Accelerate exits another property – and at a modest discount to NAV (JSE: APF)

I remain happily long

Accelerate Property Fund is such a beautiful example of the type of dislocations that can happen in the market. I’m up 46% in this counter thanks to the gap between net asset value (NAV) per share and the share price closing over time. It hasn’t even taken that long to happen, as I waited until the release of the Portside disposal circular last year before I bought.

There’s further good news from the company in the form of the disposal of the Bosveld Bela Bela Shopping Centre for R88 million. The book value is R95 million. Sure, they need to pay commission of 3%, but that’s a discount of just 7.4% to the NAV (before fees). When a share is trading at a vast discount to NAV, a disposal like this does a wonderful job of turning uncertain NAV (property valuations) into certain NAV (cash on the balance sheet).

The disposal yield is around 8.6%, so they achieved a solid price for the sale.

Naturally, the proceeds will be used to reduce debt.

Another important point is that shareholders won’t be asked to vote on the transaction, as this is a Category 2 transaction.

The share price closed flat on the day despite this news. Currently trading at its 52-week high, more investors need to get involved here for the share price to be pushed higher. I’m confident that they will come.

Double-digit HEPS growth expected at AVI (JSE: AVI)

This is despite at least one ugly duckling in the group

AVI is a very good business in the world of branded food and beverages. They do particularly well in snacks as well. And with their I&J business, they have a household name in the seafood space – even if Mother Nature (and catch rates) doesn’t always play along.

Alas, they also have some segments that are like barnacles on their boats. Barnacles get removed because they cause damage and reduce speed. The same fate should befall segments like Footwear and Apparel, and especially Personal Care, where AVI is playing in spaces in which I don’t believe they have a right to win.

For example, the Food and Beverage part of the business (which has three sub-segments) contributed 82% of revenue in the six months to December 2025. Revenue in this area increased by an appealing 6%.

Digging deeper, we find I&J as the growth highlight, up 9.4% thanks to better catch rates and increased capacity from a vessel commissioned in February 2025. Abalone continued to struggle though, with weak selling prices and poor demand in Asia. Snackworks put in a solid performance with 5.9% growth. People will never get tired of Bakers Choice Assorted, no matter how much we care about sugar consumption! Entyce Beverages lagged with 4.5% growth, mainly due to coffee volumes amid higher prices – to the benefit of better tea demand.

As for Fashion Brands (with two sub-segments and an 18% contribution to group revenue), their revenue was flat for the period. This is because Personal Care dropped by 7.2% and Footwear and Apparel was up 3.4%.

The Personal Care result is because of struggles in the deodorant body spray category. Unlike in AVI’s food businesses, they don’t have a strong brand there. In Footwear and Apparel, SPITZ is a brand that you’ll likely recognise, although this sector is a competitive bloodbath at the moment. Much of the latest growth was thanks to a weak base with supply challenges.

Combine these performances and you get group revenue growth of 4.9%. But that’s enough of the revenue story – what about the rest?

Group gross profit margin improved thanks to margin management and the higher contribution from I&J. AVI is famous for cost management, so I’m not surprised to see that this revenue growth translated into higher operating margin.

Net finance costs were flat, with lower interest rates offset by increased average borrowing levels.

By the time we get to HEPS, we find growth of between 10.5% and 12.5%. This is a masterclass in both operating and financial leverage, with the earnings growth rate more than double the revenue growth rate of 4.9%.

Leverage is exactly what AVI is known for. I just wish they could deal with those barnacles!

The share price is up 4.2% in the past year, but the real story is the 16% increase over six months as momentum has picked up. It is trading very close to its 52-week high.

Lewis bucks the weak retail trend with a solid third quarter (JSE: LEW)

Positive sentiment towards the company will be strengthened by this update

After the year got off to a rough start in terms of local retail updates, Lewis threw the market a bone in the form of a SENS announcement detailing the performance for the nine months to December 2025. It looks as though the latest quarter was a manageable deceleration vs. the first six months of the year.

The business model at Lewis depends on substantial credit sales, so it’s important to look at both total merchandise sales (which drives initial gross margin) and total group revenue (which includes the credit and other business lines).

Merchandise sales is the metric that feeds the top of the funnel. For context, it had previously grown by 6.7% for the six months to September (8.9% in Q1 and 4.6% in Q2). The latest update is that Q3 achieved 7.8% growth, an acceleration that was aided by strong Black Friday sales.

Similarly, comparable store sales were up 4.3% for the nine-month period vs. 4.9% for Q3, so there’s a further acceleration.

Other revenue, which would be combined with merchandise sales to get to total revenue, increased by 15.2% for Q3 after growing 16.7% in the first six months. This takes them to 16.2% for the nine months year-to-date.

This slowdown wasn’t due to a lack of credit sales, as credit sales growth was 69.4% of total sales vs. 68.2% in the comparable period. I suspect that the lower interest rates in the market impacted other revenue in the third quarter.

I must flag a deterioration in the collection rate year-on-year, coming in at 78.3% (identical to the first six months) vs. 79.6% in the comparable nine-month period. They saw an uptick in debtor costs to manage the book, flagging growth in the book and overall pressure on consumers. This is something to keep an eye on.

In terms of what they can actually control (i.e. not the prevailing level of interest rates), Lewis appears to have done well. This won’t do any harm to the group’s reputation as a resilient retailer, with the share price up 23.6% in the past year.

For context, Shoprite (JSE: SHP) is down 7.6% over 12 months and Pepkor is up just 1.5% (JSE: PPH). Those are two of the very best retailers we have on the market. I won’t even mention the other apparel retailers, as they were truly slaughtered in 2025.

Lewis stands head and shoulders above the rest of the sector at the moment.

Nibbles:

• Director dealings:
  • The CEO of Mantengu (JSE: MTU) disposed of just under R3 million in shares to a family member.

• Libstar (JSE: LBR) has renewed the cautionary announcement related to a potential acquisition of the company’s shares by a third party. There have been a few cautionary announcements in the past few months that suggested that there was more than one potential investor at the table. At this stage, there’s still no guarantee of a firm offer. The share price is up more than 20% since the first cautionary announcement was released on 16 September.

• The CFO of Heriot REIT (JSE: HET) has bought a unit in the company’s Fibonacci mixed use sectional title development for R1.2 million. This is a related party transaction, hence it must be announced. This pre-sale is priced in line with what other purchasers in the scheme are paying.