We believe the underlying dynamics which prompted previous MSM management to adopt the food retail strategy have not changed. We think the former Masscash wholesale business is ex-growth and low margin, and its combination with Makro could dilute Massmart Wholesale’s profitability. Despite the positive assessment of Game’s progress by management, we think Game’s critical challenge will be to deliver acceptable returns. There seems to be a mismatch between its gross margin and the type of product it sells. MSM have the highest debt to equity ratio in the retail sector, and over the past three years its equity halved. The decline in MSM’s equity may require a recapitalisation of c. R3.0bn to lower its debt to equity ratio to 1.0x.