Tiger Brands Ltd (JSE: TBS), a key player in South Africa’s food production, navigates a challenging market landscape, poised for a modest decline in 2023 after a tumultuous journey. The company reflects resilience despite a 2.12% year-to-date dip, rebounding from a significant 34.89% loss earlier in the year. Its journey echoes the strains faced by the food giant, grappling with economic hurdles like high inflation and interest rates, which restrained consumer spending.
The onslaught of challenges expanded further due to global events, particularly the Russia-Ukraine conflict, which increased raw materials, energy, and packaging costs, amplifying pandemic-induced supply chain bottlenecks. This was further compounded by sporadic power cuts disrupting production and distribution. These adversities culminated in an overall decline in gross margin to 27.7% from 30.3%.
However, amid these tribulations, the company showcased resilience. Despite a 2% volume reduction in the fiscal year ending on Sept. 30, Tiger Brands displayed commendable financial fortitude, witnessing a remarkable 10% surge in total revenue to R37.4 billion. This surge was propelled by an 11% price hike, underscoring the company’s strategic measures in navigating challenges while sustaining its revenue trajectory against the odds.
Technical
Tiger Brands Ltd exhibits an intriguing price action, delineating an uptrend above the 100-day moving average within an ascending channel. The market’s trajectory shifted after settling on a pivotal support level at R136.76 per share, notably amidst oversold RSI conditions, sparking a reversal.
This turnaround propelled the stock higher, surpassing the 100-day moving average, albeit closing near its 2023 opening price. Currently, the stock eyes the R229.58 resistance level, a significant barrier established in February and within striking distance.
Should the prevailing bullish momentum persist, a retest of this level could be likely, potentially affirming an upward trend continuation. However, if a shift occurs, reinvigorating downside momentum, the lower boundary of the ascending channel might operate as a crucial barrier to the stock’s descent.
Summary
Amidst challenges, Tiger Brands demonstrates resilience, overcoming hurdles like high inflation and supply chain disruptions. Despite a slight dip in its share price, the company rebounded strongly, showing robust financial health with a noteworthy revenue surge despite volume reductions.
Sources: Tiger Brands Ltd, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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