Finweek English Edition - - HOUSE VIEW - BY SIMON BROWN

SHO­PRITE* HOLD­INGS and re­cent r esult s were prett y much as ex­pected: av­er­age. I t showed HEPS growth of 8.6% on the back of rev­enue up 12.5% and a mod­est div­i­dend in­crease of 8.3%.

The num­bers were hit by a weak South African con­sumer, Eskom load-shed­ding (that pushes costs higher as it has to run gen­er­a­tors) and weak oil prices that im­pacted many of the African coun­tries where Sho­prite op­er­ates in.

That all said, i t re­mains the dom­i­nant food re­tailer in South Africa and, in fact, the con­ti­nent as a whole, and with a trad­ing mar­gin of 5.23%, it is a global leader.

The prob­lem, more than mod­est re­sults, is a very ex­pen­sive stock that trades on a price-to-earn­ings ( P/ E) r atio of over 22 t i mes. How­ever as a core hold­ing I would only exit if the busi­ness started to wob­ble - that it is not. So while it is ex­pen­sive I hold and would look to add more at a price of around R125.

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