Shoprite Holdings Limited

Analyst thesis 

Our recommendation is based on:

• Valuations are subdued from an EV/EBITDA and P:E perspective.
• SHP’s low value proposition, in keeping pricing inflation lower than general food and non-alcoholic inflation, positions it to continue with its momentum to gain market share.
• Checkers Sixty60 continues to dominate the grocery delivery space albeit growing competition (Woolies Dash, Pick n Pay ASAP!, Zulzi, etc). 
• It’s a stable growing business with a hold across LSM bands from its Shoprite & Usave formats to Checkers and Checkers Hyper stores. 
• SHP is well-positioned to benefit further as consumers experience easing pressure from stabilising inflation and SARB interest rate cuts.