SIMON BROWN: I’m chatting now with Sameer Singh, a research analyst at [Old Mutual Wealth] Private Client [Securities]. We’re talking [about] Mondi. Sameer, I appreciate your early morning time. The Mondi [share price] chart – you can see the giant collapse. Of course, it was back in February when Russia invaded Ukraine. That was because they had about 12% of assets and around 20% of earnings coming out Russia. But they have now exited that, and are sort of clear of Russia in its entirety.
The rest of the business, paper and packaging, is doing quite well. It is a very sound and, frankly, very profitable operation. I think we notice it most evidently when we’re buying our Woolies bags, which have shifted from plastic to cloth. SIMON BROWN: Yes. Those results, as you point out, were a really, really a strong set of results. Part of that is – and you make the point in the note that you put out – the vertical integration of their supply chain. They’ve more control over their input costs, and importantly they were able to put through price increases at the same time.
SIMON BROWN: It absolutely has. And they’re a strong generator of cash. They always have [had] strong cash flows. They’re on around a 4% dividend yield. Heck, they’re on a historic PE of around seven-and-some-change at the moment. Unfortunately, with the situation being as fluid as it is and uncertain, we cannot say when this will take place, but management have guided to the deal being concluded by the end of this year. In addition to that, that Russian business is also sitting with a bit of cash on the balance sheet and that cash is actually not part of the sale deal, so that cash will in time be sent back to Mondi. On that, they’re sitting with quite a bit of cash.