Waiting for number 1
AFTER A DISAPPOINTING earnings forecast warning, I suspected that strategic priorities going forward would include a clearly defined Africa plan when the WalMart-owned retailer f inally releases its set of f inancials for the interim period to June 2013.
While minimising operating costs remains an imperative, especially in the current market, investors are also looking for growth.
The planned 67% stake acquisition in Kenya’s fourth-largest retailer, Naivus, which also plans to expand into other African countries, including Uganda and Tanzania, is an encouraging move.
But I still think we need to see a vision that will take Massmart to the number 1 spot as distributor of consumer goods in Africa.
The share is fairly expensive at R152 on a price-to-earnings (P/E) multiple of 28 times. But there could be a buying opportunity for some patient investors as Massmart has come down from a peak of R205 in May this year.
AFROCENTRIC INVESTMENT CORPORATION