The only thing leaner (and meaner) than me — after subsisting on yoghurt, smoothies, chocolate milk and soup for more than a fortnight as my taste buds still flounder — is the Transpaco business model. Much like with packaging sector compatriot Bowler Metcalf, the usual corporate frills that adorn JSE-listed counters are refreshingly scant. The company is built to withstand tough times.
That said, Transpaco’s operating margin was squeezed to 8.2% (from 9.2% previously) in the six months to end-December. The paper and board segment crumpled a bit, its margin down to 5.7%, with the slightly larger (by revenue) plastics segment still comfortably bubble-wrapped at 8.4%. They address completely different niches in the plastics packaging sector, but it is worth noting that Bowler Metcalf managed a margin of 12.3% at its core plastics segment in its interim period to end-December. There may be an interesting line of inquiry here for an investment banker who sees value in creating a larger packaging entity from two smaller operations that have enjoyed long-term operational consistency and sustained profits.
Transpaco, I’m not surprised, muted the dividend payout — a prudent move, considering the lower operational cash flows and not-insubstantial net cash outflow during the period. I suspect the second-half operating margin won’t mend as Transpaco seeks out new business, but hopefully the cash flow taps will crank open a bit more.
By some curious coincidence, my padel ranking seems to closely track the gold price
The group does confirm it’s still on the lookout for selected acquisitions, having at one stage taken a peek at Nampak’s noncore assets. Better still, Transpaco is still buying back its own shares, picking up another 1-million for between R37 and R37.50 a share this week. That’s about 3.5% of the issued shares, so a noteworthy transaction. With the shares trading on a p:e of about seven and a yield of 6%, this is probably a wise bit of capital allocation.
By some curious coincidence, my padel ranking seems to closely track the gold price … at least until late last week, when it stood at 2.94, and bullion reached $2,954/oz. After a couple of unlikely victories against more fancied opponents I edged up to 3.02, and was hoping — for the sake of my quartet of trusty gold miners and my fraction of a pax gold crypto coin — that the gold price would smash through $3,000 in tandem. At the time of writing gold had drifted down further, but a cursory glance at the mad political twittering on X leaves me in little doubt it won’t be long before the $3,000 level is breached.
As for my crypto portfolio — a chunk of ripple and smatterings of bitcoin, ethereum and solana — I try not to glance at daily fluctuations. But I could not help notice detractors on social media happily highlighting bitcoin’s dip under $90,000. The crypto market’s correction was badly timed for small investment counter AltVest Capital, which last week announced its first investment in bitcoin. AltVest says this is “part of a strategic treasury management initiative aimed at strengthening financial resilience, preserving shareholder value, and gaining exposure to the world’s most recognised decentralised digital asset”.
The company also believes bitcoin offers long-term growth potential while serving as a hedge against macroeconomic risks — particularly depreciation of the rand. AltVest is not betting the farm on bitcoin … yet. It bought 1.00464 bitcoin for about R1.8m. This pales in comparison with US-based Strategy (formerly MicroStrategy), which, according to reports, grabbed another $2bn in bitcoin for its treasury. Strategy apparently now owns almost 500,000 bitcoin — about 2.3% of the total supply.
Maybe AltVest will also buy more at the cheaper price? Interestingly, AltVest’s strategy does not include other cryptocurrencies, some of which (such as solana, doge, chainlink and cardano) really fell out of bed last week. The company did, however, indicate that it continues to evaluate the evolving digital asset landscape.
Speaking of changing vistas, technology conglomerate Altron — where activist shareholder Value Capital Partners looms large — seems to be finding encouraging traction at vehicle tracking and fleet management specialist Netstar. Netstar has grown its subscriber base to a significant milestone of 2-million, with Altron reporting double-digit increases in both operating profit and earnings before interest, taxation, depreciation and amortisation. Netstar is still shy of Karooooo’s Cartrack, which has 2.22-million subscribers, albeit spread over a much wider geography. Altron did report that its local operations “maintained a strong trajectory” with double-digit growth in subscribers year on year. But Netstar’s Australian operations are projected to report a loss for the year.
I’m not sure Altron will want to spin Netstar off as a separate listing any time soon. But I do think there is some intriguing optionality on the deal-making front — a tie-up with Karooooo, I think, would present a compelling story of local dominance and exciting offshore potential.
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