Our opinion on the current state of RCL.

RCL is a large producer of food, sugar products and chicken in South Africa which is owned 80.4% by Remgro. The company owns a number of very well-known South African brands such as 5 Star maize meal, Farmer Brown and Yum Yum peanut butter. It competes with overseas imports of sugar, chicken, and other foods. It was impacted by the listeriosis outbreak which damaged the market for processed meats and caused costs estimated at about R158m. The company has been impacted by the weak economy, low consumer spending and high unemployment. The company, through the SA Poultry Association is petitioning the International Trade Administration Commission (ITAC) for an 82% increase in the tariffs on imported chicken. In its results for the six months to 31st December 2022 the company reported revenue up 17,6% and headline earnings per share (HEPS) down 22,4%. The company said, "The lower result was mainly attributable to declines in Rainbow and Baking. With the Rainbow and Vector Logistics separation processes still in progress and considering the impact of the ongoing external pressures". In a trading statement for the year to 30th June 2023 the company estimated that HEPS will fall by between 39,3% and 46%. We regard this company as a well-managed company. The share has made a clear upside break above its long-term downward trendline on 25th January 2021 at a price of 848c. It has since risen to 1129c despite considerable sideways movement. On 2nd December 2020, the company announced that Remgro had increased its stake by buying 100m shares at R8,05 each. On 29th March 2023 the company announced that it had sold Vector Logistics for R1,25bn.