BROKERS’ NOTES: Buy Reunert, sell Tiger Brands
Rowan Williams, portfolio manager at Nitrogen Fund Managers on what the smart money is doing
Rowan Williams, portfolio manager: Nitrogen Fund Managers
We like Reunert. It’s not a much followed stock, but it’s a long-standing SA industrial group and has recently released results that show steady progress in the business after Covid-related disruptions. What we see of particular interest is a fair exposure to the renewables sector, which is gaining a lot of traction. At R41.86 a share you’re getting an option on that, which is certainly not priced in, given that the stock trades at a forward p:e of 8 and a similar dividend yield; so it’s a built-in X factor.
Sell: Tiger Brands
I think the company has multiple headwinds in the business: rising cost input pressures, combined with a strained consumer environment and increased competition from house brands and other credible competitors. So it’s struggling with margins and market share, and this remains a difficult space. I think the business will struggle to extract a brand premium — and then there’s the overhang of the listeriosis case, which is just a distraction for management.
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