Pick n Pay: Still a long way to go

Hinzugefügt: 2026-05-27

[00:00:03]You're listening to the Money Web Now podcast series with Simon Brown, live streamed every weekday at 6:30 a.m.

[00:00:16]It's Tuesday, 26th May. Today in 1805, Napoleon Baron was crowned King of Italy. I'm Simon Brown coming at you live and loud from the Money Web Global headquarters in Johannesburg, South Africa. On the show today, Fahimadier Momentum Securities pick and pay results. Lots I mean lots there. Well, the per big thing is that break even has been pushed out yet another year. It is Soji Salanki. He is from Abscib Africa fintech market. We've had a couple of bigish IPOs and new investments. Uh looking for some trends there. And then Fed Group, they got a 500 million rand funding from the IDC for renewable energy projects. Keen to dig into that.

[00:01:01]This podcast is brought to you by Stanlib Asset Management. Invest in more global opportunities through their partnership with JP Morgan Asset Management. Morning headlines. Money Web expectations grow for SA credit rating upgrades. This following Moody's rating upping its outlook on South Africa's fiscal position and business day's vehicle trade deficit with China and India hits 90 billion rand. Morning markets US was closed yesterday although we do have the futures trading around 3/4 of a percent higher this morning.

[00:01:36]The east is mostly red. Sydney down 6 of a percent. Tokyo just under half a percent down. Hong Kong, the exception after being closed yesterday, is up half a percent and 10 cent a little over half a percent down. Commodities all red gold futures 4,576 Brent 9791 platinum,964 palladium,46 the rand 1632 bitcoin 76,600 and top 40 opening call red 320 points or.3 of a percent lower.

[00:02:14]Money web now on the money also available on podcast >> trading now with female dear from momentum securities fea the the pick and pay results uh this full year numbers uh of course post these numbers they did another sale of uh box of shares that got them four odd billion rand in cash your sense around the numbers I mean break even is is is seemingly it's getting it's getting longer and longer the turnaround is proving tough Good morning, Simon. Good to be with you.

[00:02:46]Yes. So, I thought this was an interesting one because last week uh Thursday, we saw the initial trading statement guiding the fullear results and the market actually got quite excited. I mean, at one at one stage, the share price was up almost 14%, it noted an improvement in the headline loss position. Excellent performance from Boxer that came in above expectations reporting about 12% turnover growth. But then yesterday once the full results were released, we did see a pull back down almost 5%, I think the market just got more color on the numbers and and digested that and then actually realized that it wasn't as great as the the trading statement seemed to guide and uh that the position of that core pick and pay business still isn't exactly where it needs to be. If you take a closer look at the group numbers, turnover increased 3.4% 4% but that was actually largely driven by Boxer because the core pick and pay business segment actually still saw a decline of 1.6% the group trading profit fell 4.2% the trading margin declined to 1.4% and I think what was concerning is that the core pick and pay segment that they have been trying to turn around for such a long time is still not where it needs to be. It still has a long way to go.

[00:04:04]The trading loss there widened to 1 billion rand. So look, I think it is important to note that there were some impact uh some factors that impacted the result. There was a store reset program to dispose of some loss making stores.

[00:04:17]So that did have an impact.

[00:04:18]>> Uh if you look at the supermarkets like for like sales, it looked a bit more positive. They've introduced improved product ranges in fresh foods, cut back on wastage. They're trying to reduce the the staff costs and so forth. But it doesn't seem like it's enough. like you said, they've had to actually now uh delay the break even target of that pick and pay segment from FY28 to FY29.

[00:04:40]And last week, like you said, we saw Pick and Pay have to dispose of a further 12% stake in its best performing asset, Boxer, to just help turn around the struggling Pick and Pay segment. Um, so one does really need to question whether there is value now in selling down your highest performing asset to actually invest in an underperforming legacy business which is actually taking a lot longer to turn around.

[00:05:04]>> It is taking and and it's a great point.

[00:05:06]I mean Boxer was absolutely the the star of the show and and if you're buying Pick and Pay, I mean the numbers are basically saying you get Pick and Pay for free essentially buying Boxer. Is is that a a a fair strategy or is it still just if you like boxer buy boxer don't go there? I mean is it worth going the pick and pay route to try and get some cheap boxer?

[00:05:27]>> Yeah, it's it's exactly that and which is why I think people are seeing some value in pick and pay just because of that stake in boxer. Uh but yeah, you know the that stake in boxer is worth more than the entire pick and pay group.

[00:05:41]And I think it's important you're seeing that the market's assigning a negative value to the rest of that pick and pay business. And for me, you know, I don't think it's worth the risk of going through pick and pay because of the the negative drag that that core pick and pay business could have uh on the income coming from Boxer. I would rather just, you know, have a a clear entry directly into Boxer as an investor.

[00:06:04]>> Yeah. Take your point. If you like Boxer, buy Boxer. Keep it nice and simple. Femier Momentum Securities appreciate early morning time. And that's our poll today on LinkedIn. Pick and pay. Is the stock worth looking at?

[00:06:14]Is there potential? Are you buying it just for that boxer or the risks too high? Have your vote. Have your say.

[00:06:20]LinkedIn. Let your money weather the storms for Standib Asset Management.

[00:06:24]Invest in the Stanlib Global Select Fund, a diversified all weather equity portfolio submanaged by JP Morgan Asset Management.

[00:06:34]Money Web. Now on the money.

[00:06:37]>> I'm Chad with Adoji Shalen. He is head of fintech and banks investment banking origination at ABSA CIB. It is said you appreciate the time. African fintech I want to say on the rise maybe it's on the the rise. We had two fintech listings last year. Optasia local uh cash plus in Morocco. Certainly my sense is both showing sort of improved potential but also investor appetite. It shows confidence in in the sector, its ability to scale, its ability to create real liquidity events such as a listing.

[00:07:09]They were both big stories. Uh yes, that's correct. First of all, thank you for having me on um this uh discussion uh today. So yes, that's correct. Uh those two assets did come to public market uh in 2025.

[00:07:24]And essentially what you've seen is two scaled businesses that had previously been backed by private capital now exploring an exit for those investors.

[00:07:35]So one of the listings happened in South Africa, the GSC >> and the other in Morocco. Uh the other interesting thing you find is in terms of the nature of investors that came into both uh into both companies, it was a combination of domestic retail and institutional capital but also international investors. I'll say uh significantly more international investor participation on the GSSE listing um and on the Moro on the Moroccan side, you know, relatively more participation on the domestic side just given the nature of development of that market. Yeah. um as well. So just important differences to keep in mind but the main thing here is that skilled opportunities are essentially finding exit routes by African capital markets and that's a trend which is happening for large fintech companies and long may long may it last.

[00:08:28]>> Agreed. Long may it last. Are there potential you know more listings out there or or maybe other sort of corporate activity? I'm thinking maybe mergers and acquisitions and the like. I mean these are unlikely to be isolated events.

[00:08:40]>> That that that's correct. Certainly not isolated events. So if you take a step back, what you also just have to keep in mind is the quantum of capital that has been invested in African fintech companies over the last 10 years.

[00:08:54]>> The numbers we're talking about is north of $20 billion.

[00:08:58]>> Right? So from that perspective, it's only natural to expect that there are certain scaled opportunities now or should I say companies where entrepreneurs have built very successful businesses, profitable, growing, gaining market share and it's only natural for the investors that have backed them for all of these years to consider an exit an exit opportunity. So that's one thing. So from an exit perspective, yes, capital markets, but also M&A >> and uh from the M&A on the M&A perspective, that is certainly picking up as well. And South Africa unsurprisingly is leading the charts in terms of M&A activity in the fintech space in Africa. There's been significantly more activity where you're finding large incumbents players whether it's in banking, retail or even in the fintech space actually acquiring other technology companies uh on the continent. There's also to a limited extent some crossber activity uh but this is still intra Africa M&A.

[00:10:01]>> Um there's more limited international into Africa technology M&A deals happening. So key summary is that there's significantly more domestic incountry M&A happening to a more limited extent intra Africa M&A and to a much more extent international into Africa M&A on the tech side.

[00:10:22]>> Gotcha. Gotcha. And and what are the main sectors within African fintech? I mean my sense is payments. My sense is probably lending but I mean payments goes all the way back to the original the sort of empessa.

[00:10:34]>> So correct a combination of those two.

[00:10:36]So yes payments. Yes, credit. But the unique thing about Africa also is the nature of the business models that have been built within this segment are also quite unique and perhaps quite different from what you find in other developed markets. So that that also just means that as an investor looking to get a deal done in Africa, you actually need to make sure you work with advisers that really understand the nuances of the business models um that are quite unique in an African context. and and that's one of the the main areas where we spend a lot of our time guiding our clients.

[00:11:10]>> So, you know, there's just more nuances when it comes to Africa. You know, the number of countries, the variances in the business models. I mean, you've mentioned two big categories being payments and credit. But even underneath those two umbrellas, there's just so many unique business models that have been built, you know, within within those categories. Uh mobile money uh is also another large segment as well.

[00:11:33]large growing profitable businesses. Uh and I think for international investors, this is also an area where there's a lot of explaining that is perhaps required just to explain how unique these business models are in an African context. I I take your point around that and I'm thinking you know the US for example there's PayPal there's Venmo but but those are kind of like app-based whereas we've got mobile money we've got the impessive which was the USSD process around there there's ultimately the same outcome but a very different road of how we get there and how we've used sort of ingenuity to solve problems. Yeah, and you've you've hit the nail on the head and the reasons for those differences should not be surprising because when you look at um the developed market you're talking about like the United States, so smartphone penetration, banking penetration, ATM penetration extremely high. When you come to Africa, you know, the infrastructure for cashing cash out is actually not ATMs. I mean we do have ATMs don't get me wrong but you know the most scaled infrastructure for cash in cash out is actually agent networks that are typically owned by either telecoms companies or financial technology companies right uh and the the magnitude of difference in terms of number of ATMs per 100,000 adults in Africa maybe is like you know four to five ATMs for every 100,000 adults for an age for an for the agent network I'm talking you 20 to 30 agents >> for every 100,000 adults. So that's just a magnitude of difference when it comes to the cash in cash out infrastructure that you find in Africa vis um should I say for the agent network vis the bank ATM infrastructure. So given what I've just described and how important it is when it comes to digital payments you first of all need to be able to have the infrastructure to digitize cash >> and in Africa that is largely being done by the mobile money agent network. Um, but you're also finding out that how the customers then transact once money sits in that wallet has historically been very USSD based also because there's just been more 2G and 3G phones uh in the hands of African consumers. But that is changing. Okay. And this is where the long-term growth trajectory of Africa is actually quite exciting because as more people evolve from 2G and 3G USSD to more app based models. There's just more digital transactions that also continues to happen. As internet penetration continues to increase. Uh smartphones become cheaper. Internet costs get cheaper as well and organization rates also continue to improve. there's just a significant you know flywheel effect >> that actually helps to drive the growth across the entire ecosystem and you know that that's definitely the trend that we're finding happening across quite a number of African countries uh so far >> yeah absolutely it's that flywheel and as you said and it just gathers momentum we'll leave that there soji sh is a head of fintech banks investment banking origination at absa cib appreciate the time >> give you money smoother returns for standl asset management the Stain flexible income funds. Agile investment process preserves and grows capital in all markets.

[00:14:41]>> Money web now on the money. Chatting now with Rob Timus. He's a Fed Group chief commercial officer. Rob, appreciate the early morning time. Uh Fed Group just got a 500 million rand uh funding round from the IDC Industrial Development Corporation. this for your newly established uh renewables capital fund.

[00:15:03]My sense as a complete outsider sounds like a big deal for both IDC and for for Fed Group and I imagine for renewables in in South Africa as well. It it's a it's a good chunk of of cash for the space.

[00:15:15]>> Uh yes, thanks Simon. Good morning. Um yeah, I think you're you're spot on there. I think um raising sort of institutional capital um in this alternative asset space um is is tricky and getting to these these ticket sizes um is a lot of hard work. FE group's been doing this type of funding um for around 10 years specifically in the energy energy space. Um so it's not it's not really news to us but um it's great to have a partner like the IDC along with us. Um, and it really is our asset specialization and this experience that I speak to that that sort of allows institutional uh funders to come in and co-und um with us in a public private partnership.

[00:15:56]>> Yeah, it's a great point. I mean, this is, as you say, it's not new for for Fed Group. You've been in this space for for for some time. Is it fair to say I mean, you're essentially managing the fund.

[00:16:04]IDC really is around that that that long-term debt debt funding and and their ability to to to help in that regard.

[00:16:10]>> Exactly. So um as a catalyst funer um they they can come in and allow us um to to actually grow our funds. So to to use our capital to go and find projects, develop them out um to bring them down the risk curve um pull them together into portfolios um create SPVS like we've done for this one specifically for the IDC um and actually accelerate >> um deployment of capital into these specific areas and I guess that's the the IDC's mandate um quite clearly um and and as a co-founder that's what they're looking for. I think they're looking for um funders and people in the market that are able to do that for them um rather than trying to risk their capital. We um use our experience and >> and um and our specialists to to you know make it easier for them um to come into these types of projects which are you know so so desperately needed in in this country for infrastructure investment >> and and one of your key projects steel your flagship asset and this really is is is providing solar for a a a steel billet manufacturer steel hugely energy intensive also fairly cyclical but uh in in a sense taking it and saying it doesn't need to be the dirty energy. We can almost make well this becomes green steel in a in a sense because of the the solar energy.

[00:17:27]>> Yeah, correct 100%. I mean cooker steels is a is a steel recycler. I think um uh there's yeah a lot to be said about the recycling of of scrap scrap metal and steel in this country and and yes very very energy intensive. Um the project so far um which is in its second phase um is enough energy to put power over 1,500 homes. You know it's sort of 11,000 odd solar panels. It's a substantial amount of energy.

[00:17:53]>> Um and it's definitely um it's definitely a large project but it is um is a relatively small amount of their overall energy requirement for now. Um and we hope to to look to the second um or the third phase um to to substantially increase that that power plant and take them further to yeah to green steel effectively.

[00:18:12]>> Are we seeing a a funding gap from from from banks and I'm thinking sort of the you know we see a lot of these days around private credit both locally and and globally sort of stepping into the picture as as the more traditional banks I suppose step back in a sense. Are we seeing the same happening here locally?

[00:18:29]>> Yes, for sure. Um we know globally private credits um is one of the fastest growing asset classes. Um and and locally for sure um traditional lenders you know they they're retreating from sectors where there's a lot of specialized structuring um required and and a lot of long-term capital is needed. Um so this gap's evident definitely in in renewable energy but um related infrastructure as well as in um other industrial applications and and agriculture. Um and our approach is really to fund these real economy assets. It generates um long-term cash flows um and they sort of fit our mandates. It's like I said, we've been doing it for a while and we know it works and we know that understanding the underlying real assets gives you that predictability. It offers inflation protection.

[00:19:15]>> Yeah.

[00:19:15]>> Um it's much less exposed to short-term market volatility and I think if you if you have the expertise and the experience to structure these deals correctly, um why not? there is a is an opportunity for uh private capital providers.

[00:19:28]>> Yeah, absolutely. And it as you said, it's fairly predictable and and long-term cash flows and and and that is absolutely the attraction of it. Leave it there, Robus. He's a Fed Group chief commercial officer. Appreciate the early morning.

[00:19:43]That's it for the show today. This podcast is brought to you by Stanlib Asset Management. Invest in more certainty to navigate volatile market conditions. We're live every weekday morning. the money web and the app 6:30 a.m. podcast just after 7. Thanks to my team Eddie Subusa to you for listening my guests for their time. My name is Simon Brown. This is Money Web Now.

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