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6 month results from Remgro

Remgro released results for the six months to end December 2011 as the closing bell rang. Or the screens shut off for continuous trade into all sorts of trades that I don't know well enough. After market trades and the like. I like the old Remgro model, possibly before all the restructuring when it was still called the Rembrandt Group. Where the "Rupert magic" would have been at work in the past. Is it not fair to say that all the focus, all that magic would be elsewhere, at least from the point of view of Johann Rupert. I suspect that he is more interested in Richemont and Reinet than Remgro. But that presumes that the current management at Remgro is not a dynamic bunch. I am more inclined to think that the Steinhoff management and the PSG management (who know each other well enough) have a proven deal making ability that has worked for shareholders over the last half a decade. Although having acquired a large Grindrod stake means that Remgro have not been quiet at all.


What do you get when you hold Remgro? Well, easy, check this out from their results release -> COMPOSITION OF INTRINSIC NET ASSET VALUE. The ones that I would want to own on that list, either listed or not are not many. My question is, should the share price then not trade at a discount to the intrinsic value? The short answer should be yes. For the half EPS clocked 767.5 cents per share, HEPS was 22 percent higher to 515.5 cents per share. The dividend was hiked to 126 cents.


There was a slide in the INTERIM RESULTS PRESENTATION that kind of answered my question, why should you own this one, pay the management handsomely and get an average return, when you could own the Satrix FINI and Satrix INDI? So, I compared the three. Over three years, in a life post BAT, when that was unbundled to shareholders. Why did I do this comparison? Well, check out slide four. Contributions from their industrial holdings in this half (excluding treasury and corporate costs) account for half of the overall earnings. And financials account for nearly 43 percent. Mining, actually only Impala Platinum, accounts for a mere 4.2 percent. So, how has Remgro done relative to the STXIND, Satrix Industrials and STXFIN, Satrix Financials? Well, Remgro over three years has beaten the STXFINI by 14 percent and underperformed the STXIND, the industrials by around twenty percent. So, I suppose about the same as the two combined. And that was the point I was trying to make. Do you own an index tracker and not worry about management execution, or do you say that the eating of the pudding should be a much longer affair. To be honest, not for me and us.


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