Follow the earnings: STRAT to the point | EEMEA

Research evidence excerpt

Follow the earnings: STRAT to the point | EEMEA

IdeaMExhibit 3: On a sector by sector basis, sectors representing ~30% of the JSE All

Share Index have seen positive earnings revisions over the past 3 months (the

corollary being ~70% have seen negative revisions) (post adjusting for the impact

of spot commodity prices for the resource equities)

Source: Datastream from LSEG, RMB Morgan Stanley Research estimates (e) Priced as at 12 June 2026 close. We adjust consensus

earnings revisions to spot using weekly estimates from our resource team - see here.

Second derivative slows. While consensus still expects positive y/y earnings growth

for South Africa (51/12/3% y/y - MSCI SA and 49/7/5% y/y - JSE All Share for

FY26/27/28, respectively), the rate of earnings growth and earnings breadth (second

derivative) appears to be slowing. Ultimately, this is an unsurprising result in our

view, given: 1/ South Africa is a net energy importer, with the negative knock-on

impact for higher inflation/ lower growth expectations, 2/ Retracement of precious

metal prices on higher interest rates (not yet captured in consensus - we adjust in

Exhibit 3), and 3/ Structurally lower exposure to technology/ AI. Ultimately, stocks

track forward earnings estimates - the key question now is the extent and pace to

which a possible de-escalation in the Middle East filters through to reversal of the

first 2 drivers in particular, and thus an improving earnings outlook.

Adding Pepkor (covered by Warwick Bam) to our focus list (Exhibit 5). As

previously highlighted, a number of the South African consumer discretionary

equities screen well on a possible Middle East de-escalation scenario given recent

underperformance. At the 15 June 2026 intraday price of R23/share Pepkor has