By Chantal Marx, Pritu Makan, Sithembile Bopela, Zimele Mbanjwa, Motheo Tlhagale, Khumbulani Kunene
Datatec (DTC)
Datatec boasts leading Information and Communication Technology (ICT) distribution capabilities as well as integration and management services through three core divisions, operating across 50 international markets. Westcon Comstor is the hardware distribution arm, specialising in cybersecurity, networking and cloud, with multinational vendor partnerships including Cisco, Palo Alto Networks, CrowdStrike, Microsoft and AWS. Logicalis, split between International and Latin America, designs, deploys and manages hybrid cloud, connectivity, workplace and security solutions. A newer lever, Mason Advisory, is a UK tech consultancy business that offers upstream advisory access into large transformation programmes.
The primary risks to Datatec's outlook are its reliance on a few key suppliers, which could pressure commercial terms and its large presence in the low-growth European market. The company mitigates these risks through its broad certifications, global scale, increasing focus on higher-value services and renewals and good growth in the US and Asia Pacific region.
On a 6.3 times forward PE, the stock is trading on a wider discount to peers and its long-term historic rating, complimented by an attractive forward dividend yield of 7.8%.
Optasia (OPA)
Optasia is a global fintech firm that recently listed on the Johannesburg Stock Exchange (JSE). The group leverages its AI-driven platform to help mobile operators and mobile wallet providers offer nano loans that are embedded directly into the mobile services customers already use, for instance, airtime advances or small cash advances they can borrow instantly through their phones. Optasia underwrites the customers' default risk and provides bank guarantees, which for its partners (typically mobile telecommunications companies), provides the benefit of earning incremental revenue from lending without balance sheet exposure.
Over the last three financial years, Optasia has grown its revenue and adjusted EBITDA at a compounded annual growth rate (CAGR) of 10% and 13%, respectively. In its most recent half-year results, the group delivered top-line growth of 90% y/y, driven by strong growth in MFS as the offering ramped up. Revenue is forecast to grow by 50% in FY25, 25% in FY26 and low- to mid- twenties growth over the medium term.
The risk embedded in this business is regarded as quite high, with the success of the growth strategy hinging on leadership's ability to manage defaults, currency swings, and compliance complexities and costs.
We applied a variety of valuation techniques and settled at a fair value price of R25.40, implying potential upside of ~27% from spot. Our forecasts suggest a blended 12-month forward PE of 13.6 times, which seems undemanding in the context of Optasia's expected growth profile.
Afrimat (AFT)
Since its inception, Afrimat has applied a diversification strategy that has seen it grow through acquisitions and evolve into a multi- commodity, mid-tier mining and materials company. The group produces and supplies construction materials, iron ore, anthracite and other minerals. The company's Contract Mining Services also offers full pit-through-port solutions to mining, construction and quarry industries throughout South Africa. The company is a serial acquirer, with the latest acquisition of building materials company, Lafarge South Africa, being the largest in the company's history.
The 1H26 outcome gave us further confidence that the company can stage a solid earnings recovery medium term off a very compromised FY25 base. After taking on debt to purchase Lafarge, we forecast that the company should be in a net cash position in the next three years. Moreover, in the long term, Afrimat presents a lot of optionality, particularly in its Future Facing metals business, not currently included in our forecasts.
Based on our analysis and using conservative estimates, we see significant upside in the Afrimat share price over the medium term.
Sun International (SUI)
Sun International's operations include resorts, luxury hotels and casinos in South Africa, Zambia, Botswana, Namibia, Lesotho, Nigeria, and Eswatini. Locally, the group's best-known operation is the Sun City resort while its gaming interests include prominent casinos such as Time Square, Grand West Casino, Carnival City and the Wild Coast Sun.
Sun International remains well-positioned for sustainable growth, supported by the optimisation of urban casinos, strong momentum in digital conversion for Sunbet, selective expansion in Sun Slots, and the usual seasonal rebound in resorts and hotels. The group also remains open to selective acquisitions in online gaming to enhance scale, geographic diversification and access to technology while also cleaning up the existing portfolio and allocating resources to strategic growth areas.
In terms of the regulatory environment and online gambling specifically, the group continues to advocate for a balanced framework that aligns the interests of operators, government, and consumers. Well-calibrated regulation is the most effective safeguard against the proliferation of illegal gambling and will be net positive for responsible and established players like Sun International.
Sun International is trading on a forward PE of 6.8 times, which is a discount to both its peer group and long-term average. The company also offers an attractive dividend yield of 10.8%.
Premier Group (PMR))
Premier Group began in 1820, evolving from a single flour mill into one of South Africa's largest and most diversified fast-moving consumer goods (FMCG) companies. Today, Premier operates across milling, baking, groceries, home and personal care, and sugar confectionery, with a footprint extending into Eswatini, Lesotho, Mozambique, and the United Kingdom. Its portfolio includes iconic brands such as Blue Ribbon (bread), Manhattan (confectionery), and Lil-Lets and Dove Cotton (home and personal care).
Premier's interim results for the six months ended 30 September were robust, with revenue up 6.4% and EBITDA rising 13.6% to R1.3 billion, with ongoing operational efficiency gains supporting margin expansion. Good cash generation translated into lower debt levels and finance cost savings that further complimented the bottom-line result.
Management's outlook was focused on sustaining the momentum achieved in the first half, with particular emphasis on scaling operations and maximising throughput as new capacity comes online in 2H26. The RFG transaction is expected to be earnings enhancing but is still subject to approval by RFG shareholders, and approval by competition authorities. Management is confident in the combination being given the go ahead by 31 March next year.
Premier Group is trading on a forward PE of 14.1 times - trading more or less in-line with the larger, more diversified peers in the sector.
