Steinhoff - minor update

All, 

Please find our updated analysis on Steinhoff here. 

The update is minor and there is no change to the investment thesis. We remain long the SFH A1s (21/22s) with a view to benefit from a deal with shareholders / litigation claims. 
The updates on quarters 1 and 3 are becoming ever lighter, so while we can see that PEPCO revenues handsomely outperformed our expectations, we do not know at what margin.  Still, it is sales we have been most worried about in the pandemic, so we take it as a significantly positive sign as we anticipate some 10 cents of recovery being tied to the performance of SEAG - chiefly Pepco Pundland.

Meanwhile, the Rand dropped vs the Euro, which counterintuitively raises the theoretical recovery from the South American arm. While the Pepkor market cap is largely unchanged in ZAR terns, therefore lower in Euro terms, so are the largest shareholder claims and the settlements offered to them. This means less ultimate dividend to the NV, but because the recovery from SIHPL dwarfs the recovery from the NV, the net effect is actually positive for the SFH A1s.


Wolfgang