Our opinion on the current state of MPACT(MPT)Mpact (MPT) is a large producer of paper and plastics packaging in Southern Africa. It recycles paper and cardboard and makes corrugated cardboard containers for a variety of industries as well as polystyrene trays for the food industry. It has 20 manufacturing operations, with South African sales accounting for 86% of its business. It employs over 5000 people.
The business is impacted by the general level of consumer spending (which has been depressed because of COVID-19 and was improving at least until the advent of the Ukraine crisis) as well as weather considerations, which affect the demand for corrugated containers for fruit and other agricultural products, especially in the Cape. Like many businesses in the current environment, Mpact has been working to preserve cash, but it has benefited from a switch to local suppliers during the pandemic.
In its results for the year to 31st December 2024, the company reported revenue up 3,6% and headline earnings per share (HEPS) down 29,9%. The company said, "Trading was hampered by a weak economy underpinned by high interest rates, cost inflation, load shedding and other service delivery failures, negatively affecting consumer and business confidence."
The share fell from a high of R51 in April 2016 to levels around R8 in March 2020 but has since recovered to R29. At the current level, it is on an earnings multiple of 8,43 - which looks cheap. Technically, the share looks like it may be entering a new upward trend, but it has been moving sideways since August 2022.
