Our opinion on the current state of PPH

Pepkor Holdings (Pep) (PPH), previously known as Pep, is 71,01% owned by Steinhoff International. With the collapse of the Steinhoff group following admissions of "accounting irregularities", the directors of Pep decided to change their name back to Pepkor Holdings to avoid negative publicity. The group includes Ackermans, PEP Stores and Bradlows and HiFi Corporation. Since the problem began in December 2017, and with the COVID-19 pandemic the share price fell as low as R10 per share in May 2020. Over the next year the share staged a remarkable recovery, more than doubling. The company raised R1,9bn in an accelerated book-build. The proceeds have been used to reduce debt as a precautionary measure. On 3rd February 2022 the company announced that acquisition of 87% of the Brazilian clothing retailer Avenida. On 13th April 2022 the company announced that its Isipingo distribution center had suffered significant damage as a result of the flooding in the Natal area and had to be temporarily closed. The company has adequate insurance to cover the damage. In its results for the year to 30th September 2023 the company reported revenue up 7,7% and headline earnings per share (HEPS) down 8,2%. The company's net asset value (NAV) fell 6% to 1604,9c per share. The company said, "Trading improved during the second half of the year, supported by a 53rd trading week in the group's South Africa-based clothing and general merchandise retail brands. Market share gains were achieved in key product categories. The lost trading hours more than doubled this year, reaching 845 000 hours, and diesel costs surged by 69% to R141 million for the year. The group has bolstered its operational resilience, with 84% of the store base now equipped with alternative power sources". In an update on the 3 months to 31st December 2023 the company reported revenue up 7,2%. The company said, "On a 3-, 6-, and 12-month rolling basis PEP gained market share in key categories including babies, kids, school and home." Technically, the share is in a strong new upward trend and should be watched closely.