BROKERS’ NOTES: Buy Shoprite, sell Boxer

Buy: Shoprite

Shoprite combines scale, quality and broad relevance in a way no other South African food retailer does. Its store network and product range span all income groups — from value-focused Shoprite and Usave to premium Checkers and Sixty60 — and cover essential categories including food, liquor, pharmaceuticals and pet care. This breadth supports defensive growth, even in a weak macro environment. Recent results reflect strong execution: margins expanded, costs were well contained and more than 260 new stores were opened across formats. Investments in the supply chain, new distribution centres and Sixty60 are also tracking well — positioning the business for future efficiency and reach. While near-term cash conversion has been affected by capex and inventory build, we are at the tail end of a multiyear investment phase. With major infrastructure in place, improved cash metrics can be expected. Operationally, Shoprite continues to deliver volume-led growth and stronger returns. Trading at 16.5 times June 2026 earnings, Shoprite remains a high-quality compounder trading at what we estimate to be a fair price.

Sell: Boxer

Boxer’s early growth narrative is showing signs of strain. Management has revised IPO targets downwards, including store rollout (now 25 a year, the low end of prior guidance), liquor expansion and revenue growth expectations (now 10%-12% compound annual growth rate, down from about 15%). These adjustments raise concerns around execution — particularly the risk that it will take longer to find attractive store locations. At the same time, trading margins are likely to drift lower as the cost of scaling — including wage inflation, lease escalations and the build-up of standalone corporate functions post-IPO — begins to weigh. Despite this, Boxer trades at 18 times February 2027 earnings, a premium to Shoprite, and sits above our estimate of fair value. The valuation is pricing in flawless delivery — yet recent signals point to the opposite.