Is this why Remgro shares are trading at a discount of 36%?
'Capital allocation remains the Achilles' heel of this business' - fund manager
Remgro shares are trading at a 36% discount to their intrinsic net asset value (NAV), despite the gap between the share price and NAV narrowing over the past year. This discount is still significantly higher than the 15-17% range achieved a decade ago. Remgro's top five unlisted investments, which include Mediclinic, CIVH, Heineken Beverages, Siqalo Foods, and Air Products, now make up nearly half of its NAV, excluding cash.
The company's portfolio is being repositioned towards these unlisted assets, which make Remgro an attractive entry point. However, Remgro's intrinsic net asset value per share has not grown as much as the JSE All-Share Index's total return over the past decade. Fund manager Piet Viljoen of Merchant West Investments believes that Remgro's performance has been mediocre at best, growing its iNAV by only 6-7% per annum, which is lower than the All-Share Index's total return of 13% per annum.
Viljoen argues that Remgro's management has consistently neglected the key determinant of investment success: return on capital invested.
Written by urgent.news from The Citizen's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
