JSE Mixed as Financials Outperform Resources on 14 May 2026

JSE Index Performance

The JSE closed marginally lower on Wednesday, with the All Share slipping 0.02% as a sharp divergence between sectors told a more complex story than the headline index suggested. The Resource 20 fell 1.44% and Energy lost 1.92%, dragged by a broad sell-off in mining and energy counters including Thungela and Impala Platinum, while Financials surged with the Banks index up 1.92% and the Financial 15 adding 1.7%. Pick n Pay was the standout gainer, surging 8.13% to R22.20, whereas Karooooo fell nearly 10% to R720.51 despite reporting strong subscriber growth and an upbeat earnings guidance midpoint for the year ahead.

RLO Reunert Warns of 16%–21% Earnings Decline as Electrical Engineering Segment Struggles

Reunert issued a trading statement on Wednesday guiding for a 16% to 21% decline in headline earnings per share for the first half of its 2026 financial year, citing persistent structural weakness in its Electrical Engineering division. The company flagged delayed infrastructure orders, subdued demand conditions, and elevated raw material costs as the primary drivers of earnings pressure in that segment. A non-cash IFRS 2 share-based payment charge, stemming from Reunert's appreciating share price, adds further distortion to the headline profit figures, meaning underlying business performance may look worse than the earnings decline suggests. The Defence Cluster and ICT segments provided a partial offset, demonstrating relative resilience against the broader Electrical Engineering headwinds. The stock traded near its 52-week high at the time of the announcement, suggesting the market was already looking through the non-cash charge toward the stronger divisions, though the genuine demand weakness in infrastructure-related operations remains a near-term concern for investors watching the counter.

MTU Mantengu Begins Formal Retrenchment Process at Sublime Smelting Unit

Mantengu has commenced a formal Section 189 labour consultation process at its Sublime Technologies subsidiary, marking a significant escalation from what had been a temporary operational suspension. The move follows the expiry of Sublime's electricity tariff agreement with Eskom, and the company has confirmed it was unable to secure a viable tariff for its open arc furnaces, rendering the smelting operation structurally unviable at current energy prices. This is not a short-term pause but rather a formal downsizing consultation, signalling that management views the energy cost burden as unsustainable rather than reversible. For investors, the formalisation of retrenchments at Sublime underscores severe operational distress in this segment, with existential questions now hanging over its future within the broader Mantengu group. The group will need to articulate a clearer path forward for its remaining operations while managing the cost and reputational implications of the restructuring process.

KRO Karooooo Posts 16% Subscriber Growth and 21% EPS Guidance, Yet Shares Retreat Nearly 10%

Karooooo reported full-year 2026 results showing 16% subscriber growth to 2.66 million and a 90% jump in adjusted free cash flow to R809 million, alongside an FY2027 EPS guidance midpoint pointing to 21% growth. Despite these apparently strong operational metrics, the shares fell sharply, closing 9.76% lower at R720.51. The market appears to have focused on Cartrack's operating profit margin contracting from 31% to 28%, a development that raises questions about the sustainability of profitability as the group accelerates its scaling strategy. Management also flagged a contracting gross profit margin outlook for the year ahead as it prioritises subscriber acquisition over near-term margin protection. Rising debt levels, with bank term loans increasing by R134 million to R449 million to fund operational requirements, add a further dimension to the risk narrative. For SA investors, the growth thesis remains intact in terms of top-line momentum, but the margin compression warrants closer monitoring as the company pursues its accelerated expansion plans.

THA Tharisa Forecasts EPS Surge Exceeding 450% on Stronger Commodity Prices

Tharisa issued a trading statement projecting earnings per share to surge by between 512% and 532% to a range of 15.3 to 15.8 US cents for the first half of its 2026 financial year, with headline earnings per share expanding by 455% to 472%. The dramatic percentage growth is driven by improved platinum-group metal prices against a very low prior-year base, when commodity markets were considerably weaker. Investors should note that while the headline numbers are impressive, the magnitude of the increase is heavily amplified by the low comparison base from the same period last year, and the underlying earnings remain highly sensitive to commodity price swings rather than reflecting structural operational improvement. The trading statement covers preliminary, unaudited figures, and the company has not provided full financial details at this stage. For those considering exposure to mining counters on the JSE, Tharisa's update is a reminder that commodity-linked earnings can move sharply in either direction depending on pricing trends.

KAL KAL Group Delivers 30% EPS Rise and 25% Dividend Increase in Interim Results

KAL Group reported a 30.3% increase in earnings per share to 513.87 cents for the six months ended March 2026, alongside a 25% raise in the interim dividend to 70 cents per share, reflecting strong margin management and improved operational efficiency. Revenue grew by a more modest 5%, but gross profit expanded by 8.8% to R1.81 billion, demonstrating that the group is extracting better returns from its existing sales base without relying solely on top-line expansion. A notable highlight is the substantial improvement in the balance sheet, with net interest-bearing debt to equity improving to 32.9% from 48.4% in the prior period, materially de-risking the group's financial position. The combination of double-digit earnings growth, an elevated dividend payout, and credible deleveraging makes the interim update a constructive signal for investors focused on cash-generative businesses with disciplined capital management, even if the headline revenue growth was not as dramatic as the earnings acceleration.

GTC Globe Trade Centre Flags Preliminary Irregularities in German Asset Acquisitions

Globe Trade Centre has disclosed that an internal forensic investigation, supported by external legal and forensic advisors, has identified preliminary indications of irregularities related to its historical German asset acquisitions. The review remains ongoing, and no final conclusions or quantified financial impacts have been established at this stage. The company has committed to communicating material findings as the investigation progresses, but the disclosure alone represents a significant governance alert for SA investors holding or considering exposure to this dual-listed property counter. The nature and full scope of the potential irregularities are still unknown, leaving the financial and legal consequences equally uncertain until the review concludes. For investors, this is a situation that warrants close attention to future SENS announcements as the investigation matures, as any material findings could have implications for the company's historical financial reporting and its broader strategic standing.

What we are watching

Investors should monitor SENS on Thursday for further updates from GTC on the progress of its forensic investigation, and watch for any supplementary announcements from Mantengu regarding its Section 189 retrenchment timeline at Sublime Technologies.