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Here is a good example of companies being proactive in changing their business, Tiger Brands embarked on trying to become to the rest of the continent what they are here. With mixed success it must be said, at least in the short term! Tiger clearly overpaid in Nigeria for a business that was perhaps not what they thought it was, that is however water under the bridge.
Byron wrote about it when they had their interim numbers back in May: Dangote once off, not good. However, the company are making better than anticipated progress, their trading update from late Wednesday (seconds before trade closed) is as follows: Trading statement for the twelve months ended 30 September 2014.
Loads of moving parts as a result of discontinued operations, "earnings per share from continuing operations will be between 20% and 23% lower than that reported in the previous year", the expected range is between 1260 to 1213 cents for the full year, whilst "As a consequence of an improved trading performance in the second half of the year, headline earnings per share from continuing operations will reflect an increase of between 13% to 16% compared to the prior year".
The expected range for HEPS from continued operations is as follows: 1779 to 1826 cents per share, translating to a multiple of around 19.4 times at the current share price of 355 Rand. What? 355 Rand? Yes. The stock rose 5.33 percent yesterday, reaching an all time intraday (361.98) and of course closing high. The dividend cover has always been roughly 2 times, meaning that the company pays out half of their earnings. You work out the dividend yield from there.
Results are expected in the coming weeks, the 19th of November to be exact, there will be a little more detail. What I like about these two events, the rating downgrade and the company announcement, is that the company has real news on the state of the consumer. Improved trading conditions do not happen as a result of listening to ratings agencies, it is the consumer at work here.