Our opinion on the current state of SPG

Super Group, an expansive international logistics entity, specializes in providing transportation solutions to the industrial sector. The company's strategic decision to not distribute dividends but instead focus on share buybacks and investments in both organic and acquisitive growth has underscored its financial and operational strategy. This approach, coupled with a deliberate effort to diversify its operations beyond South Africa, has proven beneficial, with over half of its operating profit now emanating from international sources. This international diversification strategy has notably mitigated the company's exposure to the fluctuating strength of the rand and the challenging economic conditions prevailing in South Africa.

The impact of civil unrest posed a significant challenge to Super Group, with estimated losses reaching up to R100m. Despite these adversities, Super Group has consistently demonstrated its capacity to generate strong free cash flows, a testament to its profitability and operational resilience.

For the fiscal year ending on 30th June 2023, Super Group reported a commendable 30.6% increase in revenue and a 23.3% rise in headline earnings per share (HEPS). Furthermore, the company's net asset value (NAV) saw a significant increase of 20.5% to 4627c per share. Reflecting on its performance since 2019, the company highlighted a 63% increase in revenue and a 126% surge in EBITDA, with profit before tax and earnings per share increasing by 32% and 31%, respectively. This performance underscores Super Group's robust growth trajectory and financial health.

However, a trading statement for the six months ending on 31st December 2023 indicated an anticipated 16.2% decline in HEPS. Challenges cited include operational difficulties within the Southern African Supply Chain business, particularly regarding trading volumes and inefficiencies at South African ports and border crossings.

Amid these challenges, Super Group's strategic acquisition of a 78.82% stake in the UK's CBW Group for GBP30.3 million (approximately R700 million) in July 2023 illustrates the company's ongoing commitment to expanding its global footprint and leveraging international market opportunities.

With the current share price standing at 2534c and a price-to-earnings (P:E) ratio of 5.4, Super Group presents itself as reasonably valued. The share has found strong support at around 2500c, suggesting potential for an upward trajectory. Given its diversified operational base, strong financial performance, and strategic international expansions, Super Group remains an attractive proposition for investors looking for exposure to the logistics and transportation sector, both locally and internationally.