Our opinion on the current state of BRIMSTON(BRT)Brimstone (BRT) is a black-controlled investment holding company with a diverse portfolio of investments across various sectors. Its significant holdings include:
1. 54.2% of Sea Harvest: A listed fishing company with a market capitalization of just over R4.5 billion.
2. 100% of Lion of Africa: A loss-making insurance company that decided to cease operations in November 2018.
3. 100% of House of Monatic: A loss-making clothing manufacturer.
4. 24% of Oceana: The largest fishing company in South Africa, with a market capitalization of R8.6 billion. Brimstone is increasing its shareholding by acquiring 8 million shares from Tiger Brands, which will take its holding to 22.9%.
5. 6.1% of Grindrod.
6. 18% of Aon Re Africa.
7. 25% of South African Enterprise Development.
8. 49.8% of Vuna Fishing Company.
9. 12.8% of Milpark Education (although it has disposed of its entire stake recently).
10. 25% of Obsidian: A black-owned investment holding firm positioned to benefit from the roll-out of the NHI, which Brimstone increased to 80% for R35.7 million in January 2020.
11. Various smaller shareholdings in property, healthcare, 3.9% of Long4Life, and 5.3% of Stadio.
Brimstone has been actively selling down its stakes in several companies, including Life Healthcare, Lion of Africa, House of Monatic, Equites, Multichoice, and Phuthuma Nathi, using the proceeds to pay down R1 billion of its debt.
In its results for the six months to 30th June 2024, Brimstone reported a 39% decline in revenue, but a 110% increase in headline earnings per share (HEPS). The company's intrinsic net asset value (NAV) fell by 5.7% to 1143.6 cents per share. The company attributed the increase in HEPS primarily to fair value gains of R76.2 million compared to fair value losses of R40.3 million in the prior period and an increase in Brimstone’s share of profits from Oceana, rising from R94.9 million in the prior period to R187 million in the period under review.
Brimstone also disposed of its entire stake in Milpark and partial stakes in Phuthuma Nathi, MTN Zakhele Futhi, and Equites.
Both the ordinary and "N" shares are thinly traded, with the ordinary shares being more illiquid, making them less suitable for private investors. Unless Brimstone begins to unbundle its portfolio, the additional value within the company is likely to remain locked in, limiting the potential upside for investors.
