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. However, Remgro's investments extend beyond banking. It also owns Mediclinic, an international healthcare company with operations 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, along with the Unilever spreads business in Southern Africa. This acquisition gave it ownership of brands like Flora and Rama. In its food division, Remgro 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 holds 29.9% of RMI. Additionally, it owns a number of 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 its networks for the next 10 years.
On 2nd December 2020, Remgro announced plans to increase its stake in RCL Foods at a cost of R805m. The company also intends to enter the electricity generation business to supply its own businesses, citing concerns over Eskom's reliability.
In its results for the year to 30th June 2024, Remgro reported revenue of R50.4bn, up from R48.1bn, while headline earnings per share (HEPS) declined by 18.8%. The company stated, "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."
In a trading statement for the six months to 31st December 2024, Remgro estimated that HEPS would rise by between 33% and 43%. The company explained, "The increase in headline earnings is driven by improved operational performances from the majority of Remgro's investee companies, lower finance costs, as well as the negative impact of significant corporate actions in the comparative period."
Technically, the share made a low at 8388c on 7th September 2020 and has been in a rising trend. It is currently trading at 15048c on a P:E of 14.78. 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. We see further upside potential in the share.
