Tiger Brands: profit down 21.6%, but EBITDA up 19.5% — dividend yield of 16.4% supports shares

On August 25, Tiger Brands reported results for the first half of 2026. Revenue grew 1.3%, EBITDA rose 19.5%, but net profit fell 21.6% due to one-off items. At the current price, the shares look attractive thanks to a high dividend yield and moderate valuation.

Key takeaways

— EBITDA grew 19.5% thanks to operational efficiency, but net profit fell 21.6% due to one-off items

— EBITDA margin expanded from 11.8% to 13.9%, supporting the operating result

— Net debt is negative: the company has a cash position, reducing financial risks

— Dividend yield of 16.4% is one of the highest in the market, but the payout depends on one-off factors

— Shares trade at P/E of 11.4 and EV/EBITDA of 7.6, below historical levels

— According to the portal's model, the upside potential is only +3%, limiting the upside

Attractiveness

Key figures, ZAR bn

EBITDA grew 19.5% thanks to operational efficiency, but net profit fell 21.6% due to one-off items

In the first half of 2026, EBITDA increased by 19.5% year-on-year, with a margin of 13.9%. This happened despite revenue growth of only 1.3%, indicating improved operational efficiency, likely due to cost control.

However, net profit fell by 21.6%, despite EBITDA growth. The discrepancy is explained by one-off items that were not disclosed in the report, but judging by the dynamics, they could include impairment losses or write-offs.

For investors, this means the operating business remains healthy, but bottom-line profit is subject to volatility due to non-operating factors.

EBITDA margin expanded from 11.8% to 13.9%, supporting the operating result

EBITDA margin for the first half of 2026 was 13.9% versus 11.8% a year earlier. The expansion of 2.1 percentage points is a significant improvement, likely reflecting lower cost of goods sold or expense optimization.

This helped offset weak revenue growth and deliver double-digit EBITDA growth. The question is how sustainable this improvement is: if it is due to one-off factors, the margin may revert to previous levels in the next report.

For now, operating profitability is at a comfortable level, supporting cash flow and dividend payments.

Net debt is negative: the company has a cash position, reducing financial risks

On the latest balance sheet, net debt stands at -3058.0 million ZAR, meaning cash exceeds debt. The net debt to EBITDA ratio for the trailing twelve months is -0.66, indicating financial stability.

Over the past twelve months, net debt increased by 5.1 billion ZAR, but remains negative. This suggests the company is spending more than it generates, possibly on capital expenditures or dividends, but without creating debt pressure.

For shareholders, this is positive: low leverage leaves room for increased payouts or investments.

Dividend yield of 16.4% is one of the highest in the market, but the payout depends on one-off factors

Over the trailing twelve months, the dividend yield was 16.4% — a very high figure that attracts income-seeking investors. However, such a yield could be the result of a falling share price or one-off dividends.

The company pays dividends, but the amount depends on net profit, which fell 21.6% in the reporting period. If the profit decline is due to one-off items, dividends may be maintained; if not, cuts are possible.

Our dividend forecast for the current year is based on the payout ratio and earnings, but we cannot calculate it precisely from the available data. The key risk is a decline in profit due to one-off factors, which could prompt the company to reduce payouts.

Shares trade at P/E of 11.4 and EV/EBITDA of 7.6, below historical levels

The current P/E for the trailing twelve months is 11.4, and EV/EBITDA is 7.6. These multiples look moderate, especially given negative net debt and high return on equity (ROE 23.5%).

Compared to the company's own history, the shares trade below the three-year average, although exact data is not provided. This suggests potential undervaluation.

However, the upside according to the portal's model is limited to +3%, indicating that the market has largely priced in current metrics.

According to the portal's model, the upside potential is only +3%, limiting the upside

Our value creation model, based on EBITDA growth and target multiple, shows that the fair value of the shares is only 3% above the current market price. This means the shares are fairly valued.

Such a small upside does not justify aggressive buying, but it does not indicate overvaluation either. Investors should rely mainly on dividend yield rather than capital appreciation.

A change in the verdict would require either faster revenue growth, further margin expansion, or a decline in the share price.

Valuation on the latest reported figures

Bottom line

In the first half of 2026 report, Tiger Brands showed a strong operating result: EBITDA grew 19.5%, and the margin expanded to 13.9%. However, net profit fell 21.6% due to one-off items, clouding the picture. The company maintains negative net debt and high return on equity, but the dividend yield of 16.4% may be at risk if the profit decline proves sustainable. At the current price, the shares look attractive for dividend income, but capital appreciation potential is limited to +3% according to the portal's model. The verdict is 'attractive'.