Shoprite

Shoprite has been dominating the food retail market share over the last number of years, and with the investments they are making as well as the strategic acumen of management, we see them extending this advantage in the years to come. We firmly believe that strong companies that continue to invest in their offerings, operations, and digital capabilities will continue to take share from companies on the back foot. In a challenged local economy, we believe this dynamic is amplified. Despite the de-rating over the quarter, Shoprite trades on a high teens earnings multiple, so it is by no means an optically cheap share. However, in recent years, their digital initiatives and other adjacent income streams have created revenue streams over and above expectations, and there is merit in buying good companies at fair prices. Paying what looks like a high multiple today stands to be rewarded by consistent retail profit growth and continued delivery on these high-margin income streams going into the future.

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