SENS-AI
CHP Results Bearish

CHOPPIES ENTERPRISES LIMITED - Unaudited Group financial interim results for the six months ended 31 December 2025

Choppies Enterprises Limited
Full analysis

What this filing means

Choppies delivered an 8.9% increase in retail sales, but this was completely overshadowed by a 57.5% plunge in headline earnings per share and a dividend cut.

Choppies sold more groceries and opened new stores, but the costs to run the business rose much faster than sales. This led to a large drop in profits and a smaller dividend payment to shareholders.

Bull case

  • Revenue momentum remains positive with an 8.9% increase in retail sales, supported by volume and price growth.
  • Free cash flow improved significantly to BWP 118 million from BWP 53 million in the prior period.
  • The Group continues to execute its growth strategy, having successfully added 25 new stores.
  • The Liquorama segment showed operational improvement, with gross profit margins expanding from 12.3% to 13.6%.

Bear case

  • Operating profitability is under severe pressure, with adjusted operating profit declining 28.9% as costs outpace gross profit growth.
  • Earnings quality is compromised by the inclusion of non-cash gains from the derecognition of payables.
  • A 57.5% decline in headline earnings per share (HEPS) highlights substantial deterioration in core profitability.
  • The dividend was cut from 1.6 thebe to 1.0 thebe, reflecting lower profitability and cash flow pressures.
  • The current trailing P/E of 19.8x appears demanding given the sharp decline in earnings and ongoing macroeconomic headwinds.
View original SENS announcement

AI-generated summary by SENS-AI, based on the original JSE SENS filing.

SENS-AI conclusion

Choppies Enterprises reported its interim results for the six months ended 31 December 2025, revealing an 8.9% increase in retail sales offset by a 57.5% drop in headline earnings per share and a dividend reduction to 1.0 thebe. The significant contraction in core profitability, driven by costs growing faster than gross profit and macroeconomic headwinds, strictly outweighs the top-line volume growth and footprint expansion. These are unaudited interim figures and do not fully reflect the long-term impact of the newly added stores maturing. Investor Takeaway: The severe deterioration in HEPS and margin compression clearly dominate the top-line growth, signaling substantial fundamental strain that makes the 19.8x multiple look demanding.

Core profitability deterioration is severe and margins are compressing. The demanding valuation multiple limits the appeal of the long-term recovery thesis.

Decision framework

Current stance: Filing Positive

Key drivers

  • Revenue momentum remains positive with an 8.9% increase in retail sales, supported by volume and price growth.
  • Free cash flow improved significantly to BWP 118 million from BWP 53 million in the prior period.
  • The Group continues to execute its growth strategy, having successfully added 25 new stores.

Key risks

  • Operating profitability is under severe pressure, with adjusted operating profit declining 28.9% as costs outpace gross profit growth.
  • Earnings quality is compromised by the inclusion of non-cash gains from the derecognition of payables.
  • A 57.5% decline in headline earnings per share (HEPS) highlights substantial deterioration in core profitability.

What would change the view

  • Forward guidance is cut or withdrawn in the next update.
  • Cash-flow conversion deteriorates relative to reported earnings.
  • Positive thesis fails to hold through the next reporting window.

Evidence from the filing

  • Revenue momentum remains positive with an 8.9% increase in retail sales, supported by volume growth of 3.8% and price growth of 7.1%.

    “The Group's retail sales increased by 8.9% to BWP 5 091 million (2024: BWP 4 677 million), driven by 25 new stores, inflation, and volume growth. Choppies segments achieved volume growth of 3.8% and price growth of 7.1%”

  • Free cash flow improved significantly to BWP 118 million from BWP 53 million in the prior period, demonstrating enhanced cash generation capabilities.

    “Free cash flow 118 53 65”

  • The Group continues to execute its growth strategy, having successfully added 25 new stores to its footprint.

    “The Group's retail sales increased by 8.9% to BWP 5 091 million (2024: BWP 4 677 million), driven by 25 new stores”

  • The Liquorama segment shows operational improvement, with gross profit margins expanding from 12.3% to 13.6%.

    “The Liquorama gross profit margin improved from 12.3% to 13.6% compared to the prior year.”

  • Operating profitability is under severe pressure, with operating profit falling 20.0% and adjusted operating profit declining 28.9%, as costs continue to grow at a significantly faster rate than gross profit.

    “Operating profit (EBIT) decreased by 20.0% from BWP 190 million to BWP 152 million. Adjusted EBIT decreased by 28.9% from BWP 204 million to BWP 145 million. The EBIT decline is due to costs growing at a much faster rate than Pula gross profit.”

  • The company's earnings quality is compromised by the inclusion of non-cash gains, specifically the 'derecognition of payables' from discontinued operations, which masks the underlying weakness in continuing operations.

    “this year included a gain from the derecognition of payables resulting from the discontinued operations of Kenya, Tanzania, and Mozambique”

  • The 57.5% decline in headline earnings per share (HEPS) highlights a substantial deterioration in core profitability, which is further exacerbated by a 108 basis point contraction in operating margins.

    “Headline earnings per share 3.1 Thebe 7.3 Thebe (57.5%)”

  • The current trailing P/E of 19.8x appears demanding given the 33.0% decline in profit for the period and the ongoing macroeconomic headwinds in the Botswana market that are suppressing consumer liquidity.

    “Trailing P/E: 19.8x”

  • The dividend cut from 1.6 thebe to 1.0 thebe reflects the board's acknowledgement of lower profitability and the ongoing regional economic pressures impacting cash flow generation.

    “The Board has declared an interim dividend (number 11) of 1.0 thebe per ordinary share (2024: 1.6 thebe)... The reduced Thebe dividend reflects lower profitability due to regional economic pressures.”
Category
Results
Event posture
Relief Bounce Risk
Published
Mar 25, 2026

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