Peter Armitage, CEO of Anchor Capital
Buy: Reinet
Can Johann Rupert create more magic? Reinet presents an unusually attractive risk-reward opportunity following a sharp 16% share price decline after investors were disappointed by the absence of a large capital distribution in the recent results. The sell-off has pushed the discount to reported net asset value (NAV) to 31%, well above Anchor’s estimated fair discount of 21%, creating a significant valuation gap. More importantly, Reinet’s cash holdings alone amount to about R558 a share, far exceeding the current share price. This effectively means investors are buying the company’s private equity portfolio, fund investments and listed holdings for almost nothing. After adjusting for future management and performance fees, the market is implying a value of only 200c a share for the noncash assets, representing a 98% discount to their estimated worth. With more than 80% of NAV held in cash, management has substantial flexibility to deploy capital into attractive opportunities, pursue buybacks or make future distributions. The downside appears well protected while investors retain meaningful upside from capital allocation and discount narrowing.
Sell: PPC
While PPC has delivered an impressive turnaround and deserves significant credit for its execution, the investment case is becoming less compelling at current levels. The financial 2026 results were excellent, with headline earnings increasing 45% to 58c a share, well ahead of consensus expectations. A healthy dividend of 30.2c reflected improved cash generation. Management has successfully driven operational leverage through disciplined cost control, with administration expenses falling 19% and further efficiencies still possible. However, much of the turnaround story is now reflected in the share price. PPC’s shares have approximately doubled over the past year as investors have rewarded the company’s improved profitability and balance sheet strength. Looking ahead, the key challenge is that underlying cement market growth remains subdued, while competitive pressures across the industry remain intense. With revenue growth opportunities limited and many of the easy efficiency gains already captured, future earnings growth is likely to moderate. Given the strong share price performance and more demanding valuation, investors may consider taking some profits.
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