PICK N PAY

DiamondONE particularly impressive aspect to Pick n Pay’s continuing ramble down the turnaround trail is that it has taken place against the backdrop of a moribund consumer market.

The company lists all the usual suspects that have been lining up to bludgeon the disposable income of the man in the street, yet it has still managed to post creditably improved results by focusing relentlessly on the nitty gritty of the business. Making sure the right products are available at the right price may seem blindingly obvious, but it works.

Pick n Pay has expanded and upgraded its store estate, particularly in its convenience store offering, responding to the consumer’s trend to shop more often for smaller baskets.

Its online offering grew by 38% in the year, and it showed solid growth in value-added services, such as cellular, pre-paid electricity and third-party bill payments. This does risk producing the till of dread, when you pull up behind a specimen who reaches into the pocket and pulls out a sheaf of bills to be paid at excruciating length, but it’s a nice little earner.

Big news is the company’s entry into Nigeria, a huge market that has claimed many a scalp from outsiders looking for a slice of the action.

Pick n Pay appears to be dipping its toes into the country with a strong local partner and a good deal of caution, and it certainly offers a great opportunity to anybody who can get it right.

It’s a remarkably sure-footed performance in a tough retail environment, and bodes well for any recovery in the economy as a whole.

Vital numbers on May 3 2016

Share price (R)74.86
Market cap (Rbn)36.57
P:e ratio33.41
Earnings yield (%)2.99
Dividend yield (%)2.00

 

DogALTRON

OOH la la, as the cognoscenti used to say about the great footballing philosopher Eric Cantona.

In fact Altron’s business update is so dire that a mere Ooh la la may not be enough for its shareholders, who may be more inclined to express their opinion in torrents of robust Anglo-Saxon that are a long way from being suitable for printing in a family publication. The group announced its new strategic direction in April 2015, but it is abundantly clear that it is easier to announce it than to implement it.

There has been some progress made, in that it has managed to flog Autopage’s post-paid subscriber base and Powertech’s interest in Aberdare Cables, and its IT businesses have performed ahead of expectations. But that is a long way from offsetting the significant losses made by its multimedia division and by Powertech, where the transformers division suffered a complete drop-off in demand and posted a substantial loss. Now the group is classifying Powertech, Altech Autopage, Altech Multimedia and Altech Node as discontinued operations, in order to give investors the chance to see the difference in performance between its ongoing, core operations and those it is looking to exit.

Unfortunately for shareholders, these operations will remain core to the bottom line of the company until Altron finds buyers willing to take them on. Given the performance of some of these operations, it is unlikely that hordes of potential purchasers will have the elbows out rushing to get a piece of the action, but let’s hope Altron can stop the bleeding and move on.

Vital numbers on May 3 2016

Share price (c)610
Market cap (Rm)644.58
P:e ratio
Earnings yield (%)-6.88
Dividend yield (%)

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