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AVI LIMITED

AVI JSE Listed
Market Cap
R37.5 Billion

Role: Senior Equity Analyst (JSE Focus) Date: 12 January 2026 Subject: Investment Analysis – AVI Limited (JSE: AVI)

Step 1: Data Gathering & Source Verification

I have utilized the following primary sources for this analysis, ensuring the most recent reporting periods available as of January 2026 are reflected.

Step 2: Metric Extraction

Market Cap: R37.5 Billion

  • Based on a share price of ~R110.00.

Dividend Yield (L12M): 5.7%

  • Calculation: Total dividends declared in the last 12 months = 626 cents (Interim 220c paid April 2025 + Final 406c paid Oct 2025).
  • Note: AVI has a history of paying special dividends, but none were declared in the L12M window (last special dividend was paid Oct 2024).

Liquidity Check: Pass (High Liquidity)

  • Data: Average daily value traded is approximately R48m – R65m.
  • Assessment: The stock is highly liquid and suitable for institutional entry/exit without significant price slippage.

P/E Ratio: 15.1x

  • Calculation: Share Price (11000c) / FY25 HEPS (729.1c).
  • Context: This is trading at a premium to the general JSE Food Producers sector (typically 12x–13x), reflecting AVI's quality "safe haven" status.

Net Asset Value (NAV): N/A

  • Reason: As an FMCG and Brand holding company, AVI is valued on earnings (P/E) and Cash Flow (DCF), not NAV.

Step 3: Operational & Strategic Analysis

Business Overview

AVI is a diversified branded consumer goods conglomerate. Unlike pure-play food producers (like Tiger Brands), AVI holds a unique mix of high-margin fashion and premium food brands.

  • Food & Bev: Entyce (Five Roses, Ellis Brown), Snackworks (Bakers Biscuits, Willards).
  • Fashion: Spitz, Kurt Geiger, Green Cross.
  • Fishing: I&J (Deep-sea hake and abalone).
  • Personal Care: Indigo (Yardley, Lentheric).

Performance Trend (FY25 Actuals + Nov '25 Update)

The trend is positive but hardening.

  • FY25 Recap: Revenue grew a modest 1.0%, but Operating Profit jumped 7.8%, showcasing AVI's pricing power—they sacrificed some volume to protect margins.
  • Current Momentum (Nov '25 Update): The first four months of FY26 showed an acceleration. Group revenue is up 4.3%, and Operating Profit is up 15.8%.
  • Driver: I&J is the current star performer due to improved catch rates and a weaker Rand boosting export revenue. Conversely, Indigo (Personal Care) is struggling with volume declines due to aggressive competition in the body spray market.

Sector Context: The "Two-Pot" & Interest Rate Cycle

The SA Consumer Discretionary sector is currently pivoting.

  1. Interest Rates: With inflation stabilizing, the SARB is expected to cut rates in 2026. This directly benefits AVI's fashion segment (Spitz), which sells premium footwear often bought on credit or by consumers sensitive to disposable income.
  2. Infrastructure Costs: Food producers are battling municipal failures. AVI spent R41 million in FY25 just on backup water/power solutions. This is a "grudge cost" that permanently elevates the cost base, compressing margins unless passed on to consumers.

Step 4: The Verdict

Bull Case: The Quality Premium & Cash Generation

AVI is the "sleep well at night" stock of the JSE industrial sector. It consistently converts high percentages of earnings into cash, allowing for a generous 5.7% dividend yield plus occasional special dividends. The current recovery in I&J provides a hedge against the weaker SA consumer, as hake exports earn hard currency.

Bear Case: The Valuation Ceiling

At a P/E of 15.1x, AVI is priced for perfection in an economy that is far from perfect. Growth is heavily reliant on price hikes rather than volume expansion (Revenue only +1% in FY25). If the consumer "breaks" and refuses to pay the premium for Bakers biscuits or Spitz shoes, AVI's operating leverage will reverse, and the multiple will contract sharply.

Fair Value Estimate

R105.00 – R115.00

  • Methodology: Based on a forward P/E of 14.5x assuming 8% earnings growth in FY26. The stock is currently trading squarely within its fair value range.

Final Rating: HOLD

  • Rationale: AVI is a high-quality company, but it is fully valued at R110. The 4.3% revenue growth in the latest update is encouraging, but not enough to justify chasing the stock higher from here. It is a solid hold for income-focused portfolios due to the reliable dividend, but new capital should wait for a pullback to below R100.
AI Generated Analysis Last Updated: 2026-01-14