WHERE TO INVEST: The Remgro discount has narrowed, but will it stay there?
To understand Remgro’s current share pricing, we must first unpack intrinsic net asset value and what the current masters of the house Johann Rupert built think the company’s assets are worth.
Remgro's share price has risen 22% over the past year, while its intrinsic net asset value (iNAV) has only increased by 4.6%. This 33% discount to iNAV is narrower than its recent highs, but still wider than rival Sabvest's 12% discount. The iNAV represents management's valuation of the company's assets, net of debt and tax, and is a key metric for investment holding companies like Remgro.
Remgro's portfolio is made up of a mix of listed and unlisted assets, with listed assets contributing 34.2% of the iNAV in the latest period. The use of dividend payouts, rather than share buybacks, to return cash to investors may be sending negative signals to the market, as it could indicate a lack of attractive investment opportunities and a lack of conviction in the iNAV valuation.
However, Remgro's recent shift towards a cash-rich balance sheet, with cash up by 143% and contributing 12% of iNAV, may help address this valuation gap as the market will no longer need to guess the cash value or liquidity.
Written by urgent.news from Daily Maverick's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
