The JSE can’t count too many remarkable transformation stories. Very few companies can manage a radical operational or strategic overhaul to emerge as a new-look counter with vastly improved long-term prospects. Mostly, sudden changes in strategic direction are signs of desperation — and often end in tears for shareholders.
But there have been exceptions. Naspers was once a media house that earned the bulk of its keep from printing and publishing — owning some of the biggest newspaper and magazine titles in South Africa. It made a subtle shift into the new media space in the late 1980s with an investment in pay TV, but the big change came with its willingness to invest in cutting-edge technology ventures.
The rest is history. The pay-TV business and printing assets have long been unbundled, with traditional media now just a sliver of the business model. Printing and publishing don’t feature in Naspers any more.
Rex Trueform is a lesser-known example. In the 1980s the company realised its clothing manufacturing operations were increasingly unviable, so it smartly shifted into lucrative fashion retailing via the Queenspark chain. Today Rextru is an investment counter, relying on steady cash flow from retail operations to diversify its portfolio, with the only remnant of the old clothing manufacturing operations being properties in the revamped Salt River hub in Cape Town.
HomeChoice International, once a dowdy specialist retailer, might just be another JSE listing that could enjoy the fortunes of change.
That said, the JSE today hardly looks conducive for inspired and potential high-growth corporate transformation stories. With a moribund South African economy and saturated, mature markets across most industries, local companies have few opportunities for expansion. True growth stocks on the local bourse have become rare. The few that do fit the bill are often pursued to the point of overvaluation, as the soaring share prices of Boxer and WeBuyCars attest, following their successful recent listings.
This fervour is typically reserved for companies above a certain size, which leaves many smaller high-potential players overlooked.
HomeChoice might be one such hidden gem. Listed under the ticker symbol HIL, the group has quietly transformed itself from a traditional mail-order retailer into one of South Africa’s most innovative fintech-driven businesses.
Founded in 1985 as a catalogue-based retailer, HomeChoice initially targeted middle- and lower-income South African consumers, offering furniture, appliances and homeware with flexible payment options such as lay-by. (This is an “ancient” payment method where the buyer pays regular instalments on a product that is held by the store until the full amount is paid, allowing the buyer to spread out the cost over time without paying interest — nominally, at least.)
At a time when traditional banking access was scarce, this model — paired with a keen understanding of local consumer needs — built a loyal customer base and positioned HomeChoice as a pioneer in credit-driven retail. At a recent presentation, it was noted that over the past 40 years the group has decorated the bedrooms of 7-million people, and if the group’s most popular kitchen pot sets were to be melted down, the weight would be equivalent to 88 fully grown elephants.
While HomeChoice has retained its legacy retail segment, its contribution to group profits has steadily dwindled over the years, now accounting for just 8%. However, a recent turnaround in this division — driven by the introduction of smaller-format showrooms where customers can inspect products before purchasing — has restored profitability, much to management’s satisfaction.
Now operating as a fully integrated omnichannel retailer, HomeChoice allows customers to shop for high-quality homeware products online, via the HomeChoice app, or through its growing network of physical showrooms. Products are delivered directly to customers’ homes, with the added convenience of a click-and-collect option from regional hubs.
However, while illustrating the company’s ability to adapt to changing consumer behaviour, that’s not the real story of HomeChoice’s transformation.
Recognising the shift towards digital commerce as early as the mid-2000s, the group made a bold strategic pivot. It started evolving beyond traditional retail with the launch of FinChoice, later rebranded as Weaver Fintech.
Today, this technology-driven financial services platform generates 92% of group profits, with core revenue streams coming from unsecured lending and the more recently introduced buy now, pay later (BNPL) offering.
As the historic core of Weaver Fintech, FinChoice was launched as a platform offering personal loans to HomeChoice’s retail customer base. At a recent investor presentation, chair Shirley Maltz reckoned that rapid growth in the number of digitally savvy urban African customers presents a major market opportunity. She estimates the total addressable market to be 21.8-million potential customers, with 18.9-million in the unsecured credit segment.
Maltz says the average HomeChoice customer is an urban African woman who earns about R16,000 a month, has a family and is aged 37. It’s the mass middle market that looks for convenience.
The catalogue business now seems to be very much on the fringe. Maltz notes: “We think the fintech business will continue to outpace the market as products get embedded. Weaver is very profitable. Over the past five years we’ve had over 30% compound annual growth rates [CAGRs]. And we are seeing a lot of cross-selling.” More insurance products are in the pipeline, and the retail business is back into growth.
Today, FinChoice is a sophisticated, data-driven financial services business, providing unsecured lending, insurance products such as funeral cover and personal accident insurance, as well as other value-added services.
Its growing customer base consists of 451,000 active users, 95% of whom engage via smartphones. The business offers loans of up to R40,000, with flexible repayment terms of six, 12, 24 or 36 months, paid via debit order. New clients typically qualify only for loans of R25,000 or less, with repayment terms no longer than 24 months.
It’s a particularly sweet spot that HomeChoice is tapping. Africa’s fintech market is projected to grow to $65bn by 2028, according to the BDO Fintech in Africa 2024 report, with a CAGR of 32%.
HomeChoice CEO Sean Wibberley says part of the strategy is to grow the fee income percentage, such as commissions and insurance. These contribute 36% but the long-term goal is to get the proportion closer to 50%.
The second pillar in Weaver Fintech is PayJustNow, a BNPL platform in which HomeChoice acquired an 85% stake in 2022. While BNPL is a relatively new concept in South Africa, operators like PayJustNow have rapidly emerged as highly profitable players in the fintech space, supported by rising consumer demand for flexible payment options.
It’s a win-win model. While shoppers enjoy interest-free credit for a limited period, BNPL providers typically earn fees of between 2% and 8% on each transaction from their retail merchants. Retailers are happy to pay up, since BNPL services have been shown to increase conversion rates and basket sizes, while allowing them to avoid credit risk.
In addition to merchant fees, BNPL operators generate revenue through late payment penalties, though these are often capped to avoid regulatory scrutiny. PayJustNow’s average repayment period is about six weeks, with the typical credit extended sitting at about R4,200.
While Weaver’s PayJustNow operates as a standalone platform, boasting about 2.4-million customers, it also serves as a powerful lead generation tool for Weaver’s unsecured lending business in FinChoice.
By offering consumers the ability to split payments over three instalments, PayJustNow is able to collect valuable data on customer spending habits and payment behaviour. This allows FinChoice to identify potential borrowers with a far greater degree of accuracy than is possible for traditional lenders, which rely primarily on static data such as salary information and formal credit scores.
In essence, PayJustNow acts as a “low-risk audition” for customers who may later qualify for personal loans or other credit products within the Weaver ecosystem. Moreover, the payment history data generated through BNPL transactions enables FinChoice to assess credit risk more effectively, leading to better underwriting decisions and lower default rates. This approach not only allows FinChoice to lend to customers that traditional banks might reject but also improves the group’s overall profitability by reducing bad debt and enabling more competitive pricing.
The data collected through PayJustNow is also valuable for cross-selling other fintech products. For instance, customers who demonstrate responsible payment behaviour through BNPL could be targeted for FinChoice’s insurance products, such as funeral cover or personal accident insurance. These products, which cater to the lower- and middle-income market, provide essential protection for families against unexpected financial shocks and are a growing part of FinChoice’s revenue stream.
A practical example of how this symbiotic ecosystem functions looks like this. A customer shops at Superbalist using PayJustNow, spending R900 on clothing. She pays R300 upfront, with the remaining R600 spread interest-free over two months. PayJustNow settles the full R900 with Superbalist, minus a merchant fee, from which it generates revenue.
In the background, her repayment behaviour is fed into FinChoice’s credit model, which identifies her as a low-risk borrower and offers her a R5,000 personal loan via the FinChoice app, which she accepts. A few weeks later, she adds funeral cover to her loan. Meanwhile, Superbalist leverages Weaver’s data insights to target her with bedding and homeware deals, driving further sales.
In this single transaction, Weaver Fintech profits from merchant fees, lending interest and insurance premiums, while Superbalist benefits from higher conversion rates and repeat sales, all without taking on any credit risk.
Wibberley says the Weaver Fintech ecosystem now has a customer base of 2.7-million, which is expanding by 100,000 customers each month, mostly on the PayJustNow platform. This growing base is seamlessly linked to PayJustNow’s network of 2,800 merchants, which includes retailers such as Superbalist, Edgars, Makro and Cape Union Mart.
Weaver’s typical customer profile is a digitally savvy urban woman, with millennials and Gen Z featuring strongly. Wibberley says at least one additional fintech product has been cross-sold to 20% of the customer base, with a key near-term objective to increase this to 50%.
While PayJustNow has established itself as a leading player in South Africa's fast-growing BNPL market, it faces rising competition in a sector that remains highly fragmented and underpenetrated. Driven by digitally savvy younger consumers seeking more flexible alternatives to traditional credit, the local BNPL market is expected to grow at a CAGR of 9.8% between 2025 and 2030.
According to the 2023 Stitch BNPL Consumer Survey, Payflex, owned by local financial services firm FeverTree Finance, holds a 39% share of local BNPL users, while PayJustNow follows with 36.9%. The remainder of the market is split among smaller, less established players such as Float, MoreTyme (backed by TymeBank), Happy Pay and Mobicred, though their individual market shares are not disclosed. More recently, Weaver management claimed that PayJustNow had become the biggest player in the South African BNPL market thanks to robust growth and more than 10,000 points of presence.
Looking ahead, international BNPL players such as Klarna and Afterpay could also seek to enter the South African market, attracted by the country’s growing middle class and high smartphone penetration. However, in a market where network effects are key, local incumbents are well positioned to defend their turf, benefiting from a significant first-mover advantage and intimate knowledge of local market dynamics.
And PayJustNow isn’t waiting for the competition to catch up. With the recent launch of PayStretch, which allows customers to extend their repayment period for up to 12 months — albeit with interest applied — it is expanding beyond traditional BNPL into the longer-term instalment financing market. By offering consumers more time to pay, PayJustNow enables bigger-ticket purchases, a move that retailers are likely to welcome as they benefit from higher sales volumes, again without taking on any credit risk. Management believes this new product will be a major profit driver.
Another opportunity for future growth for PayJustNow is to offer short-term insurance, notably in the form of warranties and other product-related coverage, which typically deliver high profit margins due to low claim rates.
While the growth prospects of the BNPL market are exciting, unsecured lending remains the primary driver of Weaver Fintech’s profitability in the near term, while also accounting for the bulk of working capital requirements. This is reflected in the R6.3bn in personal loans disbursed through FinChoice in 2024, against R3.9bn in BNPL transactions processed through PayJustNow. However, that R3.9bn marks a significant jump from R1.5bn in 2023, driving a sharp increase in non-interest-bearing fee income, which now accounts for 36% of Weaver Fintech’s revenue.
The surging demand for BNPL services and related disbursements requires increasing investment to grow the business and defend market share against competitors. As a result, Weaver Fintech used R1bn of debt funding in 2024 to support the expansion of its ecosystem, while retaining access to further loan facilities. Wibberley says management is confident that Weaver’s high-margin, cash-generative loan book, serving as security for debt funding, will support its ambitious expansion plans, especially as fee income becomes a greater portion of turnover.
Of course, execution matters too, as underscored by the 35% surge in bad debts in 2024. Wibberley attributes this to operational disruptions during the rollout of a new arrears collections dialler, as well as the impact of higher-risk loans issued in the second half of 2023.
However, with an average loan size of just R9,500 and a relatively short average loan term of 21.3 months, FinChoice can quickly adjust its credit-granting criteria to manage risk and improve collections. FinChoice’s bad debt provisioning is conservative, with 70% of all stage 2 and stage 3 loans covered. Fellow unsecured lender Capitec has a coverage ratio of 63.5%.
At the current share price, HomeChoice appears significantly undervalued relative to peers. The stock trades on an earnings multiple of just seven and 0.77 times book value at the time of writing. This is a steep discount when compared to Capitec, which trades on an earnings multiple of 32 and an eye-watering 8.8 times book value.
Part of this valuation gap can be explained by Capitec’s strong brand and large customer base, while the bank also enjoys access to lower-cost funding in the form of retail deposits, whereas HomeChoice is reliant on more expensive funding from commercial lenders.
That said, HomeChoice’s high-margin, capital-light fintech model within Weaver is increasingly starting to resemble the more profitable parts of Capitec’s business, particularly in digital lending and payments. Importantly, HomeChoice’s cost-to-income ratio, already lower than that of many traditional lenders, is expected to decline further as the business scales up.
HomeChoice’s prospects look buoyant, with Maltz indicating that “our first few weeks this year have been strong. We’re continuing to see momentum across the business.”
Naturally, there are questions over whether the business could delist from the JSE at some point, remembering that the old HomeChoice, then headed by Rick Garratt, had only a brief tenure on the JSE in the late 1990s and early 2000s. With the fintech side of HomeChoice growing briskly, there could be other operators or retailers that might want the BNPL side of the business. Insiders say HomeChoice has been approached by local as well as overseas private equity businesses that have been impressed by the financial services side of the business.
Keep a close watch.
Additional reporting by Adele Shevel
WHERE THE RISKS ARE
A key challenge facing HomeChoice is the lack of liquidity in its shares, a frustration for some investors. The stock is tightly held, with 70% owned by GFM, an investment vehicle linked to founder Rick Garratt; a further 22% by London-based private equity firm Development Partners International; and a small proportion by current management. With just 5% of the stock in free float, trading volumes are extremely thin, with some days seeing no trades at all.
Some market commentators have suggested a merger with another fintech player as the most effective way of addressing the liquidity issue, which would enhance growth prospects.
HomeChoice International Plc chair Shirley Maltz says: “We do have people approaching us and having discussions. If we looked at a merger, it would be from a market perspective that would need to make sense strategically. But yes, we’re looking at having discussions all the time.”
Maltz, Garratt’s daughter, stresses there are no immediate plans to address the liquidity challenge. The company has sufficient access to capital through existing debt facilities.
Another option could involve acquisition by a large retailer, which would offer mutual benefits by accelerating loan growth for Weaver Fintech, while simultaneously boosting sales for the retailer. Companies that play in the low-end market, such as Pepkor, seem the best fit for this.
Though HomeChoice operates primarily in South Africa, it is incorporated in Mauritius, taking advantage of the island nation’s investor-friendly regulatory framework, tax efficiencies and business-friendly policies. This explains the Plc designation. A secondary listing on another exchange remains a compelling possibility, as it could unlock significant value by accessing deeper capital markets that recognise fintech’s potential. Beyond boosting its valuation, such a move could pave the way for easier mergers, or partnerships with other fintech players, enhancing its growth trajectory on an international stage.
It would be hard to fault HomeChoice for exploring greater offshore interest when local enthusiasm has been conspicuously lacking. Over the past five years, the company has lifted group customers, group cash collections and earnings per share by a compound annual growth rate of 36%, 26% and 25% respectively. Despite this stellar operational and financial performance, the share price has inexplicably dropped 14% over the same period.
While bullish shareholders might be tempted to call this market treatment short-sighted, one reason for this apparent disconnect could stem from the relatively brief history of the company’s new business model. It is operating in a dynamic, fast-changing market that’s outside the traditional wheelhouse of local investors. Many might be adopting a wait-and-see approach, hesitant to fully commit until HomeChoice demonstrates that its competitive advantage — or moat — is as robust and sustainable as the company asserts.
Like any business, HomeChoice faces other risks to its performance and long-term sustainability. The company operates in a challenging macroeconomic environment; persistent inflation, high interest rates and sluggish economic growth in its South African market pose significant headwinds. These factors reduce consumer disposable income, potentially dampening demand for both its retail and fintech offerings.
Credit risk remains a key concern, particularly for FinChoice, which generates the majority of the group’s profit. As a provider of unsecured loans, FinChoice is exposed to rising default rates, especially in a market where household debt levels remain high. Additionally, regulatory risk is a challenge, with South Africa’s evolving financial and consumer protection laws potentially affecting lending practices, interest rate caps and compliance costs.
HomeChoice faces operational risks linked to its e-commerce capabilities. Supply chain disruptions and rising import costs, along with a volatile currency, could increase operational expenses and squeeze margins. Given its reliance on digital channels, cybersecurity threats and data breaches pose a growing risk, potentially undermining customer trust and leading to regulatory scrutiny.
Competition in both the retail and fintech sectors continues to intensify. Larger financial institutions and emerging fintech start-ups are aggressively targeting HomeChoice’s customer base, which may pressure pricing and customer acquisition costs. If HomeChoice fails to innovate or differentiate its offerings, it risks losing market share.
Liquidity and access to capital at competitive rates are crucial for sustaining growth, particularly as the company expands its lending book. Any disruptions in capital markets or increased borrowing costs could constrain operations.
Of course, HomeChoice has successfully navigated these risks in the past, evolving from a modest mail-order retailer into a high-margin fintech powerhouse — a remarkable story of innovation and resilience. With 2.7-million active fintech customers, a rapidly scaling “buy now, pay later” platform and a profitable digital lending and insurance business, the company is quietly building one of Africa’s most sophisticated financial ecosystems — one that is likely to drive sustainable growth and shareholder returns in the years ahead.
Yet, with the stock remaining highly illiquid, institutional investors are largely uninterested, creating an attractive opportunity for patient, long-term retail investors to gain exposure to this under-the-radar fintech success story.
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