CA Sales Holdings focuses on route-to-market solutions for fast-moving consumer goods (FMCG) companies.
Getting a brand’s products onto the shelf at large grocery outlets is tougher than most investors might think. There are many hoops to jump through, from logistics and distribution right through to on-shelf visibility and promotions.
It may sound like only smaller FMCG players need help with this. After all, don’t the biggest names in the game know how to do this themselves?
As logical as it might appear, this assumption is completely off the mark; CA Sales works with some of the biggest FMCG brands in the world. The average client has been with it for 19 years and is either No 1 or No 2 in its category.
This is a sticky customer base of top brands, and part of the reason the company grew its headline earnings 17.1% in the year ended December 2025, despite the fact that Botswana (a problematic region thanks to the diamond market) contributes nearly half of group revenue. In case you’re wondering, the dividend followed suit with a 17.4% increase.
One of the bright spots is South Africa. Despite tepid GDP growth and our retailers constantly coming under pressure, CA Sales grew revenue in our market by 10.2%. That’s more than double the growth the market is seeing at many retailers.
The only way to do this is by increasing market share. CA Sales has achieved organic growth through a strategy of increasing both the number of clients and the doors being serviced in the market. It refers to this as a “wider channel offering” — and it essentially makes the company even more valuable to FMCG players.
A single-digit earnings multiple for this growth outlook feels very interesting indeed
Perhaps it is time to start thinking of CA Sales as a platform business, akin to two-sided marketplaces? It would do wonders for the valuation if the market started applying that lens to the company.
There’s far more to the group than just South Africa and Botswana. It operates across 10 countries in Southern and East Africa, with the kind of footprint that you actually want to see in Africa (in other words, one that avoids the riskiest West African markets). With more than 360 clients and more than 169,000 serviced doors across that footprint, there’s a proper moat here.
The entry into East Africa is an important step for the group. It has acquired 35% in Tradco Services, a founder-led company operating in Kenya, Uganda and Tanzania. Tradco achieved 24% revenue growth in the past year (measured in rand), so it’s cooking in that part of Africa.
CA Sales has the option to increase the stake to 55%. The company is doing more work on making a final decision here. Unless something really strange crops up, we can probably assume it will execute the option and move Tradco up from an associate to a consolidated subsidiary.
This will help reduce the concentration risk in Botswana, an issue that the market has been worried about. Though segmental ebit in Botswana was up an astonishing 13.5%, despite a nearly 4% drop in revenue, it cannot keep that up forever. Increasing exposure elsewhere in Africa will be a boost to the group valuation.
Margin expansion (as in Botswana) has been a feature of this story, with ebitda margin rising from 5.7% in 2020 to 7.8% in 2025. Adding 210 basis points to the margin over that period is no joke, even off a Covid base. Some of this is thanks to the associate income, which lands on the income statement as a single line (only the net earnings, not the revenue). For context, of R861m in operating profit in 2025, R32m was the share of profit from associates. But most of it is thanks to operating efficiencies and the benefits of scale.
Return on invested capital has increased from 14.1% in 2020 to 21.2% in 2025. This is a great return, especially as 28% of segmental ebit is from South Africa as a “safer” country in Africa.
The strategy is to keep doing more of the same, which means pushing a combination of organic and acquisitive growth. Market consolidation is a significant opportunity, even in a more mature market such as South Africa. In East Africa, the company’s journey has only just begun. Namibia is another exciting opportunity, with ebit having nearly doubled in the past year.
The share price is down 19% over 12 months, with the market concerned about Botswana. The 52-week high of R19.60 is a long way up from the spot price of R14.53. A single-digit earnings multiple for this growth outlook feels very interesting indeed.
