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Alex Duys, portfolio manager: Umthombo Wealth 

BUY: Mr Price

The latest results were quite good, and we believe Mr Price is well positioned for the future. Power Fashion and Yuppiechef have annualised revenue of R2.5bn, and management has stated an ambitious target of R7.5bn by 2027. This target is materially ahead of what we and the market were expecting, so if it can execute on that, it can deliver a solid pipeline of growth. Mr Price boasts a strong net cash position, so it can easily fund the potential Studio 88 transaction. We thus believe the recent share price weakness offers a compelling opportunity to buy Mr Price with a medium- to long-term outlook.

SELL: Vodacom

I’ve been quite bearish on Vodacom for some time. Vodacom’s growth prospects are muted at best, so management decided to embark on an aggressive capital allocation strategy. We are cautious on the return profile of these capital allocation decisions, especially the Vodafone Egypt transaction. We believe it is  likely that group returns will continue to dwindle, which will affect Vodacom’s historical premium rating. We would have preferred Vodacom to focus on share buybacks and organic growth rather than embarking on transformational deals.


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