Coronation says it took advantage of the weak domestic macroeconomic conditions in South Africa last year to buy consumer-facing stocks on the cheap, with its eyes on long-term value embedded in the groups.
“We increased our exposure to Shoprite, Spar, Pepkor and Woolworths through this period. While trading remains tough and low inflation has seen anaemic topline growth, we believe the very low levels of inflation driven by the declining oil price and strong rand will result in further interest rate cuts in 2026, which should be supportive for domestic demand,” portfolio managers said in the review of the company’s Top 20 Fund’s fourth quarter performance.
Shoprite’s share price had an underwhelming 2025, with the stock down just less than 9% in the period, while Pepkor is up just 1.94% in the period and Woolworths inched up 3%.
Spar is the worst performing of the lot, having shed 34% of its value over the past year.
Despite its muted share price, Shoprite had a stellar year, with sales surpassing R150bn for the first time in the group’s history and diluted earnings surging 15.8% in the year to end-September.
Pepkor, which has breached the R100bn market value mark, is eyeing the lucrative banking space this year after receiving a banking licence last year.
Pepkor aims to marshal its unrivalled retail footprint of more than 5,000 stores in the country, servicing more than 30-million clients, to launch a full assault on South Africa’s banking sector with an audacious foray into the crowded banking sector.
Pepkor’s retail network is bigger than the branch networks of Capitec, Standard Bank, Absa and Nedbank combined.
Pepkor also has more than 10-million customers across its digital ecosystem, giving it more options in the digitally dominated banking sector.
Standard Bank impresses
Coronation said it also maintained its exposure to the South African banks “with particular high exposure to Standard Bank given its strong African growth profile”.
Standard Bank has over the years been a consistent dividend payer.
“We have also added to our position in Sanlam given its relatively attractive valuation and exposure to growth markets in Africa and India. The Africa theme is getting strong support from the high commodity prices,” Coronation said.
“While lower oil means weakness for some markets, improved reforms in key markets like Nigeria, and strong metal prices for an economy like Ghana, have seen significantly higher growth coming through in these regions.
“In addition, Sanlam has undertaken a number of restructuring and investment initiatives in its Indian operations to focus on its life and insurance operations in a fast-growing and underpenetrated market.”
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