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 30th September 2023 the company reported a net asset value (NAV) of 30,89 euros per share compared with 31,46 euros in the previous period which is a decrease of 1,8%. The company said, "The decrease in the NAV of € 104 million during the period reflects decreases in the estimated fair value of certain investments including British American Tobacco p.l.c. (‘BAT’), Pension Insurance Corporation Group Limited (‘Pension Corporation’) and Prescient China funds". 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. It is now trading for R436.51. It obviously took a hit as a result of the BATS announcement that it was wriitng the value of its US operation down by GBP25m (R595bn) resulting in a 10% fall in the BATS share price. This share benefits from any weakness in the rand and investors should consider the rand's future prospects before buying.