Trading Day – Remgro doubles earnings

Remgro released its annual results today, which revealed that the company more than doubled its earnings. It also commented on the unbundling of its Grindrod stake.

Tiger Brands also released a positive trading statement, with headline earnings per share expected to grow around 40% to roughly R4.50.

In other news, MC Mining announced a fully underwritten rights issue worth R472 million to fund its Makhado Project.

Here is the biggest news of the day.

• Remgro more than doubles earnings and commented on the unbundling of Grindrod stake. The company reported a 125% increase in headline earnings per share (HEPS) to R11.51 for the year ended June 2022. Intrinsic net asset value per share increased by 20% to R213, while the closing price ended June was R130. It represents a discount to NAV of 39%. Remgro declared a final dividend of R1.00 per share, bringing the total dividend for the year to R1.50, a 67% increase. Remgro announced that it would move ahead with the unbundling of its 25% stake in Grindrod. Shareholders will receive 30.7 Grindrod shares for every 100 Remgro shares held.

• Tiger Brands expects a healthy increase in earnings despite increased load-shedding costs. Headline earnings per share (HEPS) for the year ended September 2022 is expected to grow around 40% to roughly R4.50. The company noted that it was negatively affected by the July civil unrest as well as a recall of some of its canned vegetable products. Once-off costs related to the precautionary recall of its Baby Powder products are estimated to be between R20 million and R25 million and are largely comprised of the write-off of the inventory. The company noted that the cost of operating its generators during load-shedding is four times larger than the existing Eskom tariff.

• MC Mining announces a fully underwritten rights issue worth R472 million to fund Makhado Project. The issue price will be R2.36 per share. The funding will also be used to repay Standby Facility 2. Written commitments of approximately R305 million in debt funding have also been received. Planning and early works for the Makhado Project are expected to commence after the completion of the Rights Issue, with construction to start in early 2023.

• Ellies announces staff retrenchments amid continued financial weakness. Ellies noted that they aim to restructure certain operational functions. The company has been under continued pressure to remain profitable for years and, as a result, has suffered from operational inefficiencies that exacerbated the problem. The company’s share price is near its 52-week lows and closed at R0.14 per share.

• The Public Investment Corporation (PIC) has disposed of a beneficial interest in WBHO, reducing its total stake to just under 16.5%.

• Wall Street fear gauge hits its highest level since June as the S&P 500 sets a new low for the year. The Cboe Volatility Index, known as the VIX, jumped to 32.88 on Monday, hitting its highest level since mid-June when the stock market marked its previous bottom. The S&P 500 declined 1% to 3 655, falling below the June closing low of 3 666.