Three ‘world-class’ South African companies

Shoprite, Capitec, and PSG Financial Services are “world-class” South African companies with good leadership, a good track record, and good growth potential.

This is the view of Stonehage Fleming’s head of equity management in South Africa, Johan Barkhuysen.

In a recent op-ed, Barkhuysen said South African investors do not necessarily have to look abroad to find high-quality companies.

Relative to the US stock market, the South African investment universe is small, with limited investment opportunities. 

However, this does not mean South Africa does not have some exceptional businesses that offer attractive investment opportunities. 

In addition, due to the recent challenges faced in the domestic economy, including logistical constraints and energy shortages, local businesses have experienced some of the toughest operating environments in history. 

“However, we believe that quality businesses will perform irrespective. They are coming from an extremely low base and have remained profitable and even managed to grow profits notwithstanding the challenging broader macroeconomic backdrop,” he said. 

“Imagine what they can do if the economic environment were to become more favourable.”

He said South Africa may have a small universe of shares, but the country has world-class companies.

“We believe three of these are Shoprite, Capitec and PSG Financial Services,” he said.

“These businesses have exceptional, forward-looking leadership, a strong performance track record and the potential to grow and continue delivering strong results for investors.”

Below is an overview of what makes these companies “world-class”, according to Barkhuysen.


Barkhuysen said Shoprite has “stolen the limelight” – and significant market share – in South Africa’s retail sector.

The retailer did so by taking advantage of homebound customers during Covid and creating Checkers Sixty60. 

“This previously unheard-of service commits to a 60-minute delivery turnaround time for all groceries. It has since become the largest online grocery delivery business.”

He said Shoprite achieved remarkable online delivery success because of its dedicated focus on technology and efficiency, adding that the resources it is putting behind ongoing innovation are impressive. 

The retailer has a dedicated technology team of around 500 staff members sitting in ShopriteX, which has its own campus. 

Another resounding success has been its XtraSaving loyalty programme, now South Africa’s largest.

“The company offers investors world-class operating metrics, including attractive profit margins, efficient and scalable distribution, and strong growth prospects,” Barkhuysen said. 

“We believe the main contributors to its success to date have been attracting the best people and embracing and employing the best technology in the business.” 

He added that these investments should enable Shoprite to continue to grow its market share.

Shoprite was listed on the JSE in 1986 with a market cap of R29 million. Today, it trades with a market cap of R143.43 billion and a share price of around R242.59.


Capitec was founded relatively recently in 2001 but has given South Africa’s Big Four banks, FNB, Standard Bank, Nedbank and Absa, a run for their money.

Barkhuysen explained that Capitec’s sustained success lies in its digital focus and improved efficiency with online and digital app adoption. 

It continues to invest heavily in digital innovation initiatives, with 20% of all external appointments comprising professionals with technology and data talents.

The bank offers investors the opportunity to invest in a financial services company with world-class profitability and a sustainable return on equity of more than 25%, as per their annual statements, with substantial, long-term growth prospects.

Capitec was listed on the JSE in February 2002, and its share price has increased by 155,482.73% since then, making it one of South Africa’s best-performing stocks over the past two decades.

PSG Financial Services

Barkhuysen said another world-class financial services business is PSG Financial Services, which has claimed its competitive advantage through its distribution footprint of more than 900 advisers. 

He said the company has an attractive business model, creating an operating platform for entrepreneurial advisors to build their businesses. 

PSG shares in their revenues by providing them with brand, compliance, and product support, allowing the advisors to focus on their clients’ needs and attracting new clients.

Barkhuysen said PSG’s innovative proposition has translated into a highly profitable and cash-generative business, with a return on equity (ROE) of 22.5%.

Impressively, it has also generated sustainable compound annual growth in earnings of 18% over the past 10 years. 

“With a current market share of about 5%, there is significant upside potential to increasing its market share in the financial services sector,” he said.

PSG Financial Services was listed in June 2014, and its share price has since risen by over 90%.