Buy: TBC Bank Group
Georgia’s leading digital bank is a rare high-quality compounder trading at a discount. TBC earns a return on equity (ROE) of roughly 23% — against a bank industry median near 9.5%. Despite these high returns, it trades at 1.4 times book and an earnings multiple of six. It also offers a dividend yield close to 6%. That combination is anomalous: sustained mid-20s ROE normally commands a higher premium to book. The gap reflects Georgian country and currency risk, not franchise deterioration. TBC dominates domestic banking while scaling a fast-growing digital arm in Uzbekistan, extending the growth runway. Capital-generative profitability funds both the dividend and expansion, so book value compounds while shareholders are paid to wait. Rerating towards peers offers upside on top of that compounding.
Sell: Pick n Pay
The Edcon parallel is uncomfortable but apt: a once-dominant national brand ceding relevance to a sharper rival, funding survival by selling assets rather than fixing the core. Financial 2026 results confirm the pattern — group turnover is up just 1% to R120.3bn and trading profit is down 4.2%, with a headline loss of R386m. Breakeven for the Pick n Pay segment has slipped again, now targeted for financial 2029. Tellingly, management raised R4.7bn by cutting its Boxer stake to 53.1% — monetising the one franchise that works to prop up the one that doesn’t. The market already values the core near zero: the group trades below the worth of its Boxer holding alone. Meanwhile, Checkers Sixty60 keeps extending its online lead and Shoprite grinds share out of a business that has bled it for years. Turnarounds in structurally disadvantaged grocery are rare; three years in, the burden of proof remains unmet.
