markets, powered by Standard Bank Global Markets Retail, and Shift, the global money app that puts travel, shopping, payments, and investments in the palm of your hand. Enjoy the cheapest forex rates anytime, anywhere. Shift powered by Standard Bank. Thanks to Shift. Thanks to Stannabank. Why am I thinking about my lunch? I I was going through some of the reviews. I always say to you folks, hey, you know, share a review and stuff like that. And sometimes you do, sometimes you don’t. And I thought to myself, let me go and see these reviews. And there was one, this is on the Apple E thing, and Dank, I think it is. he loves to show, calls me Uom Simon, which is, I mean, okay, Uom Simon. He’s he talks around the nuggets. And here’s one of the things what we’re really trying to do here. I I I’ve been in the market, what, 40 years? And I’ve learnt a ton of stuff. None of it necessarily rocket science, just stuff you pick up over the many, many, many years. And that’s really what in part we’re trying to do here is impart that stuff back to folks who haven’t been in the market for forty years. Because I d how did I learn that? I learnt it by hearing it, hearing it, experiencing it. That’s how you’re gonna get it. so yeah, I take his point on on the anecdote. but he ends it. If this show was a food, it would be a cheese toasty. Everyone loves a cheese toasty. His his words and my words, I eyed a cheese toasty for lunch. Cheese toasty is excellent. But then it made me think, poor vegans never had a cheese toasty. That is tough. That is really, really tough. Anyway, let’s get to what is happening out there. and let’s kick off with Microsoft. to be clear, Microsoft is pretty boring, and there was a long time where if you held Microsoft, there really wasn’t much good news coming your way at all, the first decade of the century. And at the moment, it’s kind of going sideways. It’s actually breaking a little bit lower. We’re seeing a bit of support down there around the 340, 360 sort of level. Of course, Microsoft shifting from a capital light business to a capital heavy, right? All those data centers that they are building out are significant. But we’ve got a forward PE of around 20. The mean is 33. This thing is cheap. It’s in a dividend yield of 1%. Look, you don’t buy American. tech stocks for for for dividends by any stretch. and shares in issue have been coming down, although that has slowed since 2023. Since then it’s pretty much gone sideways. Microsoft is a bet on two things. In the one sense, it is just basically saying, you know, how is global business going to be? Because their big business is selling seats to corporates, right? You’ve got a a a Fortune 500 company, you’ve got 5,000 staff, you’ve got 5,000 Microsoft licenses. I mean, that’s just a given. Yeah, and you might have a s the bit here and a bit there, a Salesforce, maybe a Slack or whatever, but you’ve got 5,000 Microsoft. Make no bones about it. that is their really, really big driver. They’ve got other bits, they’ve got the Xbox, they’ve got the gaming studios, which they’ve recently done, Activision Blizzard. I really like those as a business. and then they’ve got they’ve got some hardware. the the those tablet things, et cetera. I mean all nice, all lacquer. but it really is just the 360, the Microsoft office 365 subscription. And then of course it is their cloud, Azure. Azure’s been doing great. And now Azure is leaning full into the the AI space. Their copilot, I use Copilot once. It was silly. I I have Microsoft on my computer, but I have some I I don’t use copilot. I I literally have used it once. But they are going big on it. And that perhaps is what is concerning some people. They are spending on capital like No Tomorrow. So we’ve got three holds, 40 buys and 13 strong buys. the share is sub 370. The low target is 400. The average is 561 and change. The high is 870. So certainly folks are thinking, hmm, there’s a lot happening here. But the the the the issue is perhaps the free cash flow. And I’ve somewhere, yeah, there it is, free cash flow per share. And free cash flow has been going up forever and a day, but suddenly it’s not so up anymore. And that perhaps is the issue. Now, their free cash flow here quarterly is fairly lumpy, but suddenly free cash flow is back at for that particular quarter, we’re back at 2021. So we’ve gone for back five years to where free cash flow was, and that is because they are spending like there is no tomorrow. I like the business, I like its entrenched nature. I like Sachan Nadella, the CEO. I think it’s a great operation. And I think if you if if Microsoft is a stock that you’ve thought, hmm, wonder if I should have some Microsoft, well, the short answer is he has an opportunity. It is looking, I think, cheaper than perhaps it has in a long time. But while we’re talking around stocks that are cheap, one that is perhaps a little more painful in the experience is AfriMat. so I suppose let’s start this by having a I I do not hold Afrimat. I certainly like Afrimat. my AI equity AI research had a buy on Afrimat target price of 45 Rand. gotta say the range was 26 to 52. and we’re pretty much at that 26 type of level. The the story here, and I’m trying to think, this is from the 22nd of May, so. Call it six or so weeks old. The story here was the cyclical turnaround, the NERSA decision that would help the anthra anthracite, and ultimately that decision around do they get rid of the cement business Lafarge, and that then generates about a billion for them in in terms of of of of cash flow. we’ve had the the the promise of the the good news from NERSA, the the other bot’s just not there. And this is a stock that is, I mean, I think are we even at five year lows? no, not even. We’re at 10 year lows. Are we even at 10 year lows? We might be. It is trading 26 round. It it yep, we’re at we’re we’re back at pre-pandemic levels, is the very, very short answer. This is a high quality company. Has management bitten off more than they can chew? I doubt it. I mean, there’s some T’s and C’s, right? The the the the the deal took way longer than than than thought because of holds up at the Competition Commission. That obviously causes some pain. it it you know, they they came to a business that was in even worse condition than previously. cash flow is starting to to come back. the PE is, yeah, I mean it’s it’s I suppose you could say kindly so, yeah, it’s sort of at the mean on on a forward basis in terms of of PE dividend yields hardly there. It’s a tiny stock, it’s a four billion market cap. I’m not sure how much price targets we’re gonna get. Yeah, so we’ve got a high low average of it’s only one. It’s fifty-two, which weirdly enough kind of fits smack in actually at my top end of the range, although my equity AI coverage came in at forty-five. I like Afromat. I am not jumping by any stretch. I you know, I I can wait. I I can wait. This one will get cheaper, or it’ll start going up, whatever the case may be. When it does, that’ll be good news and we will grab it with both hands. Until then. I’m happy to to sit out on the sidelines and just watch. Yeah, I’m I’m I’m seldom in a rush. I’m very, very seldom in a rush. Good news for petrol, it comes down by a whole bunch tomorrow today, depending when you’re listening. on Wednesday first, it’ll be a whole lot cheaper, two odd Rand for petrol, three odd Rand for diesel, I think, or maybe less than two Rand for for petrol. Point is coming down again, and that is thanks to Brent, which has effectively closed that wartime gap. Is back at 72 and change, which is more or less a little higher than it was pre-the-war. Question: Can we get back to 60? I think we can. I didn’t think we could. You’ve heard me say it in this podcast repeatedly that I think it’s gonna get stuck in the 90s, maybe the high 80s. Well, no, straight on through. Now we’re down into the low 70s. we learnt a few things from from the the war in Iran. One is that Yeah, Donald Trump should not be allowed anywhere near anything important. But the other things is that I think we learned stuff around oil. I mean, firstly, I mean, some examples. Demand destruction. Did we see demand destruction and that people weren’t traveling? And I think maybe, maybe we did. You know, I flew to Durban, for example, for my nephew’s birthday. That was March. My niece’s birthday was June. I didn’t fly to Durban for that because the ticket was like 2X the price. Yeah, because of the the surgechargy nonsense. we know that there are some countries which were actively encouraging people not to go out and sp use energy, be that flying, motor vehicles, whatever the case may be. certainly I think we had a lot more in reserve than the world thought. I also, you know, and I’m talking here China, I’m talking the US, the G7 to a degree. But I also wonder the hundred million barrels that we use a day, how many do we use a day versus how many are we putting into the system? To use in the down the line in future. We’re making a plastic bottle today, a pepper bottle that’ll get used in August, or whatever the case may be. we’re filling up a refinery ahead of demand in in I mean, I don’t know the answers. But how oil only got to 120, frankly, still confuses me. To be clear, quite happy that it did only get to that level, but it it it it confuses me nonetheless. Anyway, so let’s get on to a company called Bending spoons. And if you have heard of bending spoons, 10 points to you. I’d heard of them. because I I think Leah Laporte on Twit had the CEO on a few times. So they are they call themselves an Italian technology company founded in Milan in 2013. Okay, I mean there’s a lot of T’s and C’s by that. The guy’s name is Luca Ferrari. I mean, that’s a name. I mean, okay. Yeah, he’s Italian. But what they do, so they’re gonna be listing on the NASDAQ this week, maybe next week. I’ve got a bit of a report on it. I will save that and I’ll put it in the show notes. You can download it. Just onelap.com slash WWM for Worldwide Markets. Find this week’s show and you can go and download this. It’s AI generated, but it gives me a bunch. So what do what does bending spoons do? Well, they go and buy code on Nasdaq’s gonna be B S P. That perhaps is the The very, very important bit. They go and buy, what do we call them? legacy brands, perhaps? Brands that are are are tech companies that are maybe not as big. We transfer. Do we all know we transfer? Yeah. Do we use it sometimes? Yeah. Does it have a lot of users? No. Does it make a lot of money? No. They own Remy, which is a a photo app. They own Meetup and Everbright, which are event and and and the like. StreamYard, which I could be using. For streaming this this year podcast as I’m going along. They are buying AOL, America Online, which is still one of the biggest email clients in the world outside of Gmail and the like. they’ve got Evernote, which is how I know them because I’m an Evernote user. They they go and and also Vimeo, which again, you know, you’re gonna say to yourself, Vimeo? Come on, Vimeo is nothing. Vimeo isn’t even, you know, it’s number two to YouTube, but it is so far behind, it’s not even number two. It’s just number lost. That’s what they do. Evernote, you know, Evernote spent if you don’t know Evernote, it’s a note-taking app. So you can take notes with voice or text or handwriting or video or audio or whatever you want. You can clip things, you can photograph things, you can share it across all your different devices. It’s clunky. I mean, I’ve moved to Obsidian because it was making me crazy. you know, and I think I was I mean, it was cheap, it was 700 bucks a year, more or less. Obsidian is what is obsidian? 50, 60 dollars. Obsidian a little bit more, maybe eight, nine hundred. but Evernote is still out there, and that’s what they do. They go and buy these brands that at one point were, you know, go back 15 years, 20 years, Evernote was the rah-rah of the internet. It was growing, it was spending a fortune, it was raising a VC money galore, but it never quite got there. It never kind of became the big thing. But it also never disappeared. So then you’ve got the option of shutting it down or selling it. So somebody sells it. Like a Tumblr. So Tumblr’s not part of their network, but like a Tumblr in the sense that Tumblr still exists. And some of you are like, huh, what is Tumblr? And others of you are like, yo. It still exists. Yeah, it still exists. It’s just not very much to it. So bending spoons is kind of like private equity, I suppose. And they go and buy these. Now they’ve then got and they can use shared engineering, shared marketing, they can push through some price increases, little bit of feature changes, and and that can typically move margins very, very quickly in their favor. Now, as I said, I’m on Evernote. I it’s clunky as heck, but there’s been some real changes to it over the sort of last year or so. I mean, kudos to them. They’ve done a really decent job with it. And they’ve had Evernote for some very time. So Evernote’s the big one, retransfer, we all know. AOL, that’s the current deal which is going through. I mean, it was dial up internet. Now it’s email, now it’s content. the Brightcove, which is a video platform. I mean, all of these type of things, none of them on their own, are viable. But individually, they’re there. Filmec. Tiny little app, which I absolutely love. I didn’t know until now that that the Bending Spoons people own it. So what do they got? About 500 million active users. That’s up markedly from what 111 million in December 2023. so 500 million active users per month. It’s a good number. 9 million are paying. So that’s your your key there. That’s the 9 million who are paying. AOL’s got 30 million active and eight million daily, thirty million monthly and eight million daily. and still a top 10 email provider globally. so they they they you know Vimeo’s got 1.7 million paid subscribers. Who is paying for Vimeo? I don’t know, but somebody as well know. 1.7 million people are. You’ve got 9 million paying peeps who are paying, you know, I don’t know, nine, 10, 11 dollars a month for these products. You buy some new products, you wrap it up. so revenue. for last year was one point three billion. Q one of this financial year six hundred million. So if we just straight line that they’re gonna be at two point four. So they almost like so they’re gonna double revenue. I think AOL’s helping a lot there. If at any point I said Yahoo, I meant AOL, I get them confused. They were early day dot com bubbles that busted. so we’re seeing significant growth in that regard. as I said, they they’re raising up to 1.6 billion. at around 26 to 28 per per share. but only some of that is new stock, about 60%. The rest is some founders exiting. I haven’t got a massive concern around that. That’s fine. But it does mean that that they don’t get all of that cash. I’m trying to see they’ll get about 970 to a billion if they get top of the range. The rest is is going to to to finders. So it’s a 1.6 billion IPO but only a billion or so going to the finders. They’ve got debt and and this will help pay down some of that debt as well. I don’t think they’re massively expensive. The the EV2 revenues, what, 18 times? Okay. EV to 2026 revenue, if we take 2.4 billion, is about nine to ten. That’s not bad. That’s not bad at all. so I think this is gonna be a really, really interesting business. They’ve got a lot of debt, 4.4 billion odd. that’s after a bunch of acquisitions last year and the year before. The a and and AOL. It I mean that that added almost three billion to to the debt. AOL is absolutely the biggie there. So their leverage is about six times net debt to EP EBITDA. That’s pre-IPO. it is meaningful. And and that is, make no mistake, that debt burden is a risk. They’ve got, you know, ten nine million clients, ten so they’re getting a billion or so revenue per year. Yeah, that’s a lot. the IPO th that not okay. It is choosing not to use IPO proceeds to deleverage. Not paying down debt, they’re comfortable with that level of debt. And this is what PE firms do. So, what are they gonna do with that money? Fund the next wave of acquisitions, fresh ammunition for more of these little businesses. I like it. I I I really, really like it. And I, you know, bending spoons, NASDAQ, code BSP coming to market this week or next. Let’s keep a close eye on it. I will put the report, you can go find that. I’ll tweet it out as well. Put out the link around that as well. I I’m I I I I’m not partaking in the IPO, not getting into that space of it. But let’s have a look-see. And I think this is a potentially nice little business coming to market. I like the way they think. Let’s see how that IPO goes. $26 to $28. BSP is the code. let’s go to NASPAS process before we wrap the day. Results out Monday. dividend up forty percent. Take a lot hits a billion in revenue and is profitable for your profitability on adjusted EBITDA Ts and Cs apply. Billion dollars in revenue. Yo, to be clear, there has been the bun fight for the ages between Takerlot and Amazon this last week because of Prime Day for for for for for for Amazon. Expect more of that. Media twenty-four loss making, but its revenue is only about a hundred million. These are dollars, hey I mean It’s actually a big number. Think about it. Media 24, 1.6 billion czar at $100 billion revenue. That that is proper chunky. what have we also got here? The big one, of course, is 10 cent. But then the other businesses are starting to come through. They’ve got classifieds, they’ve got the food delivery. They’re starting to become less of a 10 cent business. And perhaps most importantly, is that they have been getting sold off to middle and back. Let’s haul up some numbers, let me. do that there to get it to be sharing. come on, play with me. There we go. So NesPass, they did a share split last year, five for one, and since then they’ve just been falling. They’re at 840 on Tuesday’s close, Monday’s close rather, which takes them back to where they were April last year, October 2024. So they certainly have been under pressure. their PE is now sitting on around eight-ish. The 10 year mean is twenty-ish. So that’s quite nice. The dividend yield is point one, which is absolutely nothing, but you’re not buying this company for for dividend yield. shares under issue have been coming down. I I just can’t help thinking, now, if you’ve got a top 40 ETF or any sort of local ETF, you’ve got a whole bunch of NASPAS already. That’s just how it rolls. But I’ve been looking at this and I’ve been watching it for an age, and I keep on coming to peeps, surely this thing is cheap. I mean, basically, we are buying 10 cent at discount to 10 cent and 10 cent been under pressure, not helped by the fact that Process sells 10 cent shares to buy back process shares. But 10 cent is, I mean, 10 cent, and we’ll come to it in a second, is immensely cheap in of itself. So targets on NASPASS, it’s currently called 840, the low is 810, the average is one twelve ninety, and the high is sixteen forty-six. So a whole bunch there. Let’s go have a look at Tencent. You know what I love about Tencent? They did it their sharecode used to be, I think it was 3500, and they did a a five four one stock split. So the share code became 700. I I know it it just tickles me. It doesn’t necessarily mean anything. It w one of those randoid facts which and dank mentioned earlier. And then tell me how to pronounce your name. so we’ve got a stock that’s massively under pressure and let’s draw some little bit of lines here. Are we seeing anything? Yeah, I mean it’s just barreling through support, just keeps on going. And it could it could easily lose another ten or twenty percent. It’s currently trading around four twenty twenty. but it is Chinese tech generally is just deeply unhated. the the PE’s around twelve, the mean for of the last decade is thirty. Chinese tech is just hated. and and you know, you know, are there some reasons to hate Chinese tech? Sure. Is it around valuations? No, you can’t haten them for being expensive. Absolutely not. So the on the targets, the lows 424, the stock is 420. the averages call it 700, the highs 881. I can’t help thinking that there is potentially something here, like with Microsoft. I mean, short answer is it is looking cheap. and 10 cent looks cheap, which flows through to Process, which flows through to NASPASS. Which do you buy? You buy the process with the NASPASS. I kind of like the NASPASS because I also get that media twenty-four, neah, losing money. But what I do get as well is the take a lot. And I don’t know, is is is Amazon gonna eat take a lot’s lunch? I mean, maybe, of course, maybe. I mean, that is entirely possible, but you know, so be it. It’s it’s a relatively small lunch, I suspect is what I’m trying to say in that. Worldwide Markets, powered by Standard Bank Global Markets, Retail, and Shift, the global money app that puts travel, shopping, payments, and investments in the palm of your hand. Enjoy the cheapest forex rates anytime, anywhere. Shift powered by Standard Bank. Hey, remember, online share trading is moving into Shift. I think those emails will start going out in the next week or two. keep a lookout for that. But thanks to them for the sponsors. and as always, my name is Simon. We’ll chat again next week. Leave us a review. They’re fun. I went and had a a look at them. They got me some chuckles. I’ll read out the fun ones. I’m still sad for those vegans who can’t have a cheese toasty. yo, I don’t know. I mean, I okay, you got your principles, that’s fine. But cheese toasties, man, they are epic. my name is Simon. As always, look after yourself. If you can, look after somebody else as well. We’ll chat again next week.