Our opinion on the current state of PURPLE(PPE)

Purple Group (PPE) is a distinctive entity in the financial sector, specifically tailored for private investors and known for providing some of the lowest trading costs on the Johannesburg Stock Exchange (JSE). The company is segmented into three divisions: Easy Equities, Emperor Asset Management, and GT247.

**1. Easy Equities:** This platform is particularly innovative as it allows investors to purchase fractional shares with minimal transaction costs. For example, buying R100 worth of a share costs only 64c. This feature has attracted a significant number of first-time investors, with 95% of the accounts opened under this category, resulting in about 150,000 active investors.

**2. Emperor Asset Management:** This division manages funds on behalf of clients, leveraging expertise to deliver competitive investment returns.

**3. GT247:** This platform caters to more sophisticated investors interested in derivatives trading, rounding out Purple Group’s offerings to cover a broad spectrum of investment needs.

In May 2023, Purple Group undertook a rights issue to raise R105 million, supported by over 27% of its shareholders. This funding strategy offered shareholders an opportunity to buy additional shares at a substantial discount, specifically 81c per share, which was 31.87% below the volume-weighted average price as of mid-May 2023.

Financial performance for the fiscal year ending 31st August 2023 showed a marginal revenue increase of 0.8%, though the company reported a headline loss of 2.05c per share, a downturn from the previous year's profit of 1.12c. Despite this loss, the net asset value (NAV) saw a growth of 6.3% to 40.8c per share. Notably, the client base expanded by 17.5%, with institutional client inflows up by an impressive 169.9%, pushing the assets managed across Purple Group’s platforms to R14.5 billion.

For the six-month period ending on 29th February 2024, the company's trading statement projected an improvement in headline earnings per share (HEPS), estimating a range between 0.74c to 0.82c, which contrasts with a loss of 0.84c in the prior comparable period. This anticipated turnaround suggests a positive trajectory in operational performance.

The shares of Purple Group are actively traded, with an average daily trading volume of around R400,000. The stock experienced a “double top” formation around 340c in early 2022, followed by a decline until early March 2024. Since then, the shares have been on an upward trend. Following our analysis, we recommended monitoring the 65-day exponentially smoothed moving average, which indicated a buying signal on 4th March 2024 at 66c. The share price has since increased to 70c, indicating a potential recovery and offering a possible entry point for investors considering the stock's recent performance and growth prospects.