The Massmart update came out yesterday and the stock was down over 3% because this stock is priced for perfection. Headline earnings per share for the 52 week period ended 24 June 2012 looks to increase by 26.8%-33.8% to between 549c-579c. However there have obviously been a lot of recent activities with this one with the Wal-Mart deal bringing in extra costs. Last year headline earnings per share before transaction costs came in at 641c. This year HEPS before costs looks to come in between 641c and 679c per share so not much growth there.
When you exclude transaction costs the stock still trades on 25 times earnings. Investors, which include ourselves expect the growth to only come at a later stage. The Wal-Mart influence will take time and the expansion up into Africa inevitably requires big capex. We continue to like the stock and are not deterred by the high valuation. The stock is 90% foreign held so it is not us who are determining this premium. More details to come when the full release comes out on 22 August.