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PURPLE GROUP LIMITED

PPE JSE Listed

Investment Analysis: Purple Group Limited (JSE: PPE)

Date: 9 January 2026 Share Price: ~R2.37 (237c) Analyst Role: Senior Equity Analyst, JSE

Step 1: Data Gathering & Source Verification

I have reviewed the most recent financial disclosures and SENS announcements. The company released a strong set of full-year results in November 2025, confirming a return to profitability.

  • Annual Results: Reviewed the Audited Consolidated Annual Financial Results for the year ended 31 August 2025 (Released 12 November 2025).
  • Interim Results: Reviewed the Unaudited Interim Results for the six months ended 28 February 2025 (Released 9 April 2025).
  • SENS Activity (L12M): Key announcements include the Annual Results (November 2025) showing a massive earnings turnaround, trading updates confirming record deposits, and dealing in securities by directors (including Mark Barnes buying in Nov 2025).

Data Sources:

  • Annual Results (Nov 2025): https://www.purplegroup.co.za/results/full_results/2025/Shortform%20Announcement.pdf
  • SENS (Director Dealing): https://www.sharenet.co.za/v3/sens_display.php?tdate=20251126070500&seq=5

Step 2: Metric Extraction

| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R3.39 Billion | Small-cap fintech, but with a highly active retail following. | | Dividend Yield (L12M) | 0.0% | Growth Focused. No dividend declared. Cash is reinvested into the EasyEquities platform (tech/marketing) and international expansion (Philippines/UK). | | Liquidity Check | Liquid | Average daily volume is robust (~600k - 1m shares/day). It is a favorite among retail traders, ensuring consistent turnover. | | P/E Ratio | ~55.1x | High Growth Rating. Based on FY2025 HEPS of 4.30 cents. The high multiple indicates the market is pricing in rapid future growth and significant operating leverage, not current earnings. | | Net Asset Value (NAV) | 47.23 cents | The stock trades at a ~5x Premium to NAV. This is typical for a capital-light fintech where the value lies in the client base (1.1m clients) and brand IP, not tangible assets. |

Step 3: Operational & Strategic Analysis

Business Overview Purple Group is the holding company for EasyEquities, South Africa's dominant retail investment platform.

  • EasyEquities (The Engine): Generates revenue via transaction fees, margin lending, and interest on client cash.
  • GT247: High-risk derivatives trading (volatile income).
  • Strategic Pivot: The focus has shifted from "Growth at all costs" to "Profitable Scaling." The strategy is to cross-sell higher margin products (Life Insurance, Credit, Retirement) to the massive existing client base.

Performance Trend

  • Turnaround Confirmed: FY2025 was a pivotal year. The group swung from a prior loss to a Profit After Tax of R61.0 million.
  • Operating Leverage: The "Jaws" opened positively. Group Revenue grew 21.5% (to R487m), while Operating Expenses only grew 11.4%. This proves the scalability of the platform—adding new clients is becoming cheaper.
  • Client Growth: Active clients grew 15.7% to 1.15 million, and client assets hit a record R80.7 billion (+38%).
  • The "Easy" Ecosystem: Retail inflows surged 48% to R11.1bn, driven by the adoption of new products like EasyProtect and EasyCredit, which are growing faster than the core equity brokerage.

Sector Context

  • Interest Rates: The high-rate environment in 2025 boosted interest income on client cash balances. As rates potentially fall in 2026, this "free money" line item may contract, putting pressure on the company to generate more transactional revenue.
  • Retail Sentiment: The bull market of late 2025 (US & SA markets hitting highs) is the perfect tailwind for a broker, driving retail trading volumes.

Step 4: The Verdict

Bull Case (Why Buy): The "Flywheel" is Spinning. The FY2025 results proved the skeptics wrong: Purple Group can be profitable. The operating leverage is finally visible—revenue is growing twice as fast as costs. You are buying the dominant fintech monopoly in SA investment. . The international expansion (Philippines via GCash partnership) is a "free option" that could double the addressable market overnight if it gains traction. The director buying (Barnes) signals insider confidence.

Bear Case (Why Sell): Valuation Vertigo. A P/E of 55x leaves no room for error. The stock is priced for perfection. If a global recession hits or markets correct, retail trading volumes will dry up instantly (as seen in 2023), crushing revenue. Additionally, the reliance on interest income (from client cash) is a risk as interest rates fall in 2026.

Fair Value Estimate: R2.10 - R2.40 The stock is currently fully priced for its SA growth. Any upside above R2.50 requires the international story to start delivering hard numbers.

Final Rating: HOLD / SPECULATIVE BUY The turnaround is real, but the price reflects it. Existing holders should ride the momentum; new money should wait for a pullback or concrete news on the Philippines revenue contribution.

AI Generated Analysis Last Updated: 2026-01-14