Our opinion on the current state of PURPLE(PPE)

Purple Group (PPE) operates as a dynamic trading platform and asset management company focused predominantly on the private investor market in South Africa. The company stands out for offering the lowest trading fees on the Johannesburg Stock Exchange (JSE), making it a compelling choice for budget-conscious investors. Its operational model is divided into three primary segments:

1. **Easy Equities**: This division democratizes investing by allowing the purchase of fractional shares at exceptionally low costs. For example, purchasing R100 worth of shares costs just 64c, making it accessible even for those with minimal investment capital. This platform has proven especially popular among first-time investors, with 95% of its accounts belonging to newcomers and a robust active investor base of 150,000.

2. **Emperor Asset Management**: This segment manages funds on behalf of clients, providing tailored investment solutions and strategies to maximize returns.

3. **GT247**: Serving as a derivatives trading platform, GT247 caters to more sophisticated investors interested in leveraging derivatives to speculate on price movements or hedge existing investment positions.

On the financial front, Purple Group successfully finalized a rights issue on 18th May 2023, raising R105 million with the backing of over 27% of its shareholders. The terms of the issue offered shareholders 10.20567 new shares for every 100 shares held at a price of 81c each, representing a 31.87% discount to the volume-weighted average price as of the week ending 16th May 2023.

For the six-month period ending 29th February 2024, Purple Group reported a remarkable revenue increase of 29.3% and a shift in headline earnings per share (HEPS) from a loss of 0.84c to a gain of 0.78c. This positive turnaround underscores the company’s resilience and the growing trust among its client base, even amid challenging economic conditions.

Purple Group’s shares are actively traded, with an average daily turnover of around R400,000. After experiencing a "double top" formation peaking around 340c in early 2022, the share price suffered a decline but has shown signs of recovery since early March 2024. Following our investment strategy advice, the stock broke through its 65-day exponentially smoothed moving average on 4th March 2024 at 66c and has since advanced to 90c.

Given the recent performance improvements and strategic initiatives, we see significant upside potential for Purple Group. The company's innovative approach to investing, combined with its ability to adapt to market demands and maintain high service levels, positions it well for continued growth and makes it an attractive investment prospect in the South African financial services sector.