Astoria adds its name to the list of companies that want to leave the market (JSE: ARA)
The stubborn discounts to NAV on the JSE have claimed another victim
Investment holding companies are slowly becoming a rare sight on the JSE. The market tends to value them at a significant discount to NAV, regardless of whether they deserve it or not. This creates a dislocation in the performance between NAV per share growth and the share price itself (which is what the market cares about). Even share buybacks seem to struggle to close this gap for many of these structures.
Of course, what doesn’t help the situation is when the NAV goes in the wrong direction in a tough year, as has been the case at Astoria. The company released its quarterly results for the three months and nine months ended September 2025. The unlisted investments are only subject to a detailed valuation at the half-year and full-year points, unless there are obvious changes that need to be considered (e.g. the repurchase of shares by Outdoor Investment Holdings). The NAV per share is R10.99, down 6.1% vs. December 2024 and 21.6% vs. September 2024.
With the NAV trending lower and with all the difficulties of trying to reduce the discount to NAV, Astoria has taken the decision to use its cash pile to facilitate a transaction that will allow the company to build in private rather than in public. The price on the table is R8.15, which at first blush looks like a 26% discount to the NAV. There’s a nuance here: my understanding is that the company plans first unbundle Goldrush (JSE: GRSP) shares to its shareholders, in a ratio of 12 Goldrush shares for every 100 Astoria shares. Goldrush closed at R6 per share yesterday, implying a value of 72 cents per Astoria share. This is a moving target as the Goldrush price changes, but it takes the price to R8.87 based on latest numbers. That’s a discount to NAV of 19.3%.
The cash portion is a 26.5% premium to the 30-day VWAP, so they’ve basically split the difference vs. the NAV discount before you take into account the Goldrush unbundling. That doesn’t seem out of line with the other delistings in this space.
Shareholders who don’t want to sell at this price have the option of keeping their shares in an unlisted environment. It’s always worth remembering that there is no guarantee of liquidity in that environment, with the only buyers for shares usually being other existing shareholders, or the company itself. Holders of 57.81% of the shares have committed to not accepting the offer. Notably, holders of 59.33% of shares other than those held by concert parties have agreed to vote in favour of the delisting.
Full details will be available when the circular is distributed by the end of November.
FirstRand takes a 20.1% stake in Optasia (JSE: FSR | JSE: OPA | JSE: EPE)
And they’ve done it at the top end of the guided range for the IPO price
When a new company is coming to market, it’s absolutely critical that a successful IPO is achieved. Generally speaking, this is judged by the market response to the capital raising activities and the way that the share price behaves when it opens for trade. The pricing of the IPO is usually done in such a way as to leave something on the table for the market to fight over.
Optasia’s pricing guidance for the IPO is R15.50 to R19.00 per share. It certainly sends a strong signal about this price range that FirstRand has happily taken a 20.1% stake in Optasia at R19 per share, right at the top of the guided range. As bullish signals go, that’s about as good as it gets for Optasia, and for Ethos Capital as one of the existing shareholders in Optasia.
Optasia is an exciting emerging and frontier markets platform focused on fintech. It provides an attractive distribution channel for financial products, including those of banking groups. FirstRand has clearly recognised the strategic importance and wants to hold a significant minority position, giving it a better chance of unlocking benefits for its retail and business banks through the platform.
iOCO’s share price has more than tripled since the 2023 rights offer (JSE: IOC)
The latest results show how far things have come
iOCO (previously EOH) is proof that when it comes to speculative stocks, it really is about timing the market rather than time in the market. This is a company that raised capital in 2023 at R1.30 per share, yet now is trading at R4.25:
Those who bought the extreme 2024 share price pressure have absolutely cleaned up, as the share price has quadrupled since then!
Why has this happened? Well, with the company having walked over the hottest of hot coals to shake off the EOH era, it now finds itself in a situation where HEPS for the year ended July 2025 swung from a loss of 0.21 cents to profit of 40 cents. Free cash flow per share was 51 cents vs. negative 21 cents in the comparable period. As turnarounds go, this one is working out very well indeed.
The group has been shifting things around in a big way, leading to a 1.2% drop in full year revenue due to disposals. Importantly, the second half of the year reflects growth of 4%, so their exit velocity in revenue is positive. Not exciting, but positive.
The good news is that gross margin improved by 140 basis points to 28.7%, so that modest move in revenue has levered up into a much better performance in profits. Adjusted EBITDA improved by 68% and operating profit was up by a rather daft 275%.
Another very important strategic move has been the push for recurring revenue, up from 37% of revenue to 48%. Guidance for FY26 is for this to be above 60%, so that will lend support to the valuation.
But here’s the best guidance of all, and something that you very rarely (if ever) see in South Africa: free cash flow per share guidance! They reckon it will be at least 60 cents per share. With the share price currently on R4.25, that’s an implied forward free cash flow yield of 14%.
If they can hit these targets and increase the recurring income in the group, then I wouldn’t be surprised to see further upside in the P/E multiple (currently 10.6x based on the latest numbers).
Pick n Pay is still heavily loss-making (JSE: PIK)
Sales momentum is great and all, but they need profits
Retail turnarounds are hard. Grocery turnarounds are even harder. Pick n Pay is giving us a local example of this, with the group struggling to stem the bleeding in the core Pick n Pay business. If it wasn’t for Boxer (JSE: BOX) to give the group some underlying value, I’m starting to wonder if there would be any Pick n Pays left out there!
The problem is that shrinking into prosperity as a grocery retailer means losing out on the benefits of scale. In a market with largely homogeneous products and extremely price sensitive customers, scale is key to success. Pick n Pay closed 65 loss-making stores in this period and although that is a necessary step, it has knock-on problems for the rest of the business. For example, if volumes are down, volume rebates from suppliers are lower and thus gross margins suffer. To compound the issue, giving up loss-making stores means vacating space that creates an opportunity for a competitor to enter your turf and put your next-closest store under pressure. With a juggernaut like Shoprite as their biggest competitor, Pick n Pay needs more than just a Springboks sponsorship to survive.
If you look at the group numbers, you’ll see a 4.9% increase in turnover and a jump in trading margin from 0.1% to 0.5% for the 26 weeks to 31 August 2025. This won’t make sense in the context of what I just told you. The reason is that the group numbers include Pick n Pay’s stake in Boxer, whereas the internal cancer that is crushing the entire group is the Pick n Pay Supermarkets business itself. In other words, we need to dig deeper to explain what is going on. Before we do that, I want to point out that the group reported a headline loss per share of 59.77 cents, or a R439 headline loss. The loss is 45.3% better than the R803 million last year.
The silver lining is that there is some momentum in the underlying Pick n Pay business. Like-for-like sales in Pick n Pay Supermarkets increased to 4.8% for company-owned supermarkets and 1.7% for franchise supermarkets. Direction of travel aside, both of those numbers remain unexciting. Gross profit margin improved by 0.4% as mix improved, but only came in at 16.9%. Yes, the underlying mix of businesses may be different, but I need to highlight that Shoprite (JSE: SHP) is running at a gross margin above 24%. There is no world in which adjusting for the underlying mix would explain that gap. There’s only one explanation: lack of scale and efficiencies is severely hurting Pick n Pay’s profitability at the tills.
Pick n Pay Clothing remains a positive story, although growth in this period was achieved vs. an extremely soft base. 7.5% like-for-like growth seems unlikely to continue in the second half, with the company noting that growth moderated towards the end of the interim period.
The profit story only gets worse further down the income statement. Trading expenses were up 6.2% on a like-for-like basis, which means expenses grew faster than like-for-like sales. Pick n Pay attributes this to the building of “operational and customer facing capacity” and higher advertising spend. A guaranteed way to upset the market during a turnaround is to shrink your sources of revenue while increasing your capacity. Capacity for what, exactly?
The number that counts is trading profit after lease interest, mainly because of ridiculous accounting rules that push the lease expenses into the net finance costs. Pick n Pay made a loss of R1.16 billion on that basis, slightly better than R1.27 billion in the comparable period. Boxer was good for a profit of R702 million, showing strong growth vs. R613 million in the comparable period. The group loss improved from R660 million to R462 million – still a significant loss.
It’s also very important to remember that there is a 34.4% non-controlling interest in Boxer. The best underlying business in the group needs to be shared with all the investors who now own Boxer alongside Pick n Pay. This puts even more pressure on the story in terms of attributable earnings to Pick n Pay shareholders.
Thanks to all the capital raised in the market, group net funding swung from a net expense of R392 million to net income of R145 million. Pick n Pay is sitting on R3.9 billion in net cash, a number that will keep dropping unless the losses can be stopped.
The most disappointing point of all in this announcement is that the trading loss in FY26 is expected to be broadly in line with FY25 in the Pick n Pay segment. Pick n Pay’s share price fell 6.3% on the day and is now flat year-to-date. My money remains far away from this turnaround story.
Nibbles:
- Director dealings:
- The CEO of Vunani (JSE: VUN) has added another R4k worth of shares to his recent purchases.
- On 20th October, Southern Palladium (JSE: SDL) announced a planned placement of shares at A$1.10 per share to raise A$20 million. They also left themselves room to raise A$1 million through a share purchase plan open to retail shareholders. The first tranche of shares has been issued, raising A$7.26 million in the process.
- Curro (JSE: COH) is making progress on the conditions precedent for the take-private by the Jannie Mouton Stigting, a deal that is loved by everyone with any degree of common sense in the market. The Competition Commission is one of the outstanding conditions, so don’t count any chickens before that is out the way. Based on the recent pricing of Capitec (JSE: CPI) and PSG Financial Services (JSE: KST) shares earmarked for the deal, the scheme consideration is a 74% premium to the closing price of Curro on 25 August 2025.
- If you’re interested in Caxton and CTP Publishers and Printers (JSE: CAT), then keep an eye out for investor presentations that will be available on the website from Tuesday, 28th October.
- The collective holding-of-breath at Shuka Minerals (JSE: SKA) continues, with Gathoni Muchai Investments promising the company that the flow of funds under the loan agreement will be happening this week. The money is needed for the acquisition of Leopard Exploration and Mining Limited, a company that appears to have patient sellers based on all the delays to the flow of funds.
- Harmony Gold (JSE: HAR) gave the market a reminder that mining is a dangerous industry. There was a tragic loss-of-life incident at the Mponeng mine, near Carletonville. There’s no indication in the announcement that the operations at the mine have been suspended, so I assume that they haven’t.
- Prosus (JSE: PRX) has significant (and growing) business interests in South America. They’ve launched something you won’t see every day: a Brazilian Depository Receipts programme. This is backed up by the American Depository Receipts (ADR) programme in the US that is a far more common site. It essentially gives Brazilian investors easier access to invest in the group.
- Way back in December 2024, enX (JSE: ENX) announced the acquisition of the property situated at 30 – 48 Jacoba Street, Alberton. ENX occupies the property and they were keen to lock in what is obviously a strategic site. The purchase price was set at R95 million. Why am I raising this again? Well, it’s taken this long for the deal to become unconditional and for it to close! It’s incredible how long these things sometimes take to be finalised.
