Our opinion on the current state of RNI

Reinet (RNI) is an investment holding company whose main asset is a holding of roughly 2,12% of British American Tobacco (BAT) worth about $1,8bn which now accounts for 31% of its net asset value (NAV) - down from 85% ten years ago. This decline from a year ago is because the price of BAT shares has fallen. Most of this reflects the more difficult legal environment for tobacco, especially in the US where the Food and Drug Administration is considering changing the laws on menthol cigarettes. In our view, Reinet shows no great urgency to divest itself of the BAT stake - which continues to contribute good dividends from growth in third world countries, while cigarette sales in first world countries fall. As the price of BAT has fallen, so the other assets in the Reinet portfolio have become more significant. The largest of these is its 46% stake in Pension Insurance Corporation (Penscorp) which now represents 36,8% of its portfolio. Aside from Penscorp, the company also owns a spread of private equity investments which account for around 15% of the portfolio. In its results for the year to 31st March 2023 the company reported a net asset value of 5,7bn euros (31,46 euros per share) which reflects a growth of 8,8% per annum since March 2009. On 21st July 2023 the company reported that its NAV was 32,98 euros per share. On the 30th September 2023 the company's NAV was 32.79 euros per share. The share is obviously a rand-hedge and, although it fell from its high of R343 in February 2020 to lows in January 2021. We advised waiting for a break up through its long-term downward trendline. That break came on 16th September 2019 at R270 per share. After that, the share moved into long a sideways pattern before breaking up in October 2022. It is now moving strongly upwards and has reached as high as R443 per share in July 2023 before starting to fall again. This share benefits from any weakness in the rand and investors should consider the rand's future prospects before buying.