Foschini Portfolio disposals could act as a meaningful catalyst for a re-rating

研报英文原文证据摘录

Foschini Portfolio disposals could act as a meaningful catalyst for a re-rating

56 5,370 -3.4%

work (see note). Management did not reference or signal any intention to pursue

Half Yearly Forecasts (FYE Mar)disposals in the recent results, which keeps us more cautious on the near-term catalyst

path. As a result, we revise our FY27 earnings estimates upwards by 5% for Adj. EPS (c)

2026A 2027E 2028E

FY27 and increase our multiples-based Dec-27 PT to R67 (from R66). We H1 291 278 300

therefore maintain our Neutral rating. H2 376 424 471

FY 671 701 772

The near-term outlook remains challenging, and we believe self-help

initiatives will be critical to drive operating leverage and support margins. Post- Style Exposure

period sales over the 9-wk period were lacklustre across divisions: TFG Africa

+2.2%, UK +1.7% and AUS -2.3%, with management also flagging

a c.100bps improvement to gross margin. The key issue for TFG, in our view, is

its higher cost structure vs peers (see our operating leverage work). Absent a return

to high-single-digit/double-digit top-line growth, sustaining a robust EBIT margin

trajectory becomes increasingly difficult. While we appreciate that management

would ideally wait for improved conditions to maximise value from the offshore

businesses, we see the opportunity cost rising vs realisable value at this stage (which

we estimate at R6–8bn, implying 8–10x PE). Even though this would mechanically

shrink group PAT towards ~R2bn (i.e., predominantly the S. Africa business), we

think the market is already ascribing limited-to-no value to the offshore operations.

Management has outlined multiple initiatives to address the cost base, but we expect

execution to be gradual. In our view, a clearer path to resolving the offshore overhang