Lunar Capital Weekly Roundup
| Index / Fund / Rate | Start of Year | Last week | This Week | % change YTD |
|---|---|---|---|---|
| JSE ALSI | 73 723 | 67 378 | 68 708 | -6.80% |
| NASDAQ Composite | 15 833 | 11 631 | 12 112 | -23.50% |
| S&P 500 | 4 797 | 3 924 | 4 067 | -15.21% |
| Prime Lending Rate | 7.25% | 9.00% | 9.00% | 24.14% |
| Lunar BCI WW Flexible Fund | 165.68 | 144.43 | 146.87 | -11.35% |
| USD/ZAR | 15.96 | 17.32 | 17.33 | 8.58% |
| EUR/ZAR | 17.95 | 17.23 | 17.41 | -3.01% |
| Brent Crude | 77.86 | 93.26 | 92.19 | 18.40% |
Source: iress
Company and Market News
Last week, Shoprite Holdings (Shoprite) reported their full-year results for 2022. Revenue for the year was R184.1 billion, up 9.6% compared to the previous year. The increase in revenue was due to the number of customer visits increasing and the size of the average basket increasing. Profit for the year was R5.74 billion, up 18.13% compared to the previous year. The gross margin for Shoprite in 2022 was 24.48% versus 24.53% for 2021. Despite the global surge in inflation, Shoprite was able to keep their gross profit margins relatively flat. The share price for Shoprite decreased by 3.29% last week. The decrease in the price could be due to the market considering Shoprite to have been over-priced.
The July Unrest from last year is still taking effect on Shoprite. During the unrest, 231 stores were effected. As it currently stands, 37 remain closed; and 10 of those will be permanently closed. Shoprite successfully recovered R1.6 billion of its losses due to the unrest, from its insurance policies. Unfortunately, a further R145 million is expected to be irrecoverable. Shoprite still plan to open 275 stores during their 2023 financial year as they look to further increase their market share.
Shoprite Holdings is the largest South African retailer in terms of market capitalisation and revenue. Some of its brands are Shoprite, Checkers, and Usave. Shoprite Holdings primarily focus in the food retail space. The Shoprite and Usave stores account for 50.8% of the total sales and have a total of 1139 stores between them. 32.5% of Shoprite Holdings’ revenue comes from Checkers and Checkers Hyper stores, where they have a total of 284 stores. Checkers is considered more of a premium brand. On average, they account for more revenue per a store compared to the Shoprite and Usave.
Below is a table showing key metrics of Shoprite compared to some of their closest competitors. These are point-in-time figures which may contain historical anomalies.
| Company | PE at close on 9 Sep 2022 | Gross Margin | Net Margin | ROE |
|---|---|---|---|---|
| Shoprite | 21.60 | 24.00% | 3.06% | 22.40% |
| Pick ‘n Pay | 22.97 | 18.80% | 1.24% | 32.69% |
| Woolworths | 16.41 | 35.48% | 4.52% | 31.57% |
Disclosure: Shoprite Holdings is held in the Lunar BCI Worldwide Flexible Fund.
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