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Blog : 12 October 2016 (PSG looking to benefit from #feesmustfall)
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PSG Group (PSG) published their results for the 6months ended 31 August 2016 today and it makes for interesting reading. We take a quick look.
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PSG Group results in summary
- Sum of the Parts (SOTP) equates to R228.32 per share
- Interim dividend up to R1.25 (up 25%)
- R1.7billion in cash available for investments
- Capitec makes up 47% of PSG's SOTP
- Curro makes up 21% of PSG's SOTP
- PSG Konsult makes up 11% of PSG's SOTP
- Zeder makes up 10% of PSG's SOTP
In short it's a very good set of numbers for PSG. Perhaps the only slow or disappointing performer being Zeder (which is understandable considering the drought in South Africa and that they are heavily involved in the agricultural sectors).
Capitec, PSG's biggest asset is steaming along adding around 100 000 new clients a month (and this with new products such as credit cards coming on line soon).
Curro has grown exponentially (the share price more so than earnings, but future profits will be higher and therefore justifying the high PE ratio it is currently demanding).
PSG Konsult showed a strong set of numbers. Gaining traction in the asset management arena, especially with greater marketing and advertising take place for PSG recently.
But in interviews after their results the current CEO of PSG Group mentioned a few interesting points, and suggested where PSG group would be focussing their efforts and cash in the medium term. And some of this might be due to the controversial #feesmustfall campaign that has been raging at universities across the country.
The #feesmustfall movement is demanding free higher education. While this would be the ideal, the question is who would be paying salaries of all the university staff if there are no tuition fees charged? Government? Don't think so as they are already running budget deficits and have to borrow money to fund their current spending commitments. If free education is given, or no fee increases are implemented, soon universities will struggle to keep staff. And the overall quality of tertiary education will fall as skilled staff leave the industry.
Capitec, PSG's biggest asset is steaming along adding around 100 000 new clients a month (and this with new products such as credit cards coming on line soon).
Curro has grown exponentially (the share price more so than earnings, but future profits will be higher and therefore justifying the high PE ratio it is currently demanding).
PSG Konsult showed a strong set of numbers. Gaining traction in the asset management arena, especially with greater marketing and advertising take place for PSG recently.
But in interviews after their results the current CEO of PSG Group mentioned a few interesting points, and suggested where PSG group would be focussing their efforts and cash in the medium term. And some of this might be due to the controversial #feesmustfall campaign that has been raging at universities across the country.
The #feesmustfall movement is demanding free higher education. While this would be the ideal, the question is who would be paying salaries of all the university staff if there are no tuition fees charged? Government? Don't think so as they are already running budget deficits and have to borrow money to fund their current spending commitments. If free education is given, or no fee increases are implemented, soon universities will struggle to keep staff. And the overall quality of tertiary education will fall as skilled staff leave the industry.
But this does open up a gap for private universities. Parents willing to pay for their kids to get a quality tertiary education will soon start looking to private universities who can charge the fees they want without being influenced by government or other outside factors. These private universities will be able to attract staff that left public universities and to pay for skilled staff.
Curro has mentioned in the past that their ultimate aim is to develop a university, where kids going through their schools can go on to tertiary studies. The #feesmustfall movement might just fast track Curro's university plans as they will be eager to step into the gap that is being created by #feesmustfall. And as COH's luck would have it. PSG's private equity arm has stakes in educational companies too. Watch this space as a tie up between PSG's private equity arm and Curro to create a tertiary institution where parents can send their children to a private university.
In addition to this PSG mentioned that the energy sector is another one they are eyeing. With ESKOM's gross inefficiencies creating loads of opportunities for others to come into the market to service consumers and business' electricity demands.
Keep an eye on PSG, they have a way of identifying gaps in markets and making the most of it (think Capitec). With R1.7billion for acquisitions and growth things will get pretty interesting very soon at PSG.
Curro has mentioned in the past that their ultimate aim is to develop a university, where kids going through their schools can go on to tertiary studies. The #feesmustfall movement might just fast track Curro's university plans as they will be eager to step into the gap that is being created by #feesmustfall. And as COH's luck would have it. PSG's private equity arm has stakes in educational companies too. Watch this space as a tie up between PSG's private equity arm and Curro to create a tertiary institution where parents can send their children to a private university.
In addition to this PSG mentioned that the energy sector is another one they are eyeing. With ESKOM's gross inefficiencies creating loads of opportunities for others to come into the market to service consumers and business' electricity demands.
Keep an eye on PSG, they have a way of identifying gaps in markets and making the most of it (think Capitec). With R1.7billion for acquisitions and growth things will get pretty interesting very soon at PSG.