Behind Tongaat Hulett’s souring value
New CEO unveils sad state of affairs at former stalwart, where property sales have been an artificial sweetener
Investors on the JSE, sadly, are becoming accustomed to profit-performance shocks from companies that have long been regarded as blue-chip or solid second-line stocks. Still, most market watchers were left aghast at developments at agribusiness giant Tongaat Hulett — which revolves operationally around large sugar and starch operations, with its sprawling property holdings in prime land near Durban considered to be a huge performance sweetener. Tongaat, once part of the old Anglo American empire, has always been regarded as one of the stalwarts of the JSE’s food sector. But after a shock trading update rattled the market late last month, Tongaat’s status as an appetising long-term food sector investment is being seriously interrogated. Only 18 months ago Tongaat was in the same league as other well-regarded food conglomerates, including Pioneer Foods and RCL Foods. Today there is incredulous realisation that Tongaat — with a market capitalisation of about R4bn — is worth considerabl...
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