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RCL FOODS LIMITED

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Our opinion on the current state of RCLRCL Foods (RCL) is a major South African producer of food, sugar products, and chicken, with an 80.4% ownership stake held by Remgro. The company owns a portfolio of well-known South African brands, including 5 Star maize meal, Farmer Brown, and Yum Yum peanut butter. RCL competes with overseas imports of sugar, chicken, and other foods, facing significant challenges in these markets. The company was notably impacted by the listeriosis outbreak, which harmed the market for processed meats and led to costs estimated at approximately R158 million. RCL has been further affected by the weak South African economy, low consumer spending, and high unemployment rates. The company, through the South African Poultry Association, is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in tariffs on imported chicken. On 2nd December 2020, Remgro increased its stake in RCL by purchasing 100 million shares at R8,05 each. On 29th March 2023, RCL announced the sale of Vector Logistics for R1,25 billion. A significant development for the company occurred on 4th June 2024, when RCL announced the unbundling and separate listing of Rainbow Chicken. RCL shareholders received one Rainbow share for every RCL share they held as of 25th June 2024. The company's pre-listing statement for Rainbow was published on 10th June 2024, with the last day to trade being 25th June 2024. In its results for the year ending 30th June 2024, RCL reported a 6.8% increase in revenue and a 31% rise in headline earnings per share (HEPS) from continuing operations. The company stated, "EBITDA from continuing operations increased by 36.8% to R2 300,5 million (2023: R1 681,6 million). This was mainly driven by a strong result in our Sugar business unit and the recovery of service levels in the Pet Food business within Groceries." Since the unbundling of Rainbow, RCL's share price has been drifting downwards, but it is expected to perform better once interest rates begin to fall. The company's future performance may also be bolstered by the eventual recovery of the South African economy and a potential favorable outcome in their petition for increased tariffs on imported chicken.
JSE:RCL
by PDSnetSA
Our opinion on the current state of RCLRCL is a large producer of food, sugar products, and chicken in South Africa, which is owned 80.4% by Remgro. The company owns a number of very well-known South African brands such as 5 Star maize meal, Farmer Brown, and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. It was impacted by the listeriosis outbreak, which damaged the market for processed meats and caused costs estimated at about R158m. The company has been impacted by the weak economy, low consumer spending, and high unemployment. The company, through the SA Poultry Association, is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100m shares at R8,05 each. On 29th March 2023, the company announced that it had sold Vector Logistics for R1,25bn. In its results for the six months to 31st December 2023, the company reported revenue up 8,4% and headline earnings per share (HEPS) up 52,6%. The company said, "The Vector Logistics segment was classified as a discontinued operation during the second half of the previous financial year. Despite the negative impact of Avian Influenza in the current period, Rainbow delivered an improved result. Sugar's improvement was achieved, despite lower crop yields and largely attributable to higher market prices." The share has been moving sideways and downwards since its peak on 9th February 2022. On 4th June 2024, the company announced that it would unbundle and separately list Rainbow Chicken. RCL shareholders will get 1 Rainbow share for every RCL share that they hold on 25th June 2024. On 10th June 2024, the company published Rainbow's pre-listing statement, with the last day to trade being 25th June 2024. In a trading statement for the year to 30th June 2024, the company estimated that HEPS would rise by at least 75%. The company said, "The expected improvement in headline earnings is driven largely by Rainbow and Groceries." We recommended waiting for a clear break up through the long-term downward trendline - which came on 30th April 2024 at 1050c per share. It has since moved up to 1270c.
JSE:RCL
by PDSnetSA
Our opinion on the current state of RCLRCL Foods (RCL) is a large producer of food, sugar products, and chicken in South Africa, with 80.4% ownership by Remgro. The company owns several well-known South African brands such as 5 Star maize meal, Farmer Brown, and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. RCL was impacted by the listeriosis outbreak, which damaged the market for processed meats and caused costs estimated at about R158 million. The company has also been affected by the weak economy, low consumer spending, and high unemployment. RCL Foods, through the SA Poultry Association, is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100 million shares at R8.05 each. On 29th March 2023, the company announced that it had sold Vector Logistics for R1.25 billion. In its results for the six months to 31st December 2023, the company reported revenue up 8.4% and headline earnings per share (HEPS) up 52.6%. The company said, "The Vector Logistics segment was classified as a discontinued operation during the second half of the previous financial year. Despite the negative impact of Avian Influenza in the current period, Rainbow delivered an improved result. Sugar's improvement was achieved, despite lower crop yields and largely attributable to higher market prices." The share has been moving sideways and downwards since its peak on 9th February 2022. On 4th June 2024, the company announced that it would unbundle and separately list Rainbow Chicken. RCL shareholders will get 1 Rainbow share for every RCL share they hold on 25th June 2024. On 10th June 2024, the company published Rainbow's pre-listing statement with the last day to trade being 25th June 2024. We recommended waiting for a clear break up through the long-term downward trendline, which came on 30th April 2024 at 1050c per share. Since then, the share has moved up to 1145c. RCL Foods appears to be in a period of transition and restructuring, which could position it well for future growth, especially with the unbundling and listing of Rainbow Chicken. However, potential investors should keep an eye on market conditions, especially the regulatory decisions regarding chicken tariffs and the overall economic climate. The recent upward movement in the share price suggests positive sentiment, but careful monitoring and consideration of the company's strategic moves are advised.
JSE:RCL
by PDSnetSA
Our opinion on the current state of RCLRCL Foods (RCL) is a large producer of food, sugar products, and chicken in South Africa, owned 80.4% by Remgro. The company owns a number of very well-known South African brands such as 5 Star maize meal, Farmer Brown, and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. The company was impacted by the listeriosis outbreak, which damaged the market for processed meats and caused costs estimated at about R158 million. Additionally, the company has been affected by the weak economy, low consumer spending, and high unemployment. RCL Foods, through the SA Poultry Association, is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100 million shares at R8.05 each. On 29th March 2023, the company announced that it had sold Vector Logistics for R1.25 billion. In its results for the six months to 31st December 2023, the company reported revenue up 8.4% and headline earnings per share (HEPS) up 52.6%. The company said, "The Vector Logistics segment was classified as a discontinued operation during the second half of the previous financial year. Despite the negative impact of Avian Influenza in the current period, Rainbow delivered an improved result. Sugar's improvement was achieved, despite lower crop yields and largely attributable to higher market prices." The company also announced that it would spin off and separately list Rainbow Chicken, which should positively affect the share. The share has been moving sideways and downwards since its peak on 9th February 2022. On 4th June 2024, the company announced that it would unbundle and separately list Rainbow Chicken. RCL shareholders will get 1 Rainbow share for every RCL share that they hold on 25th June 2024. We recommended waiting for a clear break up through the long-term downward trendline, which came on 30th April 2024 at 1050c per share. It has since moved up to 1090c. Overall, RCL Foods appears to be in a period of transition and restructuring, which could position it well for future growth, especially with the unbundling and listing of Rainbow Chicken. However, potential investors should keep an eye on market conditions, especially the regulatory decisions regarding chicken tariffs and the overall economic climate.
JSE:RCL
by PDSnetSA
Our opinion on the current state of RCLRCL Foods, a significant player in the South African food, sugar products, and chicken market, is predominantly owned by Remgro with an 80.4% stake. The company boasts an array of renowned local brands, including 5 Star maize meal, Farmer Brown poultry, and Yum Yum peanut butter, positioning it as a key competitor against foreign imports across its product lines. However, challenges such as the listeriosis outbreak have adversely affected the market for processed meats, imposing estimated costs of around R158m on the company. Moreover, RCL has faced pressures from a sluggish economy, diminished consumer spending, and high unemployment rates. In response to these challenges, particularly in the poultry sector, RCL, via the South African Poultry Association, has lobbied the International Trade Administration Commission (ITAC) for a substantial increase in tariffs on imported chicken, advocating for an 82% rise to protect its market. For the fiscal year ending on 30th June 2023, RCL reported a revenue increase of 17.3% alongside a notable decline in headline earnings per share (HEPS) by 42.4%. This downturn in earnings was largely attributed to unrecouped cost pressures within its Rainbow chicken division, despite a solid underlying performance in its core Value-Added Business, which saw underlying EBITDA rise by 10.8%. This juxtaposition of achievements and challenges underscores the company's resilience and effective management in navigating a particularly tumultuous year. Looking ahead, RCL offered an optimistic outlook in its trading statement for the six months ending 31st December 2023, projecting an increase in HEPS of between 41% and 45.9%. This positive forecast follows significant corporate actions, including Remgro's increased investment in RCL through the acquisition of 100 million shares at R8.05 each on 2nd December 2020, and the strategic sale of Vector Logistics for R1.25 billion announced on 29th March 2023. Despite these developments, RCL's share price has experienced a period of stagnation and decline since reaching a peak on 9th February 2022. Given this trend, a cautious approach is advised, with a recommendation to wait for a decisive upward shift through the long-term downward trendline before considering investment. This strategy aims to ensure that investors can capitalize on the company's well-regarded management and potential market recovery, aligned with improving economic conditions and successful strategic moves.
JSE:RCL
by PDSnetSA
Our opinion on the current state of RCLRCL is a prominent South African food, sugar product, and chicken producer, with 80.4% ownership held by Remgro. The company boasts a portfolio of well-known South African brands, including 5 Star maize meal, Farmer Brown, and Yum Yum peanut butter. RCL faces competition from imported sugar, chicken, and other food products. It encountered challenges due to the listeriosis outbreak, which negatively impacted the processed meats market and incurred costs estimated at around R158 million. The company has also grappled with a weak economy, reduced consumer spending, and high unemployment rates. RCL, through the SA Poultry Association, is actively petitioning the International Trade Administration Commission (ITAC) for an 82% increase in tariffs on imported chicken. In its financial results for the year ending June 30, 2023, RCL reported a 17.3% increase in revenue but a substantial 42.4% decline in headline earnings per share (HEPS). The company attributed the negative overall Group result to continued unrecovered cost pressures in its Rainbow division, despite delivering a solid underlying performance in its core Value-Added Business (underlying EBITDA up 10.8%). RCL is generally regarded as a well-managed company. In a trading statement for the six months ending December 31, 2023, the company estimated that HEPS would increase by at least 30%. Notable corporate actions include Remgro increasing its stake by acquiring 100 million shares at R8.05 each on December 2, 2020. Additionally, on March 29, 2023, RCL announced the sale of Vector Logistics for R1.25 billion. From a technical standpoint, RCL's share price has been trending sideways and downward since reaching its peak on February 9, 2022. It is advisable to await a clear breakout above the long-term downward trendline before considering an investment.
JSE:RCL
by PDSnetSA
Our opinion on the current state of RCLRCL is a large producer of food, sugar products and chicken in South Africa which is owned 80.4% by Remgro. The company owns a number of very well-known South African brands such as 5 Star maize meal, Farmer Brown and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. It was impacted by the listeriosis outbreak which damaged the market for processed meats and caused costs estimated at about R158m. The company has been impacted by the weak economy, low consumer spending and high unemployment. The company, through the SA Poultry Association is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. In its results for the year to 30th June 2023 the company reported revenue up 17,3% and headline earnings per share (HEPS) down 42,4%. The company said, "RCL FOODS has weathered a tremendously difficult 12 months, delivering a solid underlying performance in our core Value-Added Business (underlying EBITDA up 10.8%) with the overall Group result negatively impacted by the continued unrecovered cost pressure in Rainbow". We regard this company as a well-managed company. The share has made a clear upside break above its long-term downward trendline on 25th January 2021 at a price of 848c. It has since risen to 1092c despite considerable sideways movement. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100m shares at R8,05 each. On 29th March 2023 the company announced that it had sold Vector Logistics for R1,25bn.
JSE:RCL
by PDSnetSA
Our opinion on the current state of RCL.RCL is a large producer of food, sugar products and chicken in South Africa which is owned 80.4% by Remgro. The company owns a number of very well-known South African brands such as 5 Star maize meal, Farmer Brown and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. It was impacted by the listeriosis outbreak which damaged the market for processed meats and caused costs estimated at about R158m. The company has been impacted by the weak economy, low consumer spending and high unemployment. The company, through the SA Poultry Association is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. In its results for the six months to 31st December 2022 the company reported revenue up 17,6% and headline earnings per share (HEPS) down 22,4%. The company said, "The lower result was mainly attributable to declines in Rainbow and Baking. With the Rainbow and Vector Logistics separation processes still in progress and considering the impact of the ongoing external pressures". In a trading statement for the year to 30th June 2023 the company estimated that HEPS will fall by between 39,3% and 46%. We regard this company as a well-managed company. The share has made a clear upside break above its long-term downward trendline on 25th January 2021 at a price of 848c. It has since risen to 1129c despite considerable sideways movement. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100m shares at R8,05 each. On 29th March 2023 the company announced that it had sold Vector Logistics for R1,25bn.
JSE:RCL
by PDSnetSA
RCL FoodsRCL Foods Ltd. (South Africa) is a holding company, which engages in the food production. It operates its business by combining the Consumer and the Sugar & Milling divisions into a single food division, which is divided into four business units: Groceries, Baking, Chicken, and Sugar. The company was founded by Stanley Methven in 1891 and is headquartered in Westville, South Africa. Please Make sure that you do your own research and inc-operate it with the analysis posted. Asanda The Analyst
JSE:RCLLong
by Asanda_The_Technical_Analyst