Our opinion on the current state of RTO

This share represents an example of extremely thinly traded companies listed on the JSE, rendering them impractical for private investors in their current state. RTO, established in 1937 and listed on the JSE since 1945, specializes in manufacturing and marketing clothing and accessories through a nationwide chain of Queenspark and J. Crew stores. Additionally, it holds a portfolio of properties in the Cape Town area. The group is under the control of a consortium led by Marcel Golding and his partner Hugh Roberts.

Recently, the group made a significant investment of R81 million to acquire a 33.8% stake in Sembcorp Siza, a company specializing in water reticulation and specialist pipe services operating in Natal. With a robust balance sheet, the company has been actively seeking diversification opportunities. In its financial results for the year ending 30th June 2023, RTO reported a remarkable 35.1% increase in revenue and a substantial 78.2% surge in headline earnings per share (HEPS). The company's net asset value (NAV) also saw a notable 41% rise to 1888c per share.

RTO attributed the revenue growth primarily to an increase in turnover within the retail segment, while other revenue streams, including media and broadcasting income, rental income, tenant recoveries, and management fee income, experienced a significant uptick, mainly driven by the acquisition of Telemedia and property assets. Investment income also saw a healthy increase of 34.7%.

However, a trading statement for the six months ending 31st December 2023 forecasted a substantial 62.2% decrease in HEPS. Unfortunately, neither its ordinary nor its "N" shares trade at levels sufficient to attract investor interest at this time.