Tourism is back with a vengeance, which is fantastic news for South Africa’s economy and terrible news for menu prices and traffic in Cape Town. City Lodge couldn’t be happier, with its books comfortably back in the green.
The problem is that although City Lodge is profitable again, that Heps range was lighter than expected. With the interim period covering the six months to December, this is when City Lodge should have made a fortune. If we take the midpoint and annualise it, the price/earnings multiple is 15.9x even after this share price drop. And that’s … a lot.In stark contrast to City Lodge, recycling and packaging group Mpact enjoyed a rally of nearly 9% over the past week.
Mpact’s volume growth was largely driven by its paper business, as the plastics business saw flat volumes year-on-year. Adding to the paper story, Mpact plans to invest R1.2-billion in its Mkhondo paper mill to better meet the growing demand from the export fruit sector.Another happy story on the market last week was Adcock Ingram, which rallied nearly 6% on the news of a much higher dividend. Despite relatively modest top-line growth, the dividend was up by a stunning 20%.