Our opinion on the current state of TPCTranspaco, a small-scale manufacturer specializing in paper and plastic packaging, alongside its involvement in recycling, has faced challenging trading conditions in the latter half of 2023. The company reported a revenue decrease of 4.5% and a slight dip in headline earnings per share (HEPS) by 5.6% for the six months ending on 31st December 2023. Despite these challenges, Transpaco's net asset value (NAV) saw a commendable increase of 10.8% to 3090c per share, signaling underlying strength in its financial health.
The company attributes the difficult trading environment to several external factors, including rampant load shedding, a stagnant economy, and high interest rates. These conditions have undeniably impacted its operational efficiency and financial performance.
A notable concern for Transpaco has been its traditionally low trading volumes, which can affect liquidity and investor interest. However, there has been a positive development in this area, with trading volumes showing a marked increase to an average of about R185,000 per trading day. This uptick in tradability could enhance the company's attractiveness to a broader investor base.
Additionally, Transpaco is navigating the growing market resistance to single-use plastics by developing alternative packaging solutions. This strategic pivot not only addresses environmental concerns but also positions the company to tap into new market segments looking for sustainable packaging options.
Considering these developments, Transpaco presents an increasingly appealing investment opportunity, particularly as it works to improve share tradability and adapt to changing market demands. The company's efforts to innovate and diversify its product offerings in response to environmental and economic challenges highlight its potential for growth and resilience in a competitive industry.
TPC trade ideas
Our opinion on the current state of TPCTranspaco (TPC) is a small manufacturer of paper and plastic packaging. It is also involved in re-cycling. In its results for the year to 30th June 2023 the company reported revenue up 10,8% and headline earnings per share (HEPS) up 19,4%. The company's net asset value (NAV) increased by 12,6% to 2958c per share. The company said, "Notwithstanding a flat economy, reduced consumer spend and the negative impact of excessive load shedding, Transpaco's results for the 12 months ended 30 June 2023 ("the year") reflect operating profit up 13,3% to R252,5 million (June 2022: R222,8 million) with an operating margin increase to 9,7% (June 2022: 9,6%)". A problem with this share is that it has been relatively thinly traded but volumes are picking up. The share is selling for around R33.76 and volumes traded have increased significantly to an average of about R68 000 per trading day. The company faces a general resistance and move away from single-use plastics and is developing alternatives. In our view, as the company continues to improve the tradability of its shares it becomes more attractive.