Shoprite (SHP): Canary in the Angolan coal mine

While SHP management interprets the daily sold-out stores in Angola as evidence of it gaining traction and building strong brand equity, we make the case that this abnormal consumer behaviour may be warning signs of a potential devaluation of the kwanza. We note the similarities to the consumer behaviour in Zimbabwe before its currency collapse. We quantify the potential impact of a devaluation of the kwanza, estimating that Angola accounts for 20% of non-SA supermarket sales. In addition, we think SHP’s extensive non-SA asset base may be disproportionately invested in Angola, which is also exposed to this risk.