Capitec Holdings which makes up nearly 50% of the group parts valuation has seen headline earnings grow by around 20% (in the last interim period) with over 100 000 clients being added a month to highlight the group’s disruptive nature in the local banking industry. Furthermore Capitec is looking to launch its new credit card offering very soon. It may be argued that Capitec is trading a Price to Earnings (P/E) premium in the current market environment with a forward P/E of around 22, although earnings growth is managing to keep up with the current pricing of the share.
Curro Holdings is the next biggest part in the PSG valuation. Trading on a P/E of 132 this part of the business does seem expensive despite earnings growth of 51% in the last interim period. Growth is however anticipated to be exponential going forward as the group moves towards its goal of having 200 schools and 80 campuses by the year 2020. The PSG Group has also highlighted a renewed focus on private university education being fast tracked in lieu of the current uncertainty in the tertiary education space.
The Zeder holdings part of the PSG stable is largely a reflection of the Pioneer Foods business in which Zeder has a 27% interest. This part of the business is underperforming due to the current drought situation in South Africa which has in part equated to a 3% fall in recurring headline earnings per share.