Johannesburg — TONGAAT Hulett (Tongaat) has featured in this column several times, mainly because it was a candidate for the Private Investor portfolio in the last quarter of 2007.

The main reason it was not chosen was because of the volatility of the sugar market - and the uncertainty of the profit stream from its Zimbabwean operations. The imminent unbundling of its aluminium operation was a positive investment fundamental, as it would sharpen the focus of the company.

Shareholders could decide for themselves whether or not they wanted to remain invested in the aluminium business.

Had the Private Investor portfolio invested in Tongaat, it would probably have sold the unbundled Hulamin shares because of the expected end of the property boom - Hulamin thrives when the building cycle is positive. The expectation that the property boom would end, however, meant that Tongaat's earnings from property development would probably slow down.

In April 2008, I wrote a column about equity accounting and used Tongaat's 2007 annual results to exemplify this.

An e-mail from a reader prompted me to make a forward view of the company's earnings for the 2008 financial year.

My guesstimate - a thumbsuck - of diluted headline earnings per share was 720c and was overoptimistic.

The actual figure was 594,7c.

Tongaat's share price was then trading at R96, and, on my guesstimate, the forward price- earnings ratio was 13,3, the earnings yield was 7,5% and the projected dividend yield was about 4%.

With the sun possibly rising over the Zimbabwean horizon, the share price had lifted from R75 to a peak of R102.

My view was that the share was overpriced relative to the then current stock market climate and the probable property slump.

Market sentiment was much similar to mine, and the share price fell out of bed.

In the November market crash, you could briefly buy the shares at a price of about R50.

Its historic price-earnings ratio was then 11,4, the earnings yield was 8,9% and the dividend yield was 6,3%.

A gem perhaps for the High Yield portfolio, but the portfolio had not then been born.

And who wanted to buy when the market had already crashed and no one knew if it had reached its bottom?

With Hulamin's unbundling, Tongaat's ore operational earnings are derived from sugar, and its financial year-end was changed to take into account the seasonal changes in the sugar market. Its latest published annual report was, therefore, for the 15-month period ended March 31 2010.

Headline earnings per share were 826,5c, pro rata a year-on-year earnings improvement of around 10%.

Earlier this week, at the annual general meeting, CEO Peter Staude reported an update on Tongaat's operations and trading conditions.

In sum, trading conditions for sugar are healthy.

There is a glimmer of future growth in property earnings.

The big damper is the strength of the rand; in Tongaat's case in particular, the rand's value against euro.

The share price is now around R108, and the historical price- earnings ratio is 16,4, the earnings yield is 6,11% and the dividend yield is 2,54%.

These are heady ratings based on forward earnings growth in the 2011 financial year of 30% or more. Buying for this growth is a bet on the rand-sugar hedge.