File Image
DURBAN - Homechoice International, a South African home retailer and financial services provider, has flagged a 14percent jump in group revenue for the first quarter of 2018, buoyed by strong retail numbers.

Group revenue for the first three months is expected to soar by 14.1percent to R720million as compared to last year, the JSE listed company said in a trading statement on Friday.

Retail revenue for the same period is expected to increase by 12.5percent to R540.8m, driven by retail sales growth of 16.4percent to R397.5m.

“Retail customers continue to respond well to the group’s innovative products and expanded brands offering,” the company said.

Revenue from the financial services division will strengthen by 19.1percent to R179.2m on the back of strong growth in loan disbursements and an increasing contribution from the insurance business.

The group also added the rapid adoption among customers of the group’s mobile channels enhanced their shopping experience and convenience.

Despite the positive update, the company’s share price was flat at R47 a share on the JSE on Friday. The group is incorporated in Malta and through its retail (HomeChoice) and financial services (FinChoice) businesses; the group sells innovative home wares merchandise, personal technology and loan products to the middle-income market in southern Africa.

Fairly cheap

Homechoice’s lack of liquidity in the share has contributed to a low price to earnings rating, making it fairly cheap compared to its peers.

This is expected to change, as the company is planning a capital raise after two main shareholders agreed that they would, at the right price, sell down a portion of their shares to improve liquidity.

GSM, which holds 70percent of the shares, and London-based private equity firm DPI, which owns 23percent of the company, agreed to dilute their holdings.

Homechoice is expected to raise R400m through a primary and secondary placement of shares in a bid to improve liquidity and access a bigger pool of investors.

The company has been on a significant growth trajectory over the past ten years after recording a 21percent annual boost in revenue and profit growth of 31percent a year over 10 years. It is also adding 20000 customers a month.

Homechoice said it continues to see good demand for its products and is well positioned to take advantage of improving economic conditions, as well as to capitalise on the growing digital adoption by customers.

Last week the World Bank said the South African economy is expected to grow by 1.4percent in 2018, citing prevailing optimism that has not yet translated into investments.

Homechoice expects to release its half-year results to end June on August 27.

- BUSINESS REPORT