Daily Market Blog: Rand Merchant Unbundle

20-NOV-19

Market Scorecard



Last night after the South African market closed, RMB Holdings (share code RMH) announced that they plan to spin out their FistRand stake and then delist. RMH is effectively just a holding company for 34% of FirstRand; a legacy structure. Due to changing corporate governance standards and increased pressure from shareholders, these types of holding structures are being dismantled. Remember in 2016 Pick'n Pay restructured their holding setup?

As shareholders, it makes sense to remove this extra layer of costs and management. In the case of RMH, their stake in FirstRand is worth around R130 billion but their market cap is only around R117 billion. Where things get interesting is that Remgro owns 28% of RMH. Shortly after the RMH announcement, Remgro announced that they would also consider distributing all or some of their FirstRand shares. In the case of Remgro they will get shares from their stake in RMH, plus they own 4% of FirstRand directly. Giving them an effective holding of 13.5% of FirstRand. Here is a graph showing where Remgro makes their money.

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Stocks which we currently recommend

AdvTech is an African education group.

Alphabet (Google) is the world's biggest online advertising platform.

Amazon.com is the world's leading online retailer.

Amgen is a biotech company focussed on blood and cancer therapies.

Apple is the global leader in tablet and smartphone technology.

Aspen is a rising global star in the pharmaceutical industry.

AVI owns leading brands in the food and shoe sectors.

Booking Holdings is the biggest online travel booking service in the world.

Bidcorp is a foodservices company with operations mostly in Asia and Europe.

City Lodge is a mid-priced hotel group in urban areas of Africa.

Discovery is a technology-driven healthcare administrator and life insurer.

EssilorLuxottica is the world's largest branded sunglass maker and retailer.

Facebook owns Instagram, Whatsapp and Facebook.

Famous Brands is SA's largest quick-service restaurant group.

FirstRand is a banking holding company owning FNB, RMB and Wesbank.

Johnson & Johnson is the world's largest consumer health and pharma company.

JP Morgan is the biggest bank in the USA.

Illumina is the dominant manufacturer of genetic sequencing machines.

L'Oreal is a world leader in the manufacturing and sale of beauty products.

Long4Life is an investment company targeting the health and wellness sector.

MTN Group is an emerging markets mobile telecoms giant.

Mediclinic owns hospitals in SA, the UAE, the UK and Switzerland.

Multichoice is an Africa satellite TV and entertainment provider.

Naspers is the holding company of Prosus and South African internet companies.

Netflix is a TV & movie content creator & has a global, content streaming network.

Nike is a designer and retailer of running shoes and other sporting equipment.

NVIDIA is the world's leading chip maker for AI, cars, datacenters & gaming.

Prosus owns food delivery, internet, gaming and ecommerce businesses.

Remgro is a South African investment holding company.

Richemont owns the finest luxury brands like Cartier and Van Cleef & Arpels.

Starbucks is a roaster and retailer of coffee and fantastic foods.

Stryker makes hip and knee joint replacements and hospital beds.

Tesla is the world leader in electric vehicles and batteries.

Tiger Brands is a basic and branded food producer, expanding through Africa.

Uber is a ride hailing and food delivery company.

Visa is a global payments technology company.

Vodacom is a South Africa-based communications provider.

Woolworths the leading organic food & clothing retailer in the Southern Hemisphere.

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