Steinhoff adds R42bn in market value in two days

Markus Jooste.

Picture: Sunday Times

Steinhoff International came out tops among the blue-chip stocks on the JSE for the second session running, boosting its market value up to 15%, equivalent to about R42bn, and raising its capitalisation to R313.7bn.

The two-day rally was sparked by the integrated retailer and manufacturer’s report of 20.3% growth in its constant currency quarterly retail sales.

Steinhoff’s share price has been under pressure since August, when it announced the capital raise to fund the multibillion-rand acquisition of UK-based Poundland and US-based Mattress Firm. On Thursday, however, the share price rose 5.73% to R73.75 in late trade on the JSE. Its recent peak was about R93.

The South African company, which moved its primary listing to Frankfurt in 2015, generates the bulk of its revenue from Europe, with Africa coming a distant second at 32% and Australasia making up the balance.

"It was a tough first year on the Frankfurt exchange, but I believe management is well on track in producing synergies for the group through these businesses and optimising the complete supply chain within these new markets," said Riaan Gerber and Martin Schmulian, analysts at Sanlam Private Wealth.

"Steinhoff has de-rated significantly from a valuation perspective, even though management has maintained profit margins during a difficult year. This provides a decent valuation for a high-quality business."

Other supporting factors on the day were a weaker rand and a generally positive mood on global markets.