Sefalana releases strong results The much awaited financial results for Sefalana Holdings for the year ended 30 April 2013 were finally released on Wednesday and did not disappoint. Revenue increased modestly by 11.7%, with the ‘Trading consumer goods’ business which comprises of 3 hyper stores, 25 cash & carry stores and 13 Shoppers stores contributing 86% towards the revenue and 59% towards profit after tax. These good numbers were achieved through better product offering and enhancement of customers shopping experience. Three new Shoppers stores are earmarked to be opened before the end of this year and this will contribute more to revenue. Gross profit margins came in at 9.7% from 8.7%. Profit before tax rose strongly by 35.2%, while profit after tax came in 38.4% higher. Basic Earnings Per Share rose 35.4% to 61.50 thebe, while a dividend of 21 thebe was declared, giving a 52 week rolling dividend yield of 5.1%. Sefalana PE ratio of 8.5x against the market average of 12.0x remains on the lower side. Our forward PE ratio also brightens the outlook for the stock given that we expect 2014 FY earnings to be higher due to the continued expansion of the ‘Shoppers’ business and the awarding of some lucrative Government tenders. However, the outlook might be dampened by increased competition on the retail space, weaker disposable incomes and a reduction in government expenditure. Notwithstanding this, we see more upside potential in the stock and we assign a BUY recommendation especially towards the 10x earnings marker.
Posted on: Mon, 05 Aug 2013 16:09:25 +0000
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