Shoprite | Shoprite Angola site visit
Angola is Shoprite's (SHP) flagship operation in the non-RSA region. SHP is the pre-eminent formal food retailer in the country. We estimate that Shoprite Angola contributes R4bn to group revenue for FY '18. We estimate revenue from SHP's Angola operation to be c.R4bn and account for c.17% of total non-RSA revenue and c.3.7% of group revenue in FY '18. We estimate SHP Angola FY '18 trading profit to be c.R360m excluding once offs (c.9% margin). SHP's competitive advantage is its wide range of products, where c.30% are SA brands. SHP stores are mostly located in Luanda, but there is opportunity for SHP to expand in each Angolan province, as the formal retail industry grows from a low base of c.20% of total retail currently. SHP Angola is investing to upgrade its three separate distribution centres into one fresh and one dry supercentre. An efficient supply chain will further entrench a wide moat around SHP's market position in Angola. Post our visit to SHP's Angolan operation, we believe SHP Angola is stable despite the AOA devaluation and related hyper-inflation.Shoprite Holdings Limited is an investment holding company. The Company is a food retailer and wholesaler. It operates in the Republic of South Africa (RSA). It operates through four segments: Supermarkets RSA, Supermarkets Non-RSA, Furniture and Other operating segments. The Supermarkets RSA segment includes retail operations under the Shoprite, Checkers, Checkers Hyper and Usave brands in South Africa, retailing products, such as food, clothing, general merchandise, cosmetics and liquor. The Supermarkets Non-RSA segment includes its retail operations under the Shoprite, Checkers, Checkers Hyper, Usave and certain Hungry Lion brands outside of South Africa. The Furniture segment includes its retail operations under the OK Furniture, OK Power Express and House & Home brands retailing products, such as furniture, household appliances and home entertainment systems. Other operating segments include trading in franchise operations, and retail and wholesale of pharmaceutical products.
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