Illustrative image: (From left) Spur, Sabvest and Prosus are proving to be great examples of local growth stories. (Photos: Spur | Supplied | Jasper Juinen / Bloomberg via Getty Images)
Last week, I covered Capitec and Weaver Fintech as great examples of local growth stories. The point is that stock pickers can find success in the South African market, as it’s definitely not doom and gloom everywhere you look.
Continuing that theme, a busy earnings week on the JSE dished up a few more names that gave us something to smile about on the local market. As a reminder of just how broad and interesting the JSE can be, I’ve chosen to focus on three companies in unrelated industries.
We begin with Spur, a company for people with a taste for growth.
Spur is eating everyone’s lunch
Spur’s strategy in South Africa is working. It has been allocating capital in the right places, with a solid mix of acquisitions of new restaurant brands and refurbishments of the existing operations. For a franchise model to work, the franchisor needs to demonstrate commitment to the business and an ability to keep evolving with consumer trends, thereby giving potential and existing franchisees a sense of comfort about their investment in the restaurants.
The numbers speak for themselves at Spur, with turnover for franchised restaurants up 8.3% for the year ended June 2025. Of course, having happy restaurant owners is only one ingredient for success. Investors in Spur only do well if the company does a great job of turning restaurant turnover into group sales. Spur’s group revenue grew by 11.2% for the period, boosted by company-owned restaurants, acquisitions and the performance of the manufacturing and distribution division.
That was good enough to drive group Heps (headline earnings per share) higher by 16.8%. As the glazed cherry on top of the ice cream at the end, the dividend per share was up 40.4%. The share price is only up 6% in the past year, with the market taking a cautious approach to Spur’s growth story.
Sabvest adds to its strong track record
Sabvest is seen as one of the best investment-holding companies on the JSE. This isn’t just because of the impressive track record of 18.1% compound annual growth in net asset value (NAV) per share over the past 15 years, but also because the capital is primarily invested in unlisted companies that investors can’t otherwise get access to.
Despite this, the company still trades at a substantial discount to NAV. Much like at Spur where the market is treating growth with caution, JSE investors are nervous of investment-holding companies – and with good reason, if you look at the performance of most of them on the local market. Sabvest’s NAV per share is R138.82 and the share price is currently trading at R94.75, so that’s a discount of around 32%. Although that’s a smaller discount than at some of the other investment-holding companies, it does leave room for a reduction in the discount and thus outsized returns for shareholders over time if the market forms a more favourable view on Sabvest.
There’s not much that Sabvest can do to control the discount. All it can do is focus on allocating capital in the right places, which means a mix of new investments, support for existing portfolio companies, dividends to shareholders and, of course, share buybacks.
The first half of 2025 saw growth in the NAV per share of 17.8% and an increase in the interim dividend of 14.3%, with the group increasing its allocation to share buybacks as well. That’s a rock-solid performance, so it’s no surprise that the share price has risen 27% over the past 12 months – growth that reflects a narrowing of the discount to NAV.
Having said that, Sabvest’s share price has come off quite sharply since the 52-week high in June of R110, which some investors may interpret as an opportunity.
At Prosus, it’s all about ‘Tencent Plus’
For a long time, the Naspers/Prosus stable was a “Tencent Minus” story – in other words, the group traded at a discount to the look-through value of the stake in Tencent. This is quite frankly because it was haemorrhaging cash and allocating capital at the top of cycle into just about any opportunity it could find. While land grab strategies are well understood in the venture capital space, they don’t necessarily resonate with institutional investors.
CEO Fabricio Bloisi is now managing for profitability, not just revenue and market share like his predecessor. The e-commerce businesses in the group needed to be rationalised, competing for group capital rather than treating it as a certainty that cash would be available to fund growth at any cost. When this new approach is combined with overall global growth in e-commerce and especially emerging markets, things are now firmly on the up at Prosus.
Read more: Naspers’ Fabricio Bloisi reports transformative growth as e-commerce profits soar to $443-million
The goal is to be a “Tencent Plus” group – in other words, for the e-commerce side of the business to be worthy of a valuation that negates the discount to the Tencent stake that has plagued the group’s share price. The comments made at the AGM suggest that it is well on track, with the first quarter of 2026 reflecting solid revenue growth of 15% and even better growth in adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of 54%.
The Prosus share price is up 49% year-to-date. Tencent’s share price in Hong Kong is up roughly 35% in rand terms over the same period, suggesting that the market is starting to believe in this Tencent Plus dream. I’m certainly very happy with my long position in Prosus. DM