SHARE WATCH: October notable results

Cape Town - Overberg Asset Management analyst Kirk Swart looks at notable results for the month of October 2016 in this week's five shares to watch.

Clicks [JSE:CLS]

With Dis-Chem announcing their listing on the JSE soon, Clicks will have a listed rival to compete with. The company released its year-end results to the end of August recently which saw headline earnings per share (Heps) grow by 14.2% with dividends per share (DPS) growing by 15.7%. These results are commendable in a tough trading environment.

READ: Dis-Chem plans JSE listing as it doubles pharmacies

However, total group sales only increased by 9.5%, of which 4% - 5% can be attributable to inflation and operating margin at 6.5%. For a share trading on a price to earnings ratio of 26, these numbers are a bit stretched.

Dis-Chem might prove a better alternative for retail investors; if they can get some scrip.

Capitec [JSE:CPI]

Capitec has continued its growth in 2016 almost hitting R700 per share in October. The company released its results for the first half of the 2017 financial year. Fully diluted Heps was up 19% to R15.17 and dividends was up 20% to R4.50 per share. Income from operations was up 18% while costs only went up 13%.

READ: Disruptive Capitec, rated the world’s best bank, now moving into credit cards, insurance

Priced on a price earnings ratio of 22, the company doesn't seem that expensive if one considers the growth in numbers. Capitec also has a lot of products it can still launch to grow market share and revenue. Client numbers keep growing which shows in the net transaction fee income that was up 31%.

Pick n Pay [JSE:PIK]

Pick n Pay Stores Limited gave a 28-week update up to the 28 August 2016. The company reported Heps growth of 22.2% and a 23.6% growth in dividends. The results look very good if compared to other food and clothing retailers. It should be noted that Pick n Pay is coming from a low base and are seeing the efforts of Richard Brasher's cost cutting coming through.

READ: Pick n Pay profit rises as discounts lure shoppers

If one looks at the results a bit deeper, one will see that turnover growth was only 3.5% with internal food inflation at 5.5%. This equals real sales growth of negative 2%. It is clear that the cost cutting efforts of Pick n Pay are working. However, trading at 27, one expects sales growth to be better.

PSG Holdings [JSE:PSG]

PSG released its results for the first half of the 2017 financial year. Heps increased by 16% to R4.12 and NAV per share increased by 10% to R206.01. DPS increased by 25% to R1.25. The biggest driver of PSG's results was Curro that grew earnings by 62%. The other holdings that contributed to earnings were Zeder (5%), PSG Konsult (14%) and Capitec (19%).

READ: PSG deems interim results satisfactory

PSG is still a business that is growth orientated. It has R1.7bn of cash available for future acquisitions and investments. At Zeder, the management fee PSG used to charge will no longer apply. All running costs will now be paid by Zeder. In return, PSG increased its stake in Zeder to 42%.

Famous Brands [JSE:FBR]

Despite the increased competition and a struggling domestic economy, Famous Brands increased Heps for the six months ending 31 August 2016 by 12%. Revenue was up 22.7% and like for like sales growth increased by 9.6%.

READ: Famous Brands profits soar amid M&A spree

The majority of Famous Brands' revenue is still generated in South Africa. The group is trying to diversify its revenue stream with exposure to the UK market through its acquisition of Gourmet Burger.

Famous Brands is a good company with excellent management. Despite the tough trading conditions in South Africa, management were still been able to deliver commendable results.

* Kirk Swart is an analyst at Overberg Asset Management, an Authorised Financial Services Provider (No 783) which specialises in the private management of local and global discretionary portfolios as well as pension products.

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