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4SIGHT HOLDINGS LIMITED

4SI JSE Listed
Market Cap
** ~ZAR 407 million (Small Cap)

EQUITY RESEARCH NOTE Ticker: JSE:4SI | Company: 4Sight Holdings Limited | Date: 10 January 2026 Analyst: Gemini (Senior Equity Analyst)

Step 1: Data Gathering & Source Verification

Reporting Period Basis: This analysis is based on the most recent audited annual figures for the year ended 28 February 2025 and the subsequent unaudited interim results for the six months ended 31 August 2025.

Primary Documents:

Step 2: Metric Extraction

  • Market Cap: ~ZAR 407 million (Small Cap)
  • Price: 74 cents (at time of writing)
  • Dividend Yield (L12M): 6.8%

  • Calculation: Based on the declared final dividend of 5.0 cents per share for FY2025. (Note: The company has shifted to a stronger dividend payer status, doubling its payout from the previous 2.5c).

  • Liquidity Check: HIGH RISK (Illiquid)

  • Metric: Average daily value traded is frequently below ZAR 250,000 (~300k shares).

  • Analyst Note: Institutional participation is limited. Building or exiting a large position will result in significant slippage. This stock is suitable only for retail investors with patience or smaller position sizes.

  • P/E Ratio: 8.3x

  • Calculation: Price (74c) / TTM HEPS (~8.91c).

  • Derivation: H1 FY2026 HEPS (6.75c) + [FY2025 Full Year HEPS (7.34c) - H1 FY2025 HEPS (5.18c)] = ~8.91c.

  • Net Asset Value (NAV): 69.6 cents per share.

  • P/B Ratio: 1.06x (Trading near book value).

Step 3: Operational & Strategic Analysis

Business Overview 4Sight Holdings is a diversified technology group that has successfully pivoted from a generalist IT holding company to a specialized "Digital Transformation" partner. They operate through four clusters: Business Environment (Data/AI), IT (Cloud/Infrastructure), Operational Technologies (Industrial/Mining tech), and Channel Partners (Reselling software).

Performance Trend (H1 FY2026 vs H1 FY2025) The latest interim results show a company in the middle of a highly effective efficiency drive, characterized by Margin Expansion:

  • Revenue: Up 6.8% (Steady, organic growth).
  • Operating Profit: Up 35.7% (R48.3m vs R35.6m). This is the key story—they are squeezing significantly more profit out of every Rand of revenue.
  • Cash: Cash balances increased by 11.5%, signaling healthy cash conversion.
  • AI Pivot: The company has aggressively marketed its "Agentic AI" capabilities. Unlike many small caps merely using "AI" as a buzzword, 4Sight's Business Environment cluster saw a 264% increase in profitability, validating that high-margin AI consultancy is actually converting to the bottom line.

Sector Context

  • Macro Factor: Corporate AI Adoption vs. Skills Shortage. South African corporates are currently in a "rush to modernize" phase, moving legacy systems to the cloud and integrating AI to cut costs. However, the local market faces a severe shortage of skilled data scientists and cloud architects. 4Sight acts as a specialized outsourced partner, effectively selling "rare skills" at a premium. This creates a strong tailwind for their services division.

Step 4: The Verdict

Bull Case: The "Growth at a Value Price" Play 4Sight is trading at a P/E of ~8.3x while delivering earnings growth of >30%. In the tech sector, a company growing earnings at this rate usually commands a P/E of 15x-20x. The market is pricing 4Sight as a stagnant ex-growth stock, ignoring the successful margin expansion and the 6.8% dividend yield which provides a "pay-to-wait" incentive.

Bear Case: The Liquidity Trap The stock is dangerously illiquid. With a daily trade value often equivalent to a used hatchback car, you cannot exit quickly. Furthermore, the tech sector is prone to rapid obsolescence; if their "Agentic AI" value proposition becomes commoditized by global giants (Microsoft/Google), their margin advantage could evaporate overnight.

Fair Value Estimate Range: 95c – 115c

  • Rationale: Applying a conservative 11x P/E multiple (discounted from the sector average of 14x due to small-cap illiquidity) to the TTM HEPS of 8.91c.

Final Rating: SPECULATIVE BUY

  • Justification: The fundamentals are excellent (growing cash, growing margins, low debt, paying dividends). However, the "Speculative" tag is mandatory solely due to the liquidity risk. This is a stock to accumulate slowly on weakness, not to chase.
AI Generated Analysis Last Updated: 2026-01-14