Choppies is investing heavily into a weak market (JSE: CHP)
The immediate outcome of that strategy is predictably ugly
Choppies is on the wrong side of a macroeconomic downturn in Botswana. The diamond market collapse is hurting that economy, which means that the store expansion by Choppies is being executed in a weak market where stores take longer to mature.
And of course, when consumer demand is under pressure, gross profit margin is almost guaranteed to go the wrong way. This is thanks to the need to run more specials to attract customers (or “be more promotional” as the retailers call it).
For the six months to December 2025, Choppies reported an 8.6% increase in revenue and only a 4.4% increase in gross profit. Gross profit margin fell by 80 basis points to 19.8%.
The only segment that increased its gross margin was Liquorama. People seem to be drinking their problems away – literally.
With total expenses up by 9.1% due to new stores being opened, operating profit never stood a chance. EBIT as reported was down 20%, while adjusted EBITDA fell by 28.9%.
Once you include a small increase in net finance costs, it gets even worse for HEPS: down 50% year-on-year.
Despite this, the dividend for the period is only 37.5% lower. This decision to soften the blow in the dividend would’ve been informed by free cash flow more than doubling year-on-year.
They are bravely expanding in their markets. They just need the markets to be kinder to them.
Grand Parade’s earnings took a knock (JSE: GPL)
They are fully focused on gaming assets – and that’s tough
Grand Parade Investments released results for the six months to December 2025. Although there are some green shoots in the broader gaming sector in South Africa, HEPS has fallen sharply by 18.5%.
The most important contributor to earnings used to be SunWest – the owner of the GrandWest casino and Table Bay Hotel. Regular readers may recall that the Table Bay Hotel recently changed operator, so this segment saw revenue decrease by around R300 million.
SunWest’s EBITDA fell from R377.5 million to R277.8 million. The dividends received by Grand Parade for its stake came to R16.6 million (vs. R24.1 million in the prior period). Finally, the headline earnings contribution by this segment fell by 32%.
In contrast, GPI Slots saw a 12% increase in headline earnings, which makes it a larger segment than SunWest in the latest numbers! Revenue was up just 2% and EBITDA was steady, so the improvement happened below that line. Importantly, Grand Parade received dividends of R12 million (vs. nil in the prior period).
The Worcester Casino saw a slight uptick in revenue to R61.3 million. The net loss was R400k vs. R800k in the prior period. Regional casinos aren’t good assets at the moment.
The improvement at Worcester Casino was more than offset by Infinity Gaming Africa, the smallest segment, which slipped into a small loss-making position.
Looking ahead, the group is still looking for ways to participate in the Historical Horseracing segment of the gaming market. This is apparently growing strongly in the US.
This doesn’t mean dusting off old horses and getting them to run – no, this entails betting on the outcome of horse races that already happened. There are apparently many different ways to entertain yourself.
Heriot REIT is delivering very high growth for a property group (JSE: HET)
Mid-teens growth rates are almost unheard of
Heriot REIT released results for the six months to December 2025. Distributable earnings increased by 16.3% and the distribution per share followed suit. That’s approximately double what would normally be considered a solid performance in this sector!
Heriot’s property portfolio increased its net operating income (NOI) by 6% for the six months to December 2025. The performance varies dramatically by underlying segment. For example, the industrial portfolio only grew NOI by 3%, while office was up by an impressive 16%. Hospitality/aparthotels grew by an excellent 66%. Retail, which is by far the largest segment, was up 5%.
The net asset value per share jumped by 20.7% to R22.90. Aside from a bargain purchase gain on the Safari transaction, this was also driven by higher property values.
The loan-to-value ratio has increased from 38.95% to 43.36%, with the debt for the Safari buyout as the pressure point here. That’s on the high side, and I expect that investors would want to see it come down.
The targeted increase in the dividend per share for the year ending June 2026 is 14% to 17%. This is a significant improvement on the previous guided range of 10% to 15%.
The upgrade in guidance is thanks to the portfolio performing ahead of expectations and the debt environment being favourable to the company.
The jury is still out on whether Kore Potash will be sold or built under current ownership (JSE: KP2)
All options are on the table
Kore Potash, owner of the Kola Project in the Republic of Congo, has certainly had a year to remember. They’ve released results for the 12 months to December 2025, a busy period that required a net cash outflow of $13 million.
They had $10.6 million in cash left by December 2025. That won’t be enough to see them through to March 2027. This means that capital will need to be raised to fund working capital requirements. The only certainty in the junior mining industry is dilution of shareholders over time!
Much of the activity in the first half of 2025 was focused on securing the capital to develop the Kola Project. This was based on the Optimised Definitive Feasibility Study (DFS) that was released in February 2025.
The DFS estimated a net present value (NPV) of $1.7 billion for the project at a discount rate of 10%. The estimated internal rate of return (IRR) is 18%. That stuff you learnt in finance class at varsity has real-world application!
OWI-RAMS GMBH executed a term sheet with Kore Potash in June 2025 to provide the total funding requirement. The intention was to arrange a funding package of $2.2 billion through a combination of senior secured project finance and royalty financing.
We are still waiting to see that package. It does take time to put these things together, but Kore Potash doesn’t have all day to sit around.
In November 2025, to keep all options open regarding the future of the company, Kore Potash commenced a formal sale process. Two parties initially approached them, with only one remaining interested and conducting a due diligence.
And on top of all of this, PowerChina and Kore Potash have started on selected workstreams at the site.
That’s quite a year! The share price is up 52% over 12 months. It also happens to be up by more than 350% over 3 years. When risky mining companies make progress, the rewards are significant. But many risks are still at play here.
Remgro’s INAV story is tame, but the cash is quite exciting (JSE: REM)
Will they finally ramp up the share repurchases?
Remgro, like all investment holding companies, is fighting a constant battle against the market. Investors want to value the shares at a substantial discount to the intrinsic net asset value (INAV) per share. Or, put simply, the market isn’t prepared to pay the price for the shares that directors say they are worth.
Much of this is because Remgro’s portfolio is so skewed towards other listed companies that investors can just go and buy directly. There are other reasons as well, like the costs of Remgro’s structure and the risk of management doing things that shareholders don’t approve of.
The obvious solution in this case is to execute share buybacks. After all, if Remgro’s INAV per share is R297.03, why wouldn’t they buy shares in the market at R185?
Instead, Remgro is obsessed with cash dividends. They’ve even used special dividends before. Although more cash visibility does help reduce the discount to INAV to some extent, I think it would reduce a lot faster if they did share repurchases instead.
There’s certainly no shortage of cash: in the six months to December 2025, Remgro enjoyed a 34% increase in dividends received from investee companies. This excludes the once-off CIVH pre-implementation dividend of nearly R2.6 billion.
If we look deeper into the portfolio, we find that one of the worries is Mediclinic’s exposure to the United Arab Emirates. Remgro is in the process of negotiating a deal to swap the exposure to Mediclinic’s international business for total control over the South African assets. I suspect that this became a much more difficult negotiation in the past month.
Although headline earnings is not the right measure of performance for an investment holding company, it does at least help us compare the performance across unlisted and listed investee companies. The only blemish in the result was RCL Foods (JSE: RCL), with that listed company struggling with conditions in the sugar industry.
Everything else grew headline earnings – including Mediclinic! Remember, these results only cover the period until December, long before the troubles in Iran kicked off.
Heineken Beverages deserves a special mention, with headline earnings of R155 million vs. a loss of R11 million in the prior period. That’s a much better performance, particularly in an environment of weak demand. I know for sure that my dad did his best to boost sales of Windhoek beer.
Sticking with alcohol, spirits business Capevin suffered a 53% decline in profits. People just aren’t drinking as heavily as they used to. It’s not about whether they are stopping entirely. It’s about a moderation in consumption and what that means for overall demand. Having three drinks instead of four means that you cut your consumption by 25%!
Another investment worth mentioning is fibre business CIVH, where headline earnings swung from a loss of R141 million to profit of R123 million. Both Vumatel and Dark Fibre Africa enjoyed an upswing in revenue.
There are many more companies in the portfolio, both listed and unlisted. Once all the moves are taken into account, INAV per share increased 1.6% for the period. More importantly, if you adjust for the distributions during the year, the increase was 3.4%.
I remain steadfast in my view that they should be executing far more share repurchases. But what do you think?
Nibbles:
- Director dealings:
- KAL Group (JSE: KAL) announced share purchases by two directors to the value of R597k in aggregate.
- Datatec (JSE: DTC) announced a bolt-on acquisition that is so small that there are no financial details at all in the announcement. Logicalis Germany, a subsidiary of Datatec, has acquired 100% of NetworkedAssets, a software development, network automation and observability solutions company operating in Germany and Poland. And yes, I also had to Google “observability solutions”! The companies have already been working together for years, so that seems like the right starting point for an acquisition. The deal became effective on 24 March.
- Africa Bitcoin Corporation (JSE: BAC) intends to execute a 3-for-1 share split. As the name suggests, this will triple the number of shares in issue, but without any cash flowing. The market cap thus stays the same (in theory), the share price will be a third of what it used to be, and each shareholder will have three shares for each share that they used to have. What’s the point of all this? Usually, to drive increased liquidity and get some trading volumes going in the stock. Shareholders will need to approve the resolutions required to achieve this.
- If you are a geologist or mining engineer, then Molefe Mine Phase 1 drilling results at Jubilee Metals (JSE: JBL) may interest you. The rest of us need to rely on management commentary, which in this case includes the CEO being “very excited” about the outcome. Phase 2 drilling is in progress at the eastern extension. The idea is to unlock the resource for processing and refining at Jubilee’s nearby Sable refinery.
- Rex Trueform (JSE: RTO) has close to zero liquidity in the stock, so the trading statement only gets mentioned down here. HEPS has sadly dropped by 98.7% for the six months to December 2025. The details behind this drop will be important when they become available. Related company (they even have the same website!) African and Overseas Enterprises (JSE: AOO) is even worse, swinging into a headline loss per share.
- Crookes Brothers (JSE: CKS) announced the appointment of Melani De Castro as CFO with effect from 1 April 2026. Hopefully she has a good enough sense of humour to laugh about an April Fool’s appointment date! Most importantly, this is an internal promotion, as De Castro joined the company in 2016. It’s always good to see this kind of thing.
- Grindrod (JSE: GND) announced that the SARB has approved the special dividend of 43 cents per share.
