VODACOM GROUP LTD
Vodacom Group Ltd. is an investment holding company, which engages in the provision of communications products and services. The firm operates through the following segments: Corporate, South Africa, and International. The Corporate segment comprises the holding companies of the group which do not relate to specific operating segments. The South Africa segment includes the segment information relating to the South African-based cellular network, service provider and other business segments. The International segment provides the segment information relating to the non-South African-based cellular networks in Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo as well as the operations of Vodacom International Limited and Vodacom Business Africa. It offers voice, messaging, converged services, broadband, data connectivity, mobile financial services, and other value-added services. The company was founded in 1993 and is headquartered in Midrand, South Africa.
- Current Price: R135.82
- Priced at a meaningful discount given the company’s financial health and stability.
- Market Capitalization: R246 Bn
- Nothing in particular that stands out in the company’s latest financial results, however, given that Vodacom Ltd is not a growth stock anymore, we are seeking for fundamentals that show a strong and sustainable dividend.
The telecom industry is maturing around the world, as data and access to data is getting so much cheaper due to the market getting so saturated which has caused margins to become very thin. However, given the company’s most recent announcement that they will be entering into operations in Egypt shows us that the company is leveraging their long-standing business segments and knowledge of the markets as they are trying to win market share in the rest of Africa. They also have a key focus on their Fintech involvement and operations within the whole of Africa as that is most likely one of the next biggest markets to come.
PPC Ltd. engages in the manufacture and sale of cement, aggregates, metallurgical-grade lime, burnt dolomite, and limestone. The firm operates through four segments: Cement, Lime, Aggregates and Other. The Cement segment includes the mining of limestone and the manufacture and supply of cementitious products. The Lime segment offers the mining of limestone, and the manufacture and supply of metallurgical grade limestone, burnt lime and burnt dolomite. The Aggregate segment is engaged in the mining and supply of aggregates and metallurgical grade dolomitic limestone. The Other Segment comprises the various consolidated trusts and trust funding relating to the broad-based black economic empowerment transaction. The company was founded in 1892 and is headquartered in Johannesburg, South Africa.
- Current Price: R4.97
- The company’s restructuring is being well accepted by the market given the performance over the last year. However, this is only the beginning of a new chapter for PPC, so we believe there is more to come and any meaningful discount in the price creates a buying opportunity.
- The environment in which this company operates is one of high input costs, heavily dependent on government policies on dumping, electricity supply and labor laws. All of which are currently still a risk to PPC Ltd.
- Market Capitalization: R7.2 Bn
- R500m received from the disinvestment of their Limestone business and can now be incorporated in the balance sheet.
Inflationary pressure around their input costs, fuel and electricity being two of the largest input costs, is putting a lot of pressure on their margins, however, we believe with their restructuring over the past few years the company is well positioned to accompany higher input costs which is evident in their current balance sheet and operating margins. PPC Ltd is one of those shares that will remain undervalued for as long as there is instability within the Rand, electricity costs and supply constraints as well as increasing fuel prices around the globe.
THE SPAR GROUP LTD
The SPAR Group Ltd engages in the wholesale and distribution of goods and services to SPAR grocery stores and various other branded group retail outlets in Southern Africa, Ireland, Switzerland, and Poland. The company offers fresh produce, in-store bakery, butchery, deli, ready-to-eat meals, home-meal replacements, groceries, general merchandise, baked foods, liquor products, Building and hardware products, dispensary and health-related products, confectionery, health and beauty, frozen foods, catering products, wines, and non-food items. It operates 4,357 stores. The SPAR Group Ltd was founded in 1932 and is headquartered in Pinetown, South Africa.
- Current Price: R171.05
- The consumer retail space in South Africa has become very saturated over the years, the SPAR group has been leveraging their knowledge of the market and their strong balance sheet over the past to establish themselves to generate profitable businesses and stores across a few other countries. This stock overs you with international exposure and well-diversified income streams.
- Market Capitalization: R31.4 Bn
- It seems that after most European countries have eased their lockdown restrictions and live turns back to normality, the SPAR group have retained most of their market share from their stores located in neighborhoods as opposed to the stores located in the town areas.
The company has a strong market share given their size in the Irish and Swiss markets, with well situated distribution locations and a market who is well suited for their ‘convenience’ target-market. There is a lot of potential to be unlocked, especially in Ireland as the company seems to have all their logistics in place for a post Brexit world and a strong market which makes a business case for deploying more resources within that region. Poland however has been costing the group an enormous amount of money in the past, but the management seem to be well underway with some key restructuring. We must take note that the Polish market is still a fairly new one for the group, however we believe their long-standing history of adaptability will prevail and we ware looking forward to see the progress that they make in Poland.
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