PSG com­pa­nies still top dogs; Pi­o­neer a win­ner

Finweek English Edition - - MONEY - BY LU­CAS DE LANGE

The PSG Group and some of its as­so­ci­ated com­pa­nies are st i l l top dogs among t he strong­est shares on the JSE. The only dif­fer­ence lately is that PSG* it­self has moved to top of the list, with its off­spring, Capitec Bank, in the sec­ond spot af­ter it had the great­est mo­men­tum for some time.

Mean­while, Pi­o­neer Foods, a con­sumer- or i en­tated f ood g r oup i n which PSG i s a l s o i nvolved t hrough Zeder I nvest­ments, has re­placed Telkom as the share in third place. Pi­o­neer in fact rep­re­sents an in­vest­ment that all in­vestors would love to own: a re­cov­ery stock (al­ways a high risk) that de­liv­ers great prof­its should the turn­around suc­ceed. The group has been (and still is to some ex­tent) in a re­cov­ery sit ua­tion af­ter dras­tic re­struc­tur­ing took place, in­clud­ing the ap­point­ment of Phil Roux as chief ex­ec­u­tive about t wo years ago. Since Pi­o­neer’s cur­rent bull phase kicked off at the end of 2012, the share has in­creased by some 220%, which once again con­firms that the mar­ket will re­ward strong earn­ings growth.

The suc­cess at­tained i s ev­i­dent from Pi­o­neer’s in­terim re­port, which ap­peared l ast month. The over­all op­er­at­ing prof it mar­gin i ncreased f ur­ther to 12.3% (it was - 6% when Roux t ook over), while ad­justed head­line earn­ings per share jumped by 39%. The div­i­dend was in­creased by no l ess t han 46%. How­ever, a ques­tion t hat one may well ask is whether this ex­cel­lent per­for­mance is sus­tain­able, given the ex­tent re­cov­ery has pro­gressed from low lev­els.

The weak­est s ha r e s a r e s t i l l dom­i­nated by build­ing and con­struc­tion, as well as com­modi­ties, although Tiger

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