BREAK­ING THROUGH

Finweek English Edition - - MARKETPLACE TECHNICAL STUDY - Edi­to­rial@fin­week.co.za

Au­gust, be­fore it dropped slightly. This fol­lowed on the suc­cess it achieved with a num­ber of steps taken to in­crease prof­itabil­ity. Its net profit for the year to Septem­ber im­proved by 91% com­pared to the pre­vi­ous year. Its pol­icy to fo­cus more on prof­itable spe­cialised pack­ag­ing prod­ucts in Europe and North Amer­ica is in­creas­ingly bear­ing fruit.

Tiger Brands, South Africa’s largest food group, ac­quired a new CEO in Lawrence MacDougall in May. He must still prove him­self, but the mar­ket has high hopes for him, which par­tially led to the share price re­cently reach­ing a new high. MacDougall or­dered a com­pre­hen­sive strate­gic re­view of the group shortly af­ter his ar­rival, which is ex­pected to be com­pleted in April. Cost-cut­ting is one of his pri­or­i­ties with which he’s had a mea­sure of suc­cess. He also in­di­cated that he be­lieves the group should un­lock more value from its es­tab­lished brands such as the Jun­gle, All Gold and Koo prod­uct ranges.

The group could also be given a profit boost next year with the price of maize and wheat hav­ing al­ready dropped by al­most a quar­ter. Should we have good rains, the down­ward trend could con­tinue, which would re­duce the group’s in­put costs quite con­sid­er­ably. The prices of many prod­ucts have in­creased sub­stan­tially on su­per­mar­ket shelves through in­creased in­put costs ow­ing to the drought, but as in the past, it is un­likely that the food groups would pass lower prices on to the con­sumer. In other words, profit mar­gins could widen con­sid­er­ably. (Also see page 39.)

Among the weak­est shares, we still have Lon­min and PPC, which lie the fur­thest be­low their long-term EMAs, while the Chop­pies re­tail group of Botswana has ap­par­ently lost in­vestors’ con­fi­dence. Gold shares, which have un­til re­cently been so pop­u­lar, have also weak­ened to such an ex­tent that it once again proves how spec­u­la­tive (and dan­ger­ous) any runs in gold shares could be.

their long-term EMAs.

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