Our opinion on the current state of REMGRO(REM)Johann Rupert's Remgro (REM) is an investment holding company that owns 28.2% of Rand Merchant Bank Holdings (RMH) and 3.9% of Firstrand. But that is not Remgro's only investment. It also owns Mediclinic, an international healthcare company with divisions in Switzerland, Southern Africa, and the United Arab Emirates, which has now been delisted from the JSE.
Remgro recently sold its 25.8% stake in the London-listed Unilever Group for R4.9bn in cash, plus the Unilever spreads business in Southern Africa. This gave it ownership of brands like Flora and Rama and other spreads. In its foods division, it also owns 31.8% of Distell and 77.2% of RCL Foods, where the Unilever spreads division may be housed in a new subsidiary called "Silver 2017."
Under insurance, Remgro owns 29.9% of RMI. It also has several other investments, including a 23.1% stake in Grindrod and a 30% stake in Seacom. The Competition Tribunal has approved the acquisition by Community Investment Ventures Holdings (CIVH), a Remgro subsidiary, of Vumatel, a "last mile" fibre infrastructure company. As part of the approval, Vumatel must supply free uncapped fibre services to schools near where its networks pass for the next 10 years.
On 2nd December 2020, Remgro announced that it is planning to increase its stake in RCL Foods at a cost of R805m. The company has the intention of getting into the electricity generation business to supply its own businesses because it believes that Eskom can no longer be relied upon.
In its results for the year to 30th June 2024, the company reported revenue of R50.4bn, up from R48.1bn, and headline earnings per share (HEPS) down by 18.8%. The company said, "A significant driver of the decline in headline earnings relates to the effect of the corporate actions implemented in the recent past, the majority of which are non-recurring items. Remgro's intrinsic net asset value per share increased by 1.0% from R248.47 at 30 June 2023 to R251.01 at 30 June 2024."
Technically, the share made a low at 8388c on 7th September 2020 and has been in a rising trend. Its most recent results have disappointed, and the share has broken down out of that trend. It is currently trading at 14583c on a P/E of 14.33. Once the negative news has been fully discounted, the share will probably represent good value. We recommended applying a 65-day exponential moving average and waiting for a clear upside break before investigating further. That break came on 12th June 2024 at 13000c.
