TFG’s 1H22 results reflect the improving trading conditions, with TFG Africa’s comparable GPM in line with pre-Covid levels. The lower profitability of TFG Credit weighs on TFG Africa, and we think that sustained low interest rate levels may inhibit credit granting which could limit sales growth. TFG London is likely to remain a smaller business than before the pandemic. The shift from concessions should boost GPM though and we think there is still significant room for improvement in its GPM. TFG Australia performed well despite the periodic lockdowns, but the high space growth is surprising considering the difficult market conditions. TFG Design and Manufacturing has benefited substantially from government funding in previous years, and National Treasury has allocated R900m through the Growth Programme for the CTFL sector for the next 12 months. TFG’s local merchandise chain could benefit significantly from this funding.
