PSG gets a kicker from Capitec

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PSG gets a kicker from Capitec

Published Date: 2019-10-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

PSG gets a kicker from Capitec

The investment group says it benefited from positive results from a number of investments, offsetting a poor showing from Zeder.

PSG Group says commendable performances from the majority of its investments contributed to a positive first half for the investment holding company.

The group measures its performance on its recurring earnings per share (EPS) and its sum-of-the-parts value (SOTP). It says the SOTP value, and its own share price, should depend on sustained growth in the recurring EPS of its underlying investments.

The group's 30.7% stake in banking group Capitec remains its biggest investment, making up almost two-thirds of its total sum-of-the-part assets. It's also a major contributing to its recurring earnings. Along with financial services company PSG Konsult, business incubator PSG Alpha and private schools group Curro, they all grew earnings in the six months to end-August, offsetting a sharp slide in profitability at food and agri business Zeder and a reduced loss at BEE investment holding company Dipeo.

Profit before finance costs and tax increased by 17% to R1.49 billion and basic earnings per share (EPS) rose 24% to 639c. Headline EPS were 12% higher at 568c, while recurring EPS gained 16% to 584c. It said headline earnings increased by a lower margin than recurring earnings due to a fair value gain recognised in the prior corresponding period by Zeder on its investment in Chinese investment Joy Wing Mau, which was subsequently sold. It has raised its dividend by 8% to 164c per share.

At the end of August, its sum-of-the-parts value was R259.56c per share, down 17% from February's level. However, by last Friday it had increased to R299.57 and the group pointed out that the five-year compound annual growth rate of its SOTP value per share and share price at the end of August was 19% and 17%, respectively, whereas that of the JSE's All Share Index was 2%.

Its shares rose 1.1% to R230.36 yesterday.





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