Our opinion on the current state of RHODES(RFG)Rhodes (RFG) is a Western Cape manufacturer of convenience foods—started by Cecil John Rhodes in 1896. It has several well-known South African brands like Bisto, Bull Brand, and Hinds. The company operates 15 manufacturing plants in South Africa and a fruit processing plant in Swaziland.
In its results for the year to 29th September 2024, the company reported revenue up 1,5% and headline earnings per share (HEPS) up 18,6%. The company's debt-to-equity ratio improved from 21,3% to 11,9%. The company said, "The regional segment delivered resilient revenue growth in an environment of sustained pressure on consumer spending. However, the rate of volume decline and price inflation have slowed considerably relative to the prior year as consumer confidence started to show signs of improvement."
In a trading update for the 5 months to 28th February 2025, the company reported revenue up 2,1%. The company said, "Regional revenue increased by 5.6%, driven by volume growth of 8.7% (prior comparative period: volume decline of 5.7%) and price deflation of 0.6% (prior comparative period: price inflation of 10.8%)."
Technically, the share fell from a high of 2900c in October 2016 in a bear trend. We suggested waiting for it to break up through its long-term downward trendline—which happened on 13th November 2023 at a share price of 1220c. It has since moved up to 1895c and is on a P:E of 8,53— which looks reasonably priced, even cheap. We believe that the share will continue to recover over time as the economy and rand improve.
