Love reading @RudivNiekerk investor letters. What he’s doing in South Africa is truly differentiated and special.
So I spent last weekend reviewing the African $AFK ETF and picked my favorite names in the space.
Here’s a thread on what I found 🇿🇦🇿🇦🇿🇦
Guaranty Bank (GUARANTY.NSE)
One of the cheapest biz I’ve seen in any market. The core banking segment generates 26% ROE with 51% NI margins. Expecting ~13% 2022 rev growth.
You can buy it for 4.5x current earnings w/ a 10% DY.
Mtn Nigeria Communication (MTNN)
Nigeria’s leading mobile operator. 76.5M subscribers and the #1 NPS score in its industry. 32% EBIT margins.
Largest mobile network w/ 49% smartphone penetration. Data rev up 57% YoY & will grow w/ smartphone adoption.
Can buy for ~8x EBIT.
Clicks Group (CLS)
Largest retail pharmacy chain w/ 600+ stores doing 40% ROC and 42% ROE.
50% of customers are <6km away from a Clicks store.
Closed unprofitable “Musica” business to focus on core pharmacy biz.
Trades for ~14x NTM EBITDA and 1.6x Sales.
Multichoice Group (MCG)
Africa’s leading video entertainment platform. 20.1M subscribers (about the same as NBC/Comcast). 59K hours of local content.
Increasing subscription revenue bolsters GM expansion (19% to 22%).
Call option w/ 20% investment in BetKing (sports betting)
Pick N’ Pay (PIK)
Africa’s largest online grocery operator w/ strong local brand value. Always low prices (think $WMT comparable).
16% 8YR EPS CAGR while generating 40% ROCE. Own-brand is 25% of sales
2020 was best year since founding.
Do yourself a favor and follow @RudivNiekerk for all things 🇿🇦 equities. I hope you enjoyed this thread and got 1-2 new ideas from it.
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