Weekly Roundup 2022-09-09

Weekly Roundup 2022-09-09

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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