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AFINE INVESTMENTS LIMITED

ANI JSE Listed

Investment Analysis: Afine Investments Limited (JSE: ANI)

Step 1: Data Gathering & Source Verification

Reporting Periods Reviewed:

Key SENS Announcements (Last 12 Months):

  • 19 Nov 2025: Unaudited Consolidated Interim Financial Results & Dividend Declaration (22.50 cents).
  • 29 May 2025: Audited Results for the year ended 28 February 2025 & Dividend Declaration (22.30 cents).
  • 25 Nov 2025: Trading Statement & Correction of Comparative Information.
  • 19-20 Nov 2025: Director Dealings (Buying signals from management).

Step 2: Metric Extraction

| Metric | Value | Notes & Analysis | | --- | --- | --- | | Market Cap | ~R313 Million | Nano-Cap. Extremely small compared to sector peers (e.g., Growthpoint >R40bn). | | Share Price | 432 cents | (ZAR 4.32) As of 07 Jan 2026 close. | | Dividend Yield (L12M) | 10.4% | High Yield. Calculated as Final 2025 (22.30c) + Interim 2026 (22.50c) = 44.80c total. This is significantly higher than the JSE All Share average. | | Liquidity Check | Critical Risk (Illiquid) | Warning: Daily trading volumes are often negligible (e.g., <500 shares). There are days with zero trades. It is very difficult to build or exit a position without moving the price. | | P/E Ratio | ~9.0x | Based on TTM Earnings. Reasonable valuation, though typically P/E is less relevant for REITs than Distributable Earnings. | | Net Asset Value (NAV) | 465 cents/share | Discount. The stock trades at a ~7% discount to its NAV (432c vs 465c). While a discount exists, it is narrower than many larger SA REITs. |

Step 3: Operational & Strategic Analysis

Business Overview Afine is a specialized REIT focused almost exclusively on petroleum service stations (filling stations). Its portfolio consists of properties tenanted by major oil majors (like Sasol, Engen) or independent operators. The model is defensive: fuel consumption is less cyclical than mall retail, and leases are typically long-term triple-net (tenant pays maintenance/rates).

Performance Trend (Interim H1 2026 vs H1 2025)

  • Steady Growth: Revenue increased by 11.5% to R26.7m.
  • Earnings Expansion: Distributable earnings grew impressively by 14.25%, supporting the dividend hike.
  • Profitability: Operating profit margin remains extremely high (~91%), reflecting the low cost base of the triple-net lease model (tenants cover most costs).

Sector Context

  • Interest Rates: Like all REITs, Afine benefits from the SARB's rate-cutting cycle (2025/2026). Lower debt servicing costs directly boost distributable income.
  • Fuel Sector Dynamics: The sector faces long-term questions regarding the transition to Electric Vehicles (EVs), but in the medium term (5-10 years), South African demand for petrol/diesel remains robust due to grid instability and slow EV adoption.

Step 4: The Verdict

Bull Case (Buy Argument)

  • High, Defensive Income: A 10.4% yield from a business backed by petrol stations is attractive. Fuel demand is inelastic (people need to drive), making the rental income far more secure than office or fashion retail rentals during economic downturns.

Bear Case (Sell/Avoid Argument)

  • Liquidity Trap: This is the primary risk. The stock is a "roach motel"—you can check in, but you can't check out. If you need to sell R50k worth of shares urgently, you might crash the price by 10-20% because there are no buyers.

Fair Value Estimate

  • Target Range: 465c - 500c
  • Rationale: The stock should ideally trade at or slightly above NAV given its defensive nature and high yield, but the illiquidity discount keeps it suppressed.

Final Rating: Speculative Buy (Income Focus)

  • Justification: If you are a small retail investor seeking passive income and willing to hold for 3-5 years, the 10% yield is compelling. However, do not invest money you might need on short notice.
AI Generated Analysis Last Updated: 2026-01-14