Shoprite’s success can be attributed to many factors, one of which is the exceptional versatility of the operating model.

The group has achieved client resonance at all income levels, evidenced once more by a second-quarter performance that saw Checkers and Checkers Hyper grow 13.7% and Shoprite and Usave grow 13.1%.

Even the OK Franchise business registered a 25% increase in sales to franchisees.

The only blemish on the result is growth in the furniture business, which really isn’t the most attractive place to be playing in South Africa. At least it was in the green, albeit with only 1.7% growth.

All eyes will be on interim results due in March, as Shoprite has given the market some things to chew on.

As strong as the sales numbers are, profit will be affected by non-recurring income in the base period (R244-million in insurance claim proceeds) and of course the sheer extent of diesel costs in this ­period. In case you’re wondering, they’ve spent R500-million on diesel in the past six months.

Bye-bye big birds

Astral Foods is enjoying a much-improved financial situation thanks to a reduction in load shedding. The company will take the wins wherever it can get them, particularly after such a revolting year in 2023, when absolutely everything went wrong.

Margins are so tight in the chicken business that profitability falls over when the slaughtering programme is disrupted. One of the major problems last year was that the birds were simply too big, as they weren’t being slaughtered on time. Bigger birds cost more to feed.

Things are much better this year for Astral, with Heps expected to be between 647 cents and 654 cents for the interim period. That’s a lot higher than 163 cents in the comparable period! Debt is trending lower and the balance sheet is strong, but continued success will depend on load shedding and the company having much better luck than last year. In particular, the dreaded bird flu needs to stay far away.

WeUnbundleCars

Transaction Capital is one of the most severe broken growth stories on the JSE. The company had the wind in its sails for quite some time before problems at SA Taxi tore a gaping hole in the story – and the balance sheet.

The founders of the group have certainly had to change their retirement plans, with Jonathan Jawno stepping in to try to save whatever value is left in the group. The first big step is an unbundling of WeBuyCars. Although this route isn’t fully confirmed, the board has made an in-principle decision to get the WeBuyCars brand far away from SA Taxi and reputational contagion.

The real debate is about the likely valuation of WeBuyCars in the market. Transaction Capital paid a significant multiple for the business as part of getting to a 75% stake, which didn’t seem so bad relative to the much higher earnings multiple at which Transaction Capital was trading. Now that the Transaction Capital share price has collapsed, that multiple doesn’t seem quite so reasonable any more. Although WeBuyCars achieves a return on equity that would support a valuation at a premium to book value, sentiment in the used car market has taken a knock.

The other debate is about what the “rump” at Transaction Capital is worth. Nutun is a good business that is being left behind with SA Taxi. Will we see a delisting of that combined business, led by the founders? It’s a lot easier to fix things in private, particularly when Transaction Capital has said there is no rights issue being considered. If they don’t need fresh equity capital, then stepping away from the markets might be the best way forward.

The share price is up around 8% in the past week, so the market has appreciated the possibility of an unbundling. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.