Our opinion on the current state of MPACT(MPT)
Mpact (MPT) is a leading producer of paper and plastics packaging in Southern Africa. The company specializes in recycling paper and cardboard, manufacturing corrugated cardboard containers for various industries, and producing polystyrene trays for the food industry. It operates 20 manufacturing facilities and employs over 5,000 people, with South African sales accounting for 86% of its revenue.
Mpact's business is influenced by consumer spending, which has been under pressure due to COVID-19 and more recently affected by the Ukraine crisis. Additionally, weather patterns impact the demand for corrugated containers used in fruit and other agricultural products, particularly in the Cape region. The company has prioritized cash preservation in the current economic climate but has benefited from a shift to local suppliers during the pandemic.
In its results for the six months to 30th June 2024, Mpact reported revenue slightly down at R6.17 billion, while headline earnings per share (HEPS) fell to 144.6 cents from 211.6 cents in the prior period. However, the company’s net asset value (NAV) increased by 9% to 3,411 cents per share. The company stated, "The uncertain socio-political environment leading up to the national elections, high levels of loadshedding that continued until the end of March, high inflation, and interest rates all contributed to weak consumer and business sentiment."
Mpact’s share price declined from a high of R51 in April 2016 to as low as R8 in March 2020 but has since recovered to 2,902 cents. At this level, it is trading on an earnings multiple of 5.66, which appears cheap. While the share has been moving sideways since August 2022, there are indications that it may be entering a new upward trend.
On 1st August 2024, Mpact announced the sale of its Versapak business for R267.7 million as part of its strategic portfolio adjustments. Additionally, on 3rd February 2024, the company announced that its shares would begin trading on the A2X exchange from 11th February 2024, providing investors with an alternative trading platform.
Overall, Mpact remains a well-managed company with strong fundamentals. Its low valuation presents a potential opportunity for long-term investors, particularly if consumer spending improves and the company’s upward trend materializes. However, economic uncertainties, loadshedding, and inflationary pressures remain key risks to monitor.
Mpact's business is influenced by consumer spending, which has been under pressure due to COVID-19 and more recently affected by the Ukraine crisis. Additionally, weather patterns impact the demand for corrugated containers used in fruit and other agricultural products, particularly in the Cape region. The company has prioritized cash preservation in the current economic climate but has benefited from a shift to local suppliers during the pandemic.
In its results for the six months to 30th June 2024, Mpact reported revenue slightly down at R6.17 billion, while headline earnings per share (HEPS) fell to 144.6 cents from 211.6 cents in the prior period. However, the company’s net asset value (NAV) increased by 9% to 3,411 cents per share. The company stated, "The uncertain socio-political environment leading up to the national elections, high levels of loadshedding that continued until the end of March, high inflation, and interest rates all contributed to weak consumer and business sentiment."
Mpact’s share price declined from a high of R51 in April 2016 to as low as R8 in March 2020 but has since recovered to 2,902 cents. At this level, it is trading on an earnings multiple of 5.66, which appears cheap. While the share has been moving sideways since August 2022, there are indications that it may be entering a new upward trend.
On 1st August 2024, Mpact announced the sale of its Versapak business for R267.7 million as part of its strategic portfolio adjustments. Additionally, on 3rd February 2024, the company announced that its shares would begin trading on the A2X exchange from 11th February 2024, providing investors with an alternative trading platform.
Overall, Mpact remains a well-managed company with strong fundamentals. Its low valuation presents a potential opportunity for long-term investors, particularly if consumer spending improves and the company’s upward trend materializes. However, economic uncertainties, loadshedding, and inflationary pressures remain key risks to monitor.
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Aviso legal
As informações e publicações não devem ser e não constituem conselhos ou recomendações financeiras, de investimento, de negociação ou de qualquer outro tipo, fornecidas ou endossadas pela TradingView. Leia mais em Termos de uso.