Investors view RCL at 8.27 as reasonably valued if poultry and milling divisions can recover from load-shedding pressures, with most seeing potential in margin stabilization and the distribution network, though beef weakness and currency headwinds temper conviction and the stock attracts nibbles rather than strong conviction buys compared to competitors like Oceana and Astral.
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@k_maphosa ja, the beef drag is real. Oceana's cleaner.
RCL sitting at 8.27 is decent value if you actually believe in the poultry and milling side recovering. Problem is load-shedding keeps crushing margins and the beef division has been weak. Compare that to Oceana and you're paying for a messier business. Worth a nibble but not a conviction buy yet.
@pedant_pete ja, the margin picture only shifts once load-shedding eases. Until then it's just treading water at this price.
@pedant_pete ja, operational discipline is the key here. Margins recover and this runs to 15 easy. BEST IS YET TO COME!!
rcl closed at 8.27, which still feels cheap relative to the milling and poultry assets on the books. the real question is whether they can stabilise margins through another winter without feed costs getting away from them again. been holding since the rights issue and the operational discipline seems to have stuck, but you need the rand to behave.
My reading of this: RCL's poultry and milling divisions have weathered load-shedding better than I'd expected given the energy intensity, and the interim results showed decent margin hold even as input costs stayed elevated. At 8.27 the valuation doesn't price in much recovery if they can stabilise volumes through next year. Worth noting the beef side remains under pressure but that's maybe 20-25% of group ebitda anyway. Not saying it rips but the risk-reward looks reasonable for a 18-month hold.
the milling division carrying decent volume through winter is what keeps me watching this one. beef is the drag but poultry's been steady enough and if feed costs don't spike again there's margin there. at 8.27 you're basically getting the milling assets for free, oceana's more expensive and less diversified. worth holding if you've got patience for the rand and load-shedding noise.
RCL's been grinding sideways around 8.27 but the poultry side is actually moving volume, grain milling holding up decent against load-shedding pressure. Compare that to Astral and you're looking at better leverage to protein demand if food inflation keeps running. Long term the distribution network is the real asset here, not just the commodity production.
@jozi_janet cash position still solid though, right? Or am I missing something on the balance sheet.
Look, bear makes a fair point on feed and power eating into margins, but RCL's grain milling side actually buffers that better than pure poultry plays. The real question is whether they can hold pricing while input costs stay elevated, and the last set of numbers didn't show that clearly enough for me. At 8.10 it's not crazy but it's not a screaming buy either, more of a wait and see on the next quarterly.
Bear's got a point though, the feed and electricity costs are the real killer. But RCL's actually got decent scale in milling and the poultry side still moves volume even when margins get squeezed. I reckon if they can hold costs steady through the next earnings cycle they've got legs, but yeah, 8.10 assumes a lot goes right. Load-shedding alone could flip the whole story.
RCL at 8.10 is still priced like everything goes right, and that's a big ask for a poultry and milling business in this economy. Half the margin pressure comes from feed costs and power, neither of which is getting better. I'll believe it when I see earnings actually hold up.
What's the difference between RCL and a unit trust, sorry still figuring this out?
@jozi_janet ja, been pleasantly surprised too. long-term view hasn't changed but holding up better than the macro would suggest.
RCL's been hammered since the poultry oversupply mess last year, sitting at R8.10 with margins still under pressure. The grain side keeps them afloat but it's not enough to offset chicken pricing collapsing. Reckon you need a two year view here, not a trade, but load-shedding keeps grinding food producers anyway.
Did some homework on RCL over the weekend, balance sheet's not as bad as the mood here suggests
Good Morning Everyone. RCL closed at 8.10 yesterday, down quite a bit from the 12-13 range we saw earlier. The poultry and milling segments are still solid but beef margins got hit hard, and that's dragging the whole thing down. At this price you're paying under 6x earnings which isn't terrible for a food company with those cash flows, but the question is whether beef recovers or if we're in a structural shift.
rcl's been taking strain with input costs still elevated and rand weakness making imports expensive. the poultry side especially feels the squeeze when feed costs spike, and we're not seeing that flow through to retail prices quick enough. long-term view hasn't changed but ngl the margin compression is real while we wait for inflation to normalize properly.
Current R 8,27 — 50% of range
Fundamentals sourced from JSE disclosures. Updated quarterly.