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SHOPRITE HOLDINGS LIMITED

SHP JSE Listed
Market Cap
~R161.7 Billion

Investment Analysis: Shoprite Holdings Limited (JSE:SHP)

Date: 12 January 2026 Analyst Role: Senior Equity Analyst Subject: Shoprite Holdings (The "Amazon of Africa" Premium)

Step 1: Data Gathering & Source Verification

I have conducted this analysis using the most recent audited financial results for the 2025 financial year and subsequent trading data up to January 2026.

  • Reporting Period 1 (Latest Annuals): Reviewed Results for the 52 weeks ended 29 June 2025 (Released 02 September 2025).

  • Source File: Shoprite FY2025 Results Announcement

  • Reporting Period 2 (Latest Operational Update): Operational Update for the quarter ended September 2025 (Released 10 November 2025).

  • Source: Shoprite Investor Centre

  • SENS Activity: Reviewed announcements regarding the Pingo Delivery acquisition (full consolidation) and the FY2025 dividend declaration.

Step 2: Metric Extraction

  • Market Cap: ~R161.7 Billion
  • Dividend Yield (L12M): 2.9%
  • Calculation: Total FY2025 Dividend of 781 cents (Interim 285c + Final 496c) divided by the current share price (~R273.55).

  • Note: Shoprite continues to compound its dividend at roughly 10% per annum, reflecting its strong cash conversion.

  • Liquidity Check: Liquid / Low Risk

  • Average Daily Value: The stock is a JSE Top 40 heavyweight with deep liquidity (Average volume >1 million shares/day). It is the default "defensive" hold for most local asset managers.

  • P/E Ratio: 20.0x

  • Calculation: Current Price (27,355c) / Diluted HEPS (1,367.2c).

  • Context: A 20x multiple is a significant premium to the sector average (approx 12x-14x). You are paying for "quality" and the Sixty60 moat.

  • Net Asset Value (NAV): N/A (Operating Retailer).

Step 3: Operational & Strategic Analysis

Business Overview Shoprite Holdings is Africa's largest food retailer. Its engine room is Supermarkets RSA, split into three distinct tiers:

  1. Shoprite/Usave: The mass-market "price fighter" dominating the lower LSM.
  2. Checkers/Checkers Hyper: The premium brand stealing market share from Woolworths.
  3. Sixty60: The on-demand delivery service which has effectively become a logistics company in its own right.

Performance Trend (FY2025 vs FY2024) The FY2025 results demonstrate why the stock commands a premium:

  • Revenue: Group sales surpassed the R250 billion mark, growing 8.9% to R256.7 billion.
  • The "Sixty60" Effect: On-demand sales surged 47.7%, now contributing 8.9% of all RSA supermarket sales. This is no longer a "side hustle"; it is a primary sales channel.
  • Margins: Trading profit rose 16.6%, with the trading margin expanding to 5.9% (up from 5.6%). This margin expansion in a high-inflation environment highlights their pricing power and supply chain efficiency.
  • Strategy: The full acquisition of Pingo (the logistics JV) allows Shoprite to control its "last mile" delivery costs completely, further widening the gap against competitors like Pick n Pay ASAP.

Sector Context

  • Macro Factor: Deflationary Pressure. Unlike 2024, where inflation drove "nominal" growth, 2025 has seen internal inflation drop to 2.3%. This forces retailers to drive volume to grow sales. Shoprite’s ability to grow sales nearly 9% in a 2.3% inflation environment proves they are taking physical volume share from competitors.

Step 4: The Verdict

Bull Case (Buy Rationale) The "Ecosystem" Moat: Shoprite has transcended being just a grocer. Between Sixty60 (Logistics), Xtra Savings (Data/Media), and K'nect (Mobile), it has built a sticky ecosystem that competitors cannot easily replicate. The 47% growth in Sixty60 suggests they are aggregating the entire on-demand market, turning a low-margin activity into a profitable scale game.

Bear Case (Sell Rationale) Priced for Perfection (20x P/E): At R273, the stock is priced for flawlessly continued growth. Any stumble—such as a slowdown in Sixty60 adoption or a resurgence from a revitalized Pick n Pay (under Sean Summers' plan)—could see the multiple de-rate to 16x. There is zero margin of safety at this price point.

Fair Value Estimate R260.00 – R280.00

  • Justification: The stock is currently trading exactly within its fair value range. A 20x multiple is justified by the superior growth profile (15.8% HEPS growth), but the upside from here is limited to earnings growth rather than rating expansion.

Final Rating: HOLD (Quality Compounder)

  • Rationale: This is a "Buy on Dips" stock. It is too expensive to chase aggressively at R273, but it is too high-quality to sell. Hold it for the dividend growth and stability, but wait for a pullback to ~R250 before adding fresh capital.
AI Generated Analysis Last Updated: 2026-01-14