Our Research

Will the rapid growth of cheaper Chinese vehicles depress used-vehicle resale values and, consequently, increase credit risk for banks in South Africa? We analysed used vehicles for sale on the two most popular marketplaces in SA and assessed recoverable values after one to six years. We compared the recoverable values to the outstanding debt on those cars to determine if the debt was sufficiently covered by the recovery values. Our analysis was based on an extensive range of 54 000 vehicles.

Key points from Capitec's (CPI) 1H27 results presentation

Diluted HEPS increased by 18.3% y-y to 8 219cps (1H26: 6 945cps), compared to consensus of 8 335cps. Net income before impairments increased by 14.4% y-y to R28 839m, with NII growth of 7.4% y-y and NIR growth of 20.6% y-y. Credit impairments increased by 21.4% y-y, while credit impairment-to-net income increased from 18.8% to 19.9%. This was driven by higher FLI provision for ECL in Personal Banking reflecting increased economic uncertainty since February 2026, as well as 175% y-y growth in the Business Banking unsecured scored loan book. Operating costs increased by 4.7% y-y, while operating cost-to-income decreased from 39.6% to 36.3%. PBT margin up by 230bps to 43.8%. Dividend of 3 110cps (1H26: 2 620cps). Credit loss ratio increased from 7.9% to 8.4%. Net interest margin decreased from 9.77% to 9.52%. Return on equity of 31.0% (1H26: 31.0%). Gross loans and advances growth of 13.1% y-y (1H26: 12.4% y-y).

The Retailer Liaison Committee (RLC) released its Market Sales Report for August 2026. Its members’ SA sales accounted for 45.0% of total SA clothing sales. Total Apparel, Homeware and Beauty sales slowed by 0.7% y-y in August (July: 3.7% y-y), with a 6-month rolling growth slowing to 1.7% y-y and a 12-month rolling sales growth of 2.1% y-y. Total SA sales grew 0.1% y-y in August, while Botswana, Lesotho, Namibia & eSwatini (BLNE) sales grew 6.6% y-y. The Rest of Africa sales grew 6.0% y-y. Apparel contracted slightly in August, down 0.2% y-y. Womenswear sales fell 0.2% y-y, with menswear sales up 2.8% y-y. Kids & baby sales fell by a sharp 3.3% y-y. Beauty sales slowed to 2.3% y-y in August (July: 9.0% y-y). Homeware sales grew 4.2% y-y in August (July: 4.8% y-y). Total volumes contracted by 1.4% y-y in August (July: 3.2% y-y). Product inflation surged to 2.1% for August (July: 0.5%) The average unit price for the RLC was R128.59 in August (compared to R125.93 in August 2025).

We think management’s strategy to reorient the group around Foods with selected adjacent categories is opportune and a natural consequence of the long-term evolution of the WHL SA business. We track the long-term development of Food and FBH, noting the key inflection points in its recent history. We highlight several benefits of the new shift, including reduced exposure to a highly competitive, low-growth apparel market in SA, less markdown risk in fashion apparel, and more stable top-line growth and margins in Food. We think the adjacencies that complement the Food core can provide exciting growth drivers, as the current adjacencies of home and beauty can be extended to health (including pharmacy) and relevant general merchandise. We argue that traditional retail is transforming globally, with interesting category mixes that excite consumers and help retailers remain relevant against the threat of online-only retailers. WHL SA’s carefully curated adjacencies could strengthen its destination-shop status with customers and provide defensive capabilities against online retailers like Shein and Temu.

Cashbuild delivered a mixed performance in FY26, with solid top-line growth and a slight margin uplift. However, operating costs continue to put pressure on the group’s profitability, and the loss on disposal of the Malawian subsidiary resulted in weaker operating profit for the period. Despite the poorer performance from a profitability standpoint, we highlight that CSB did improve its market position in 2H26, boosting sales by 10.6% y-y in the last six months, gaining c. 80bps of market share. Even if we exclude the acquisition of the three Amper Alles stores, the group still managed to expand sales by 9.7% y-y in 2H26, ahead of the market, which grew by just 1.5% y-y in the period.

Key points from our engagement with City Lodge Hotels' (CLH) management (CEO: Andrew Widegger and CFO: Dhanisha Nathoo)

Diluted HEPS decreased by 5.7% y-y to 168.6cps (FY25: 178.8cps). Revenue declined by 1.8% y-y to R6 588m, driven by reduced consumer confidence, which was mainly felt in the publishing and printing operations (-6.4% y-y in revenue). Total expenses decreased by 1.2% y-y with expense-to-revenue of 89.5% (FY25: 89.0%). Operating margin down by 20bps to 7.5%. Impacted by increased utility costs and higher diesel prices, which increased distribution costs. Dividend of 80.0cps (FY25: 70.0cps). Cashflow from operations declined from R910m to R824m. Net cash increased from R3 025m to R3 073m. Capex increased to R400m (FY25: R321m). The closure of the Mpact mill in Spring is now complete, and supply has been migrated to CAT’s overseas sources without interruption. R38.3m in plant impairment costs mainly relates to the Durban commercial printing plant that has reduced tonnages and cash-generating ability, and the inoperative battery storage system at CAT’s original pilot site.

Diluted HEPS up 3.9% y-y to 34.4cps (FY25: 33.1cps). Adjusted DHEPS up 20.2% y-y to 41.6cps (FY25: 34.6cps), which excludes unrealised losses on forex of R28.7m (FY25: R7.9m) and the impairment of the deferred tax assets of R9.5m (FY25: R13.8m). Turnover increased by 10.3% y-y to R2.2bn. Expenses increased by 10.1% y-y with expense-to-sales decreasing slightly from 81.1% to 81.0%. OPM decreased from 22.3% to 20.4%. Dividend of 19.0cps (FY25: 15.0cps). Cash generated from operating activities up 25.9% y-y to R417m. Average occupancy up from 56% to 58%. 1H26 occupancy rate of 62%, 2H26 occupancies negatively impacted by global tensions and fuel price increases. Average room rate increases of 7% y-y (FY25: 7% y-y). 1H26 room rate increase of 4% y-y. Other income reduced due to lower profits on disposals of R20.8m (FY25: R42.2m).

Key points from FirstRand's (FSR) FY26 results presentation

Italtile (ITE) delivered another consecutive period of weak results, as revenue contracted 1.2% y-y. The Retail segment continues to struggle with poor demand, especially in the CTM brand. Management decided to franchise four stores, which structurally lowered revenue generated by the CTM brand. Italtile Retail may find it difficult to maintain positive like-for-like growth in FY27, as it had a strong year, especially in the special projects division. TopT’s performance was relatively flat, but this will be the focus of group expansion in FY27, with five net stores planned to open. Management would like to significantly accelerate the rollout of TopT but acknowledges the difficulty of finding suitable site locations.

SHP delivered strong results for FY26, although its top-line growth is moderating. While it continued to gain market share, its trading density growth was weak. Management contends that trading density is an outdated metric and not appropriate for omni-channel retailing. However, we believe combined online and in-store densities are still insightful, and rapid online growth should improve combined trading density. Sixty60 sales rose 34.7% y-y to R25.5bn, and now account for 24.2% of Checkers’ sales. This service incurs additional costs, which are reflected in its staff complement of 19 939 (11.4% of SHP group employees). While Sixty60's efficiency has improved, its sales per staff of R1.3m still lag SHP group sales per staff of R1.6m. Nevertheless, SHP’s strong results show it has offset these costs with new business. SHP’s cash surged to R12.9bn, and we are concerned that excess cash could lead to poor capital allocation. For example, we think the Vida e Caffe acquisition does not fit well with SHP's high-volume, low-staff-cost model.