A textbook cash compounder, on sale: ~62% gross margins, +17% profit growth, ~9× earnings, and an 8.5% dividend yield. The market prices it for decline; it keeps delivering cash.
TCC grew FY2025 profit 17% to TZS 135bn on revenue of TZS 507.2bn (+11.6%) and a gross margin near 62% — the economics of an entrenched, low-capital consumer franchise. EPS rose to TZS 1,354 (from 1,153), funding a total dividend of TZS 1,050/share. At ~TZS 12,360 the stock trades at ~9.1× earnings and yields 8.5%.
This is a different kind of opportunity from a growth compounder: the return is cash, not re-rating. An 8.5% starting yield plus mid-teens earnings/dividend growth is a high-teens total return from a defensive, recession-resistant cash flow — provided one is comfortable with a declining-category, ESG-screened sector.
Three pillars of cash, one honest caveat on the category.
Gross profit of TZS 314.1bn on TZS 507.2bn revenue is a ~62% gross margin — pricing power and low capital intensity, the hallmark of an entrenched staple.
~9.1× earnings and an 8.5% dividend yield (78% payout) — you are paid most of the earnings as cash, at a single-digit multiple.
Profit +17% and revenue +11.6% in FY2025 — pricing power is offsetting any volume maturity, so the dividend is growing, not just high.
Tobacco is a declining, regulated, ESG-screened category. The cash is real; the long-run volume and reputational risks are too. Size accordingly.
A mature, regulated category with steady domestic demand in a ~6% GDP economy — low growth, high cash conversion.
TCC operates in a defensive consumer category: demand is price-inelastic and resilient through the cycle, which is why the franchise throws off cash regardless of macro. Growth comes from pricing rather than volume; the regulatory frame (excise, advertising restrictions) is the dominant external variable. In a ~6% GDP, ~3.3%-inflation economy, the company has comfortably passed input costs through to price, sustaining its margin.
A dominant, JTI-affiliated manufacturer of cigarette and tobacco products with national distribution.
| Snapshot | |
|---|---|
| Listing | DSE: TCC |
| Shares in issue | 100 million |
| Market cap (~) | ~TZS 1.24tn |
| Category | Tobacco / consumer staple |
| Year-end | 31 December |
| FY2025 economics | |
|---|---|
| Revenue | TZS 507.2bn (+11.6%) |
| Gross profit | TZS 314.1bn |
| Gross margin | ~62% |
| Profit after tax | TZS 135bn (+17%) |
| Dividend / share | TZS 1,050 |
A low-capital-intensity manufacturing and distribution franchise with deep route-to-market across Tanzania, converting the bulk of profit into cash and returning most of it as dividends — the financial profile of a mature, cash-generative staple.
An illustrative model: low-single-to-mid-teens earnings growth driven by pricing, with the bulk returned as a rising dividend.
| TZS bn (EPS/DPS in TZS) | FY25A | FY26E | FY27E | FY28E |
|---|---|---|---|---|
| Revenue | 507.2 | 553 | 597 | 645 |
| Profit after tax | 135 | 150 | 164 | 180 |
| EPS (TZS) | 1,354 | 1,500 | 1,640 | 1,800 |
| DPS (TZS) | 1,050 | 1,150 | 1,260 | 1,380 |
| Gross margin | ~62% | ~62% | ~62% | ~62% |
Illustrative only — projections rest on assumptions that may not be realised. Revenue +~8–9% on pricing; PAT +~10%; ~77–78% payout. EPS on 100m shares. FY2025 figures are reported results.
The value is the cash — harvested through a high, growing dividend, with optional re-rating if the market re-prices the durability.
An 8.5% starting yield with mid-single-digit dividend growth is the core return — paid in cash, every year.
Above-inflation price increases sustain the 62% gross margin and grow earnings despite a mature category.
Low reinvestment needs mean almost all profit is free cash — the franchise funds its dividend comfortably.
At ~9× earnings the market prices terminal decline; any evidence of durability could lift the multiple toward a normal staple.
The risks are category and policy, not cash generation.
| Risk | Severity | Mitigant |
|---|---|---|
| Excise / tax increases | HIGH | Demonstrated pricing power passes cost through; high margin absorbs shocks. |
| Category decline & ESG screening | HIGH | A value/income position, not a core growth holding; size to the risk; the 8.5% yield front-loads return. |
| Regulation (advertising, packaging) | MEDIUM | Entrenched distribution and brand; mature regulatory framework. |
| Illicit trade | MEDIUM | Scale and distribution advantages; an industry-wide, not company-specific, issue. |
| Liquidity (thin float) | MEDIUM | Patient limit-order entry; a long-term income hold, not a trade. |
An income-and-value position — sized for the category risk, held for the dividend.
| Term | Proposed approach |
|---|---|
| Instrument | Ordinary shares — DSE: TCC |
| Stance | Accumulate for income & value; sized to category/ESG risk |
| Entry | ~TZS 12,000 and below (≤ ~9× earnings, ≥ 8.5% yield) |
| Income | ~78% payout; 8.5% yield, growing |
| Horizon | Multi-year income hold |
Indicative only; subject to diligence, prevailing DSE liquidity, transaction charges and final approval.
A cash cow is valued on earnings yield and dividends, not growth-DCF. The return is dominated by the 8.5% yield plus modest growth.
| Measure | Value |
|---|---|
| Trailing P/E | ~9.1× |
| Earnings yield | ~11% |
| Dividend yield | 8.5% |
| Payout | ~78% |
| Component | p.a. |
|---|---|
| Dividend yield | ~8.5% |
| Dividend / EPS growth | ~8–10% |
| Expected total return (P/E held) | ~16–18% |
A Gordon-style return: starting yield + growth, with no re-rating required.
Scale 0–30,000. At ~9× the stock sits at the low end of a normal staple multiple; the return is the dividend plus growth, with a re-rating toward ~11–12× as upside.
| Scenario | Exit P/E | EPS CAGR | Total return p.a. |
|---|---|---|---|
| Downside (excise shock) | 8× | +5% | ~7% |
| Base | ~9× | +10% | ~17% |
| Upside (re-rating) | 11× | +12% | ~24% |
The 8.5% yield underpins every scenario. Returns in TZS; USD outcomes lower by expected currency depreciation.
We recommend accumulating TCC as an income-and-value position — not a core growth holding. It is one of the cheapest, highest-yielding, highest-margin franchises on the exchange: ~62% gross margin, +17% FY2025 profit growth, ~9× earnings, and an 8.5% dividend yield. The return is cash you are paid today plus modest growth — a high-teens total return that needs no re-rating. The honest constraint is the category: tobacco is declining and ESG-screened, so size the position to that risk.
Arthur G. Kanza