There’s always been a lot I found hard to digest. Consecutive double faults, craft beer, meme coins, Radiohead, politicians, being tailgated by Checkers Sixty60 riders in rush hour, my wife’s sudden penchant for sandpapering and varnishing old garden furniture, to name a few.
But now I just can’t digest anything without great resolve and some hard swallowing. Last Wednesday I was tucking into a slab of grilled kingklip at my favourite eatery. By my third mouthful I was doing the good old “langtand” grind on a meal I usually devour with unbridled gusto. After a few moments of panicky processing, I realised my sense of taste had gone Awol. I’m assuming this is one of those Covid complications – even though, aside from a brief episode of the sniffles last week, I suffered no obvious symptoms.
Hopefully this is a temporary setback, because it’s an inconvenient ailment — unless you want to shed weight rapidly. I am totally unaccustomed to reminding myself to eat. But that’s what it takes, because I simply have no craving for food, especially staples such as meat, potatoes, pasta and cheese. Consequently, I’m pretty much limited to smoothies, avocado sarmies and scrambled eggs — a routine that will surely wear thin sooner rather than later.
The other irritating side effect is a dry mouth, which can entail waking up with my tongue stuck to my palate. I found an interesting prescription to entice the saliva glands back into action: sour jelly worms (which, if anything, will please the executives at Premier). However, slurp a pack of these acidic wrigglers a day, and I’ll no doubt find myself in the dentist’s chair before too long.
Moving on to matters more easily masticated, dogged Trellidor shareholders must be delighted to see the reinforced profits for the security barrier specialist in the interim trading statement to end-December. The headline earnings range was set encouragingly higher at between 28.5c and 30.7c a share, which tees the group up for an interesting second half. The market reaction was telling, with the share peaking at 240c on the release of the trading update and then drifting a bit lower.
Trellidor is already up 35% over a month, so perhaps some circumspection is not a bad thing. In the last full financial year, Trellidor turned interim earnings of 21.4c a share into a full-year bottom line of 36c a share. Trellidor tends to have softer second-half trading, so let’s be conservative and assume it earns the same as the 2024 second half (about 15c a share). That would see full-year earnings of between 43c and 45c a share, placing Trellidor on a blandish earnings multiple of about 5.5.
The little bit of colour Trellidor provided on the trading statement was useful, with executives indicating that profit growth was driven by a continued strong performance by the UK division and, perhaps more importantly, an improved performance from Taylor and NMC Decorative Mouldings. There were concerns last year that the UK segment might be running out of steam. The “continued strong performance” reference hopefully means new business has been picked up.
Taylor and NMC have underperformed woefully since being acquired in mid-2016 for a price tag that today represents more than half of Trellidor’s market value. The performance of the core South African security barrier operations was not specifically highlighted, so one might assume the going remains tough. Hopefully cash flow is secure. For me, the key indicator — which will only come out with the full interim report early next month — is the debt level, which at last count had been whittled down to R116m. Further meaningful progress here could really lock in sentiment.
BAT points out that by 2028, the number of adult smokers might have declined by a whopping 20-million
Returning to matters some may regard as tasteless, the just-released British American Tobacco (BAT) annual report is quite a tome, running to about 474 pages. I remain morbidly fascinated by BAT’s tilt at relevance by swinging smokers away from cigarettes to so-called new-generation products (NGPs) such as vapes, tobacco heated devices and modern oral products. But at the end of the 2024 financial year, BAT’s revenue line is still very much clouded in smoke, with 80% of the almost £26bn generated by cigarettes. The NGPs make up about 17.5%.
It strikes me that BAT might be lagging rival Philip Morris International quite badly, with the latter aiming to be “substantially smoke free” by 2030. BAT, according to its annual report, wants to be “predominantly a smokeless business by 2035”.
Investment company Reinet, we know, is not waiting around for BAT’s transformation, having sold out of its significant minority position in the group recently. The BAT share price has edged up since Reinet sold out, but my gut feel as a shareholder is that it was the correct long-term decision. That said, BAT does remind us that its new categories business is two years ahead — and bolstering the group’s financial flexibility and cash generation.
BAT points out that by 2028, the number of adult smokers might have declined by a whopping 20-million. The group adds that the most recent external forecast estimates the value of the vape market at $21bn, with tobacco heated products valued at $34bn. Nicotine pouches, one of the newer innovations in reduced-risk products, had a global value of $7.4bn in 2022 but is projected to grow to almost $16bn by 2027.
Big numbers. But expect a serious scrap for market share in the years ahead — which may even burn into margins.
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