Choppies IPO

Its here. The Choppies Group has listed in the Botswana Stock Exchange. No pun intended but their tagline "Value For Your Money" seems to be taking on a whole new meaning. But what does this mean for the average investor and the average Motswana?

The expansion of Choppies into the neighbouring countries accentuates their hunger for growth. And growth coupled with profits boosts the P/E. Given how much the Group makes [in profit terms] this wont be a big issue, I for one  will put my head on the block and make the assumption that the stock price will have increased by at least  35% in half a year. The basic assumption and fundamental principle is that given the market share and the scope of operations, the windfall will be favourable for Choppies. Also given the limit to the number of share they have offered in terms of private and public placement, there is a possibility of  over-subscription.

Now the average investor will benefit from the capital gains. Basic finance teaches us that capital gains are realised when the stock price increases in value, thus increasing value for the shareholder. However given the stagnant nature of the BSE I will like to reduce the outlook on stock price movement a bit. The retail industry in Botswana is very competitve and with Choppies on a steamroll one can only imagine. The average Motswana is happier if there are more Choppies stores --Hyper and supermarket, where they can spend their hard earned income. Batswana are driven by consumption, much more so. Our generation however is frantically trying to shift the dynamic through entrepreneurship. Another topic of the day could be the issue of  tenderprenuers (or tender boys) which hurts innovation and gives rises to bribery and corruption. (I believe the whole system can be revised and revamped to re-engineer the tendering process)

Back to Choppies. I highly recommend 'buy&hold' for Choppies. The IPO came at a very opportune time, a time of festive where bonuses and 13th cheques  are running rampant. My analyst friend says he needs around  1million euros and i can imagine ~900,000 shares (the listing price =P1.15 very underpriced if you ask me!)
and he can sit back relax, peruse their annual reports and track their operation while watching the porfolio grow.

So, people the window is open for another 30 days or so, move that money and get the Choppies shares....I am gonna do that.

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