Our opinion on the current state of MRP

Mr. Price (MRP) is a retailer of clothing, household goods and sportswear through shop fronts and online in Africa and Australia. Unlike most retailers, Mr. Price receives most of its sales in cash, but there is a growing credit element. Mr. Price has a reputation for being cheaper than other stores. This was a definite advantage during COVID-19 as consumers tried to stretch the buying power of their income. In our view, this is a good share doing extremely well in a very difficult industry, especially in the current economic environment in South Africa. Its P:E ratio of 12,89 seems cheap while the company is well-positioned to ride out these economic hard times and then benefit from any improvement in the economy. There is little doubt that Mr. Price has grown its market share at the expense of other clothing retailers during the COVID-19 period. On 21st July 2021 the company reported on the impact of the unrest and looting saying, "...the damage caused by looting did not increase materially beyond what was first reported and totals 111 stores. At one stage over five hundred of the group’s stores were temporarily closed but has now significantly reduced to 20 temporary store closures." On 15th March 2021, the company announced the acquisition of Yuppiechef, a primarily online retail kitchenware business for an undisclosed amount. On 13th April 2022 the company announced that it had purchased 70% of Blue Falcon Trading for R3,3bn in cash. Blue Falcon is the "...largest independent retailer of branded leisure, lifestyle and sporting apparel and footwear in South Africa". In its results for the 26 weeks to 30th September 2023 the company reported revenue up 26,4% and headline earnings per share (HEPS) down 9,3%. The company said, "Loadshedding, was four times higher in Q1 than the same period in the prior year. During this period the group spent R140m to accelerate its back-up power solutions. The poor economic and consumer retail environments, including double digit inflation in food and public transport". Technically, the share has been in a downward trend since April 2022, but we believe that it is currently underpriced. On 23rd November v2023 the share broke up through its downward trendline indicating a new upward trend. In our view, this is a very high quality share that should be accumulated on weakness. Since its peak on 12th April 2022 the share has been drifting down and sideways. On a P:E of 13,32 and a dividend yield (DY) of 5,2% is looks like good value, but it could fall further in this bear market.

Top 3 & 4 companies on our winning shares list.
Snapshot: 4/2024

#3 - MIXTEL- MIX- Added 2023-12-28 - 86.44% Gain since added
#4 - HARMONY - HAR- Added 2023-11-16 - 70.15% Gain since added

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