by Chantal Marx, Pritu Makan, Sithembile Bopela, Zimele Mbanjwa, Motheo Tlhagale, Khumbulani Kunene
Aspen (APN)
Aspen is a global specialty and branded multinational pharmaceutical company with a presence in both emerging and developed markets. Aspen focuses on marketing and manufacturing a broad range of branded medicines and domestic brands covering both the hospital and consumer markets.
Solid operational progress in both the Commercial Pharmaceuticals (Injectables, OTC and Prescription) and Manufacturing businesses supports a recovery in FY26 and beyond. The group has and continues to build a differentiated portfolio of relevant intellectual property (IP), creating value through complex manufacturing capabilities and enabling access through its globally integrated supply chain, providing high geographic diversity. Its market positioning is focused on opportunities presented by emerging markets, balanced with presence in more established, stable developed markets.
Aspen is trading on a forward PE of ~7.7 times, which is below its five-year average and peer group average.
Pepkor (PPH)
Pepkor is a leading non-grocery retailer in South Africa with the largest retail store network in Southern Africa. The company offers a wide range of services across several categories including Apparel and Footwear, and Electronics and Appliances. While most of its operations are in South Africa, the company also operates in other African countries and Brazil. Pepkor owns and operates several household names including PEP, Ackermans, Bradlows, Rochester, Incredible Connection, HiFi Corporation and Tekkie Town.
Half-year results to the end of March revealed a strong and dynamic growth story, driven by operational efficiency, strategic expansion in credit, and a broadening revenue base. Cash generation was strong, despite a continued increase in inventories (mainly to support growth) and the financial position remained solid.
For the year ended 30 September, management recently confirmed strong results are on the cards, with double-digit revenue growth and a notable improvement in headline earnings guided for in a trading statement. The group's retail operations outperformed the broader market despite a challenging macroeconomic backdrop and intense competition, underscoring the strength of Pepkor's value proposition and operational execution. Also impressive was the performance of the Fintech segment, which posted over 30% revenue growth.
Pepkor is trading at a forward PE of 13.7 times, which looks fair relative to its own long-term average rating and is at a premium to peers. We believe this can be justified by the company's solid fundamentals and superior growth outlook.
Bidcorp (BID)
Bidcorp is a market-leading food service product distributor across several geographies including the United Kingdom, Europe, Middle East, South America, the Asia-Pacific region, and South Africa. The company's business units operate across the food and ingredient manufacturing sectors, such as catering, hospitality, leisure, baked products, poultry, meat, seafood, and processing. The strategy is to grow organically in existing regions and acquisitively in new ones, with improvements in the customer mix and value add opportunities providing further upside potential.
The outlook remains positive for the balance of FY26, despite the ever-present macro uncertainties, and management remains confident that the group will continue to deliver real growth. Bolt-on acquisition opportunities continue to be pursued; however, management remains disciplined and patient in converting the right opportunities at the right price - the focus is currently on integrating recent acquisitions to realise their growth potential and relevant synergistic benefits.
The company remains financially strong, with relatively low levels of gearing and a robust business model with solid diversification and defensive characteristics. Bidcorp is trading on a forward PE of 15 times, which is still below its long- term average of 18.6 times.
Shoprite (SHP)
Shoprite Holdings Limited is Africa's largest food retailer and offers quality products and exceptional convenience to millions of customers across the continent. The group operates a diverse portfolio of over 3 400 stores under trusted brands such as Shoprite, Checkers, Usave, LiquorShop, and several specialty businesses. With a robust supply chain and market-leading loyalty programme, the group serves more than 30 million customers annually, and maintains a strong focus on affordability, innovation, and omnichannel retail including the market-leading Sixty60 on-demand delivery service.
In 1Q26, Shoprite reported group sales growth of 8.0% y/y, reflecting even further market share gains in its core South African supermarket operations. The growth rate was particularly impressive in light of a notable slowdown in selling price inflation. The group's multi-facetted strategy that combines aggressive store expansion and the inclusion of specialty outlets such as Petshop Science and Uniq clothing, ensure relevance across diverse consumer segments. Digital transformation also remains central, with the market-leading Sixty60 positioning the group as an omnichannel leader going forward. We expect further earnings growth to be underpinned by an improved macro environment and increased consumption as lower inflation and interest rates should yield higher disposable income in the near-to-medium term.
Shoprite's share price has underperformed the broader market despite continued strong earnings growth. The stock continues to appear attractively valued compared to its long-term average rating.
Clicks (CLS)
Clicks Group is a health and beauty focused retail and supply group. Through market-leading retail brands, Clicks, Sorbet, Claires and The Body Shop, the group has hundreds of stores across southern Africa. United Pharmaceutical Distributors (UPD) provides distribution capability for the group's healthcare strategy and has close to a third of market share in private pharmaceutical wholesale in South Africa.
For the year ended 31 August, the group delivered a solid set of results, with double-digit growth in both diluted HEPS and dividends, and a notable improvement in the trading margin. The group's defensive positioning in health and beauty, combined with disciplined cost management and ongoing investment in private label, underpinned its ability to outperform in a constrained consumer environment. Retail turnover growth was solid, particularly in front shop health, baby, and beauty categories, while the distribution segment managed to grow despite margin pressure from hospital genericisation. Management expressed confidence in the group's medium-term prospects, citing improving macroeconomic indicators but acknowledging that consumer spending remains under pressure.
Trading on a forward PE of 23.8 times, the valuation appears reasonable in the context of Clicks' long-term multiples and consistent delivery. We think this stock could be a key beneficiary of improved offshore flows into the local equity market.
