Africa-Press – South-Africa. 36ONE Asset Management founder Cy Jacobs said Mr Price, Sanlam, FirstRand, and Dis-Chem offer good value in the current market. However, negative South African sentiment is harming the market and company valuations.
Jacobs told 2024 BizNews Conference delegates that there are many well-run, good companies in South Africa which are “too cheap”.
He added that if he had to choose between investing in South African or US companies in the short term, he would choose South Africa.
“I am positive about South Africa and do not think we will get a doomsday coalition after the elections,” he said.
However, he cautioned that South Africa’s market is depressed because of negative sentiment towards the country.
He said new companies had no incentive to list on the JSE. “We have not seen a good new listing for over a decade. We have only seen de-listings.”
A big problem for South African listed companies is that they cannot extract the proper value from the market.
“So, even if you have a good South African business that is better than one in the United States, it will never attain the value that it should,” Jacobs said.
For this reason, Jacobs said he would invest in the US long-term. “You have a much bigger selection and much better liquidity in the US,” he said.
However, he added that if the sentiment around South Africa improves, many of the top locally listed companies will re-rate.
Mr Price
Mr Price is a South African value retailer with ambitions of becoming the most valuable retailer in Africa.
It has 2,809 stores and boasts an operating profit compound annual growth rate (CAGR) of 19.7% over 37 years. The retailer has a strong, ungeared balance sheet and a defensive, low-cost, cash-generating business model.
Sanlam
Sanlam is a leading financial services group in Africa with a history stretching back 100 years.
It is well-diversified and has a presence in 44 countries. It has a first-mover advantage in Africa and an unmatched Pan-African presence in 35 countries.
The insurer has a stable dividend policy with a dual focus on future growth and dividend flows. The management team is positive about the company’s prospects and growth for 2024.
FirstRand
FirstRand is a portfolio of integrated financial services businesses and offers a universal set of transactional, lending, investment, and insurance products. It operates in South Africa, certain markets in sub-Saharan Africa, the UK, and India.
The group’s track record of delivering superior returns to shareholders has been achieved through organic growth, acquisitions, innovation, and the creation of completely new businesses.
This has resulted in a long track record of consistent growth in high-quality earnings and superior and sustainable returns for shareholders.
Dis-Chem
Dis-Chem offers local and international equity investors exposure to the non-cyclical food and drug retail sector in South Africa.
It has a good management team, a strong market position, a winning retail business model, and a proven financial track record.
The retailer has good growth potential from an already high base and is looking to bring its cost structures down.
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