Challenging Nu-World’s old order

Deep-value acolytes, stand closer.

Nu-World Holdings, a low-key but enduringly profitable consumer brands distributor which in recent years has traded at a desultory discount to its NAV, is now seeing a strong pushback from shareholders.

Whether this pushback unlocks value or creates new growth opportunities in the short to medium term remains to be seen. But investors who have watched Nu-World’s share price languish for the past few years will certainly take notice of developments at the company’s AGM last week.

Results from the AGM showed that shareholders — most notably major backer Inhlanhla Ventures, with a 32% stake — voted in big numbers against several key resolutions.

Nu-World, which reported turnover of close to R2.3bn in its 2025 financial year, distributes well-known household appliance brands such as Sunbeam, Conti, Telefunken, Goldair, Aiwa and JVC.

The company, effectively managed and controlled by the Goldberg family, has been listed since 1987 and has an enviable and unbroken track record of consistent profits and dividends. But crimping top and bottom lines in recent years has weighed on investor sentiment — enough for key shareholders to register their dissatisfaction at the AGM.

The reappointment of directors Graham Hindle (the long-serving FD) and Michael Judin only received 55.18% of the eligible votes. Remuneration resolutions, including payment to nonexecutives and the repurchase of shares, also received support from just 55.18% of eligible votes.

The shareholder dissension was rather abrupt. Inhlanhla has not previously made waves at Nu-World. The entity bought an initial 28% stake in 2018 from Wild Rose Capital, which had acquired that stake from Old Mutual a few years earlier.

David Brouze, a well-known businessman who has been associated with listed counters such as Austro, House of Busby and enX, is the prime mover at Inhlanhla Ventures. He stresses that his position is not an attack on executive management.

“[CEO] Jeff Goldberg has worked hard to build and sustain the business. He is fundamentally honest and committed. This is not personal.”

However, Brouze argues for a clear distinction between respect for management and expectations of governance evolution. “Even solid businesses require renewal. Succession planning, board refreshment and credible independence are not signs of instability — they are signs of maturity.”

He says one of the central concerns is the tenure of certain nonexecutive directors, some of whom have been associated with the company for several decades.

Judin, currently listed as the lead independent nonexecutive director, was appointed to the board in 1989. Michael Goldberg has served on the Nu-World board since its listing in 1987 and has chaired the group since 2001 (albeit on a nonexecutive basis since 2024).

“When tenure extends well beyond accepted norms, shareholders are entitled to ask whether independence is still robust — both in fact and in perception,” says Brouze.

Brouze holds that listed companies must be seen to have genuinely independent oversight. “Optics matter.” He adds that governance credibility depends not only on compliance but also on confidence.

“A board can be technically compliant and still face legitimate questions about refreshment and oversight.”

While dividend flows are not at risk of being stanched in the short term, there is the pesky issue of Nu-World’s eye-popping value proposition

Perhaps a more fundamental concern for shareholders is Nu-World’s operating performance in recent years. A quick glance at its 10-year track record will show diminishing revenue, profits and returns — with the only real comfort in the form of steady dividends that are, these days, covered 2.5 times by earnings.

Turnover has drifted down from a R3bn high in 2019, while the combined operating profits of R188m for the 2024 and 2025 financial years don’t match the R223m generated in 2019.

Nu-World’s return on total assets for the past three financial years has ranged between 5.2% and 5.6% — almost half the 11% seen as recently as 2021 and well off the 13.6% and 18.4% notched up in 2019 and 2018 respectively.

The share price is up less than 4% over five years, with a R35 high seen in early 2022. For the past few years the share has ranged listlessly between R25 and R30.

Nu-World’s current board has a distinct taint of greyness, with Jeff Goldberg now 70 and his brother Michael, the nonexecutive chair, 73. Judin, the other nonexecutive, is close to 80. It is worth noting, though, that Frank Davidson — viewed as Inhlanhla’s board representative at Nu-World — stepped down recently.

In terms of board composition, Hindle says new board appointments are imminent. “This will happen within weeks and will bring new ideas into the company.”

On Tuesday Nu-World announced the appointment of Amos Mboweni, GM of real estate at Eskom and former executive director for sustainable human settlements development at the City of Tshwane, as an independent nonexecutive director.

Hindle suggests disgruntled shareholders are not cognisant of the current difficulties in the consumer goods wholesale sector. “We are doing our best in a tough market and doing well compared with our peers. The company retains a strong balance sheet and is traditionally strongly cash generative.”

Whether more minority shareholders will lean towards Brouze’s side remains to be seen. While dividend flows are not at risk of being stanched in the short term, there is the pesky issue of Nu-World’s eye-popping value proposition.

The share price of around R27 represents a discount of more than 60% on an estimated R68 a share “hard” NAV (stripping out deferred tax, goodwill and other intangibles).

The Nu-World share price is also underpinned by a net cash holding of about R395m, which is equivalent to around R18 a share. If the cash component is stripped out, Nu-World is effectively trading on an earnings multiple of just over two.

The consideration for shareholders is whether to watch and wait to see if management’s efforts to rebuild profitability to previous levels can spark life into a slack share price … or to hope Brouze can play the role of an activist investor to force an unlocking of value or a strategic overhaul to reharness the company’s profit potential.

“There is clear embedded value,” Brouze says. “The issue is whether the board and leadership are structured in a way that fully unlocks it.”

He says that with a strong balance sheet and mature distribution platform, investors are increasingly focused on capital allocation discipline — including potential share buybacks, enhanced dividends, acquisitions or renewed growth initiatives.

Brouze’s stake in Nu-World is worth around R195m, but at the stated intrinsic value, that stake is worth closer to R450m.

“Preparing leadership transition is prudent governance, not disruption,” he contends. “The market needs to see a credible pathway for the next phase of growth.

“This is about strengthening the company for the next decade — ensuring credible independence, visible succession planning and disciplined capital deployment that narrows the valuation gap.”