FALL­ING SHORT

Finweek English Edition - - INVESTMENT -

We’re pretty much out of the hec­tic earn­ings sea­son, but still a few trad­ing up­dates are trick­ling out. The Mass­mart one cer­tainly caught my at­ten­tion. On the sur­face it’s not bad, with sales up 10.2%, but prod­uct inf la­tion of around 4.8% and same-store sales of 7.1% higher means real growth of closer to 2.3%. With a his­toric P/E ra­tio of around 23 times, that, to my mind, falls very short of what the mar­ket is look­ing for. It fur­ther in­di­cates how ex­pen­sive our lo­cal re­tail­ers are rel­a­tive to their cur­rent earn­ings abil­ity. The mar­ket is pric­ing in se­ri­ous African growth and in the case of Mass­mart, the Wal­mart magic is kick­ing in sooner rather than later. Nei­ther is likely in the short term.

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