Our opinion on the current state of MPACT(MPT)Mpact (MPT) is a large producer of paper and plastics packaging in Southern Africa. It recycles paper and cardboard and makes corrugated cardboard containers for a variety of industries as well as polystyrene trays for the food industry. It has 20 manufacturing operations, with South African sales accounting for 86% of its business. It employs over 5000 people.
The business is impacted by the general level of consumer spending, which has been depressed because of COVID-19 and was improving at least until the advent of the Ukraine crisis, as well as weather considerations that affect the demand for corrugated containers for fruit and other agricultural products, especially in the Cape. Like many businesses in the current environment, Mpact has been working to preserve cash, but it has benefited from a switch to local suppliers during the pandemic.
In its results for the six months to 30th June 2024, the company reported revenue slightly down at R6.17bn and headline earnings per share (HEPS) of 144.6c compared with 211.6c in the previous period. The company's net asset value (NAV) increased 9% to 3411c per share. The company said, "The uncertain socio-political environment leading up to the national elections, high levels of loadshedding that continued until the end of March, high inflation and interest rates all contributed to weak consumer and business sentiment."
The share fell from a high of R51 in April 2016 to levels around R8 in March 2020 but has since recovered to 2902c. At the current level, it is on an earnings multiple of 5.66 - which looks cheap. Technically, the share looks like it may be entering a new upward trend, but it has been moving sideways since August 2022. On 1st August 2024, the company announced that it had sold its Versapak business for R267.7m.
