ARTICLES

Spur

The Spur group is an iconic South African brand focused on the fast-food restaurant business. Aside from the Spur Steak Ranches chain it also owns Panarottis, John Dory's, The Hussar Grill, RocoMamas, Casa Bella, Nikos and Modrockers. It has restaurants in Australia, The Middle East, India, Mauritius and other Africa countries like Namibia, Nigeria, Zambia, and Kenya. Altogether it has 639 restaurants which are dominated by Spur which accounts for 62,2% of their revenue.

In the year to 30^th June 2023 the company reported revenue up by 27,4% and diluted headline earnings per share (HEPS) up 81%. This shows that they have completely recovered from the restrictions of COVID-19 and are continuing to grow at a rapid pace.

From a balance sheet point of view, the company had no borrowings and R375m in the bank on 30^th June 2023. As a result, it earned net interest income of R26m during the year. This puts it in a very strong and conservative position. It is very well placed to deal with any future “black swan" events similar to COVID-19. From an investor’s perspective, the fact that the company is debt-free substantially reduces the fundamental risk in the share.

The group works mostly through franchisees who purchase a franchise in one of its branded restaurants for an up-front fee and then pay the group a percentage of their sales. These franchisees are required to adhere strictly to the branding of the restaurant chain of their franchise. During the year to 30^th June 2023 the company opened twenty-two new franchises in South Africa and ten internationally. It also closed twenty in South Africa and four internationally. So, the group is constantly selling new franchises and closing those which prove to be ineffective. It also periodically acquires entire new franchise chains which it believes have potential to expand.

So, this is a service company in the food business. Its success is directly linked to the level of consumer spending in the economy. When consumers have reduced disposable income, they tend to eat out less, but the convenience and ready availability of fast food make it a constant in most consumer’s budgets. The risk inherent in any particular restaurant is taken by the franchisee. The Spur group receives a steady and reliable percentage of all food sold. As the net number of franchises increases so does the company’s income.

Technically, the share fell to a low of 1240c on 7^th September 2020 as a result of COVID-19. Since then, it has been recovering steadily as business conditions normalized. Obviously, restaurants have had to incur the additional expense of implementing alternative electricity solutions to enable them to remain open during periods of loadshedding – but that problem has mainly been dealt with by the individual franchisees.

Consider the chart:

As you can see the share had been moving sideways since March this year and then began to rise steeply once it became apparent that its results for the year to 30^th June 2023 were going to be particularly good.

We added it to the Winning Shares List on 8^th August 2023 at a price of 2488c per share. Since then, it has risen to 2777c – a gain of 11,6% in just over 2 months. The share is trading on a dividend yield of 5,5% and is debt-free, making it an excellent addition to any private investor’s portfolio.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

The Debtors' Book

A BIT OF HISTORY

Many years ago, in 1982 when I started this business (which became “PDSnet”), I ran advertisements in both the Rand Daily Mail (RDM) and in the Star – which were the two most widely read newspapers in Johannesburg at the time. At that time, we were a very small business and had no credit rating at all. Despite this the RDM immediately

WeBuyCars - Results

The financial results of companies show how profitable they are and give a good indication of their share’s risk and potential return. WeBuyCars (WBC) is a recent listing which came to the JSE on the 11^th of April 2024. Unlike other listed motor vehicle companies, it is a company which specialises in the purchase and sale

Choosing Winners

We are often asked how we go about selecting the shares to put on to the Winning Shares List (WSL). Right now, there are 102 shares on the list with 5 having gone down since they were added, 94 are up and 3 are unchanged. On an annualised basis, 24 of them are performing at above 100% per annum.   

As a private investor,

Kore Revisited

Kore (KP2) remains at once the most exciting and most risky investment on our Winning Shares List (WSL) at the moment. We originally added it to the list just over a year ago on 16^th May 2024 at a price of 20c. It subsequently rose to a high of 83c on 3^rd October 2024 and we published an article

Rand Strength 2025

The strength of the rand is both a critical and a complex issue for private investors on the JSE. Our currency is influenced by two primary forces:

1. Our local economy’s prospects
2. The rand’s role as a leading emerging market currency

These, in turn, are

Sibanye Revisited

In these uncertain times, when nobody really knows to what extent Trump will back down on the international trade war which he has initiated, many investors are moving into precious metals as a hedge against the weakness of paper currencies (especially the US dollar) and paper assets like equities and bonds.

The problem

Smart Local Investors

The last two months have been wild on the markets – mainly because of Trump’s ill-advised, on-again, off-again tariff policies. The issue now is:

Will this morph into a full-blown bear trend? Or is this correction almost over?

From his election victory on the 6^th of November 2024,

Jerome Powell

The Federal Reserve Bank (“the Fed”) is completely outside the control of the President and Executive Branch of the US government. The chairman of the Fed is appointed for a renewable 4-year term by the President. The President cannot remove the Chair without cause. The current chairman, Jerome Powell was appointed by Trump during his first term as President and reappointed by

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500

Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19^th February 2025 to Friday’s