Choppies share price jumps on JSE debut
Isaac Pinielo | Thursday May 28, 2015 18:04
According to a press release from Choppies, the retailer’s share price increased from R4.90 (P4.02) to R5.10 (P4.16) per share shortly after the 9am listing.
Group chief executive officer (CEO), Ramachandran Ottapathu expressed delight, stating that the listing on the JSE has led to a broader shareholding in the company. He welcomed the new shareholders to the company, noting that Choppies offers a compelling investment case because of its growth trajectory and cash rich business.
“Our proven business model, knowledge of the market and exciting economic fundamentals clearly show Choppies is ideally placed to grow its market share across Africa as shoppers turn to branded convenience in ever-growing numbers,” he said.
The retailer had placed 277 million ordinary shares at an offer price of R4.90 (P4.02) comprising a placing of 117 million new subscription shares and 160 million existing shares. The company will be the fourth listed African company to have an inward secondary listing on the JSE.
Before listing, Choppies successfully raised a total of R1.4 billion (P1.1 billion), with R575 million (P471 million) to be used to reduce debt and finance expansion plans, while the retailers’ top three directors will collectively pocket R784 million (P642 million) from selling their shares.
At the end of last year, Choppies had total borrowings of P466 million, as shown by its interim financial results for the six months ended December 31, 2014.
The P4.7 billion company, which already trades on the Botswana Stock Exchange (BSE), plans to double its store numbers in existing markets, and enter new countries such as Zambia, Tanzania and Kenya.
The company plans to expand from its current footprint of 125 stores in three countries to 200 stores in five countries by the end of 2016.
In addition, Choppies has invested in over 44,000 square metres of combined distribution centres and logistical infrastructure that will deliver superior scale benefits as the company expands across the region.
“The JSE listing is a valuable opportunity to showcase the company and we look forward to growing our footprint and delivering long term value for stakeholders and investors,” said Ottapathu.
Choppies has seen superior growth over recent years with a compound annual growth rate of 27 percent in total revenues from P2, 435 million, for the year to 30th June 2011 to P5,012 million for the year to 30th June 2014. Since listing on the BSE in 2012, Choppies has maintained a dividend pay-out ratio consistently above 30 percent.
The dividend payout ratio is expected to increase towards 50 percent in future.