TONGAAT Hulett has long acted as the parent and controlling shareholder of Zimbabwe’s lowveld sugar operations.
Through its wholly-owned subsidiary Triangle Sugar Corporation Limited, Tongaat controls 50,35% of Hippo Valley Estates Limited, forming an integrated sugar farming, milling and ethanol complex that produces over half of Zimbabwe’s sugar output.
The structure has deep historical roots. Hippo Valley was established in 1956 as a citrus estate before evolving into a large-scale irrigated sugar producer.
It has maintained a primary listing on the Zimbabwe Stock Exchange since 1961, making it one of the country’s oldest listed counters. Tongaat itself was listed on the Johannesburg Stock Exchange and expanded into Zimbabwe in 2006 when Triangle acquired its majority stake in Hippo from Anglo American Corporation Zimbabwe.
That long-standing corporate relationship is now under scrutiny following Tongaat’s collapse. After a forensic investigation by PwC uncovered systemic accounting irregularities — including premature revenue recognition and capitalisation of expenses — the group entered business rescue in 2022 under the weight of an estimated R12 billion (US$754,7 million) hole.
On February 12, 2026, business rescue practitioners confirmed they would file for liquidation after exhausting restructuring options.
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While management at Hippo has emphasised that Zimbabwean operations are ring-fenced — with separate management, funding lines and legal structures — the market’s concern lies less with operations and more with control.
Sugar economy strategic anchor
Operationally, Hippo remains one of Zimbabwe’s most strategically important agricultural assets.
The south-eastern lowveld offers competitive topography, climate and irrigation infrastructure. Hippo farms approximately 11 977 hectares of cane, while private growers supply around 12 117 hectares.
For the year ended March 31, 2025, Hippo milled roughly 1,8 million tonnes of cane and produced 219 112 tonnes of sugar — about 50% of national output of 440 172 tonnes.
Approximately 88% of industry sales are domestic, with exports accounting for the balance. Sugar contributes 96% of Hippo’s revenue, underscoring its focused business model.
The half-year to September 2025 reinforced this stability. Revenue rose 10% to US$113 million, supported by a 7% increase in sugar production to 170 953 tonnes.
Export volumes surged 56% to 13 304 tonnes, while domestic sales grew 9% to 102 297 tonnes. Profitability, however, remained relatively flat, declining 3% to US$17,5 million, with headline earnings per share steady at US$0,09.The numbers suggest a business that is operationally resilient but margin-sensitive — characteristic of staple producers operating within regulated and cost-pressured environments.
Full-year FY26 revenue appears on track to exceed the US$192 million recorded in FY25, with scope for modest earnings improvement.
Curious market capitalisation
Despite this stability, Hippo’s market capitalisation on the ZSE currently stands at approximately US$48 million — a fraction of prior valuation cycles.
Between 2009 and 2025, Hippo’s market capitalisation fluctuated significantly, ranging from above US$270 million at its 2021 peak to US$37 million trough in 2024.
Notably, in 2021 peak, production volumes and national market share were broadly comparable to current levels: 22 183 hectares under cane, 1,7 million tonnes milled, US$198 million in revenue and US$13,3 million in profit. The operational profile has not deteriorated materially. What has changed is the ownership backdrop.
Pricing the Tongaat effect
Tongaat’s liquidation introduces uncertainty regarding ultimate control of Triangle and, by extension, Hippo.
In 2024, a rescue plan proposed selling Tongaat’s assets to the Vision Group, which would have acquired control via a Mauritian vehicle. The consortium now holds approximately R8 billion (US$503 011) in secured claims, positioning it as a key player in any asset realisation process.
At the same time, Zimbabwe’s sovereign wealth vehicle, the Mutapa Investment Fund, previously expressed interest in acquiring the estates, citing strategic and community considerations.
The presence of multiple suitors underscores the underlying attractiveness of the Zimbabwe operations.
However, for listed minority shareholders in Hippo, the path to resolution remains unclear. Will a new controlling shareholder trigger a mandatory offer? Could strategic ownership alter pricing or capital allocation priorities? These questions introduce a governance discount into the share price.
Trading below sector multiples
From a relative valuation perspective, Hippo appears inexpensive. The average P/E ratio across profitable consumer staples counters on the ZSE — including Delta Corporation, CFI Holdings, Afdis Distillers, Dairibord Holdings Limited and TSL Limited — stands at approximately 5,67x after excluding loss-making counters.
Hippo currently trades at a P/E of 3.21x, the second lowest in the peer group after TSL.
For a company producing half of Zimbabwe’s sugar and generating mid-teen millions in annual profit, such a multiple suggests either anticipated earnings deterioration or event risk.
Operational data does not indicate structural decline. Production volumes are stable, irrigation infrastructure remains intact, milling licences extend to 2040, and domestic demand for sugar is inelastic. The discount therefore appears less about sugar fundamentals and more about corporate uncertainty and perhaps market risk.
The lowveld cane fields continue to produce. Mills continue to crush. Revenues continue to flow.
However, the share price appears to be discounting a central uncertainty: Who will ultimately take control of Zimbabwe’s sugar crown jewel — and what strategic direction will they pursue going forward?
Taimo is an investment analyst with a talent for writing about equities and addressing topical issues in local capital markets. He holds a First Class Degree in Finance and Banking from the University of Zimbabwe. He is an active member of the Investment Professionals of Zimbabwe community, pursuing the Chartered Financial Analyst charter designation.