Pepkor（PPH SJ）：持有：金融科技和成人服装增长推动核心业务强劲发展

Pepkor(PPH SJ) Hold:Strong coreboosted by fintech andadultweargrowth South Africa ◆Acquisitions and expansion within adultwear,home, furnitureandfintech alloffergrowth and potential upsiderisk to forecasts MAINTAIN HOLD TARGET PRICE(ZAR)PREVIOUS TARGET(ZAR)31.0027.00 ◆Pepkor isalsohighlygeared to an economic recovery, whileheightened competitionremainsa key challenge ◆Increase DHEPSestimates by1-7%andTPtoZAR31(fromZAR27);3-yr earnings CAGR of 16%;maintainHoldrating Strongperformance inH1’25.Revenue grew by 12.8% and GP margin expanded by110bp to 39.2%, driven bystrongFintech growthin particular. Cost growth was contained to11.9% (LfL: 7.8%) and despite increased debtors’ costs (+67%) EBIT margin expanded by10bp to 11.9%, resulting in HEPS growth of 12.4%. InEntrenching a sustainable competitiveadvantage(24 Oct 2022), we said that Pepkor is a story of scale and growth, where strategycentres on sales and market share gains. Organic growth opportunities reside in categoryexpansion within adultwear, home, and the group’sfast-growingfintech business, alongsideitsstore rolloutambitionsoftheAvenida chain in Brazil. Despite the mounting near-termconsumer pressures (Local and global risks tempering the pace of recovery, 30 Apr 2025)thecompany has indicated that H1’25’s strong trading momentum has been maintained intoH2’25,boosted bythe onset of winter in May. We expect some consumer relief in themedium term, supported bymoderatelyimproving GDP growth, and some revival inhousehold spending buoyed by lower fuel prices andthecumulative effects of lower inflationand rate cuts.We increase our FY25-27 forecasts by 1-7% and raise our TP to ZAR31 (fromZAR27);wemaintainourHold rating withtheshares trading on a 12m fwd PE of16x. Adultwear, furniture and fintech to drive furtherstronggrowth.To grow its single-digitmarket share in adultwear the group is planning to be more aggressive in its Refineryexpansionalongside Rfnry Junioranditsnew womenswear brand Ayana(AckermansWomen relaunched across 32 stores)within Speciality.Also, the acquisition of theRetailability brands (for cZAR1.9bn, FY’26 completion-not included in forecasts) and ChoiceClothing (for ZAR80m) will further increase its presence in adultwear. The acquisition ofShoprite’s furniture business (for ZAR3.2bn, H2’25 completion-not included inourforecasts)should also give greater scale advantagesto the Lifestyle segment.PEP’s customeracquisition capability in its retail operations isfurtherenabling rapid growth in Fintech (sales+35%, EBIT+97%, contribution to sales 16% vs 13% in FY’23) and has also added3.1million customers to the group’s A+ retail credit base. Nick Webster*Head of Research, South AfricaHSBC Bank plcnick.webster@hsbc.com+44 7468 703441 Harshul Sharma*Analyst, South Africa Consumer and IndustrialsHSBC Securities and Capital Markets (India) Private Limitedharshul.sharma@hsbc.co.in+91 91 3676 7047 RecoverycontinuesinAckermansbut Avenida requires scale to achieve targeted 10%EBIT margin.Ackermans saw strong LfL sales growth of 9.6% in H1’25, with market sharegains in the babies, kids and womenswear categories.Avenida’s performance (LfL:-1.8%)was impacted by a weak Brazilian consumer andEBITmarginwas still at c5% levels.Scaleshouldcome with future store growth, buttherollout was curtailed (+12 stores),allowing timeto refine the business model to better capture the long-term growth opportunity. * Employed by anon-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulations IncreaseFY25-27DHEPSforecasts by1-7%and TPtoZAR31(from ZAR27);maintainHold.We now forecast DHEPS of ZAc162 (+17% y-o-y) for FY25, ZAc190 (+17% y-o-y) forFY26 and ZAc214 (+13% y-o-y) for FY27. We forecastastrong 3-year earnings CAGR of16%. Our TP implies6% upside and we maintain our Hold rating,with the shares trading on a12m fwd PE of 16x andgiventhe heightened competitionin theSAapparel retail market. GCC Exchanges Conference 2025 16 -19 June, The May Fair Hotel, London Register Issuer of report:HSBC Bank plcView HSBC Global Research at:https://www.research.hsbc.com Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. Financials & valuation:Pepkor Investment case in charts WeforecastFY25-27averagegroupsalesgrowthof10.0%… …driven bystronggrowth in the Clothing,Footwear and Home (CFH) and Fintechdivisions(%) Newgrowthdrivers in aconstrained macro ◆Organic growthopportunitiesin category expansion within adultwear,home, and the group’s fintech business,plus Avenida in Brazil ◆Acquisition ofSHP’sfurniture business will provide scale, whileChoiceClothingand Retailability brandswill increaseitspresence in adultwear ◆WeincreaseFY25-27earnings forecastsby1-7%andour targetpricetoZAR31(from ZAR27). MaintainHoldrating Pepkor’s discount modelshouldremain resilient in the toughmacro environment Inour initiat