Our opinion on the current state of REINET(RNI)
Reinet (RNI) is an investment holding company primarily noted for its significant stake in British American Tobacco (BAT). This stake, which represents roughly 2.12% of BAT, is worth about $1.8 billion and accounts for 31% of Reinet's net asset value (NAV), down from 85% ten years ago. This decline in proportion is mainly due to a drop in BAT's share price, reflecting a more challenging legal environment for tobacco, especially in the US where the Food and Drug Administration is considering new regulations on menthol cigarettes.
Despite the reduced value of the BAT holding, Reinet has shown no urgency to divest this asset. BAT continues to provide substantial dividends, driven by growth in third-world countries despite declining cigarette sales in first-world countries. As BAT's share price has fallen, the significance of other assets in Reinet's portfolio has grown. The largest of these is its 46% stake in Pension Insurance Corporation (Penscorp), now representing 36.8% of the portfolio. Additionally, Reinet has a diverse range of private equity investments accounting for around 15% of its portfolio.
In its results for the year ending 31st March 2024, Reinet reported an 8.1% increase in NAV, reaching 3402 euro cents per share, with a compound annual growth rate of 8.8% since March 2009. By 30th June 2024, the NAV had further increased to 3669 euro cents per share. As a rand-hedge stock, Reinet's value benefits from any weakening of the rand.
Technically, the share fell from a high of R343 in February 2020 to lows in January 2021. The recommendation was to wait for a break up through its long-term downward trendline, which occurred on 16th September 2019 at R270 per share. It is now trading at R451.42. The share experienced a significant decline following an announcement by BAT about writing down the value of its US operations by GBP25 million (R595 billion), which led to a 10% drop in BAT's share price.
Investors considering Reinet should factor in the potential movements of the rand, given its influence on the share's performance. Despite the volatility linked to BAT's challenges, Reinet's diversified portfolio and steady NAV growth make it a resilient investment option.
Despite the reduced value of the BAT holding, Reinet has shown no urgency to divest this asset. BAT continues to provide substantial dividends, driven by growth in third-world countries despite declining cigarette sales in first-world countries. As BAT's share price has fallen, the significance of other assets in Reinet's portfolio has grown. The largest of these is its 46% stake in Pension Insurance Corporation (Penscorp), now representing 36.8% of the portfolio. Additionally, Reinet has a diverse range of private equity investments accounting for around 15% of its portfolio.
In its results for the year ending 31st March 2024, Reinet reported an 8.1% increase in NAV, reaching 3402 euro cents per share, with a compound annual growth rate of 8.8% since March 2009. By 30th June 2024, the NAV had further increased to 3669 euro cents per share. As a rand-hedge stock, Reinet's value benefits from any weakening of the rand.
Technically, the share fell from a high of R343 in February 2020 to lows in January 2021. The recommendation was to wait for a break up through its long-term downward trendline, which occurred on 16th September 2019 at R270 per share. It is now trading at R451.42. The share experienced a significant decline following an announcement by BAT about writing down the value of its US operations by GBP25 million (R595 billion), which led to a 10% drop in BAT's share price.
Investors considering Reinet should factor in the potential movements of the rand, given its influence on the share's performance. Despite the volatility linked to BAT's challenges, Reinet's diversified portfolio and steady NAV growth make it a resilient investment option.
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