Boxer bulls win big

Investors who participated in the Boxer initial public offering (IPO) and bought shares at R54 made a big profit in one week.

Discount retailer Boxer was listed on the Johannesburg Stock Exchange (JSE) on Thursday, 28 November 2024, under the ticker “BOX”.

This listing followed an IPO that concluded on 22 November. 157.4 million shares were allocated to qualifying investors at R54 per share.

The share price exploded as soon as Boxer chief executive Marek Masojada blew the kudu horn to signal the first trade on the JSE.

The stock gained 18% to R63.69 by midday on Thursday and continues to trade around the R65 level a week after listing.

Investors who believed in the Boxer story and bought at R54 per share gained over 20% in the first week.

It was one of the most successful local JSE listings in years, and many investors remain optimistic about the retailer.

One of the bulls is Jean Pierre Verster, the founder and chief executive officer of Protea Capital Management.

He described Boxer as a high-quality growth stock, which may look expensive because of its strong growth.

“These high-quality growth stocks look expensive and generally stay expensive. However, because they have good earnings growth, the share price also increases,” he explained.

He cautioned that expensive growth stocks can experience significant declines if the company does not meet growth targets.

“If the management team makes a mistake, which happens, the share price can come down sharply,” he said.

However, a simple business model reduces the likelihood of a major strategic mistake, which is the case with Boxer.

Shane Watkins, chief investment officer at All Weather Capital, explained that Boxer is a growth story.

The retailer has 550 stores and wants to double its footprint in South Africa in six years. “It is an obvious growth story,” Watkins said.

He likened Boxer to Capitec and Pepkor, which are growth stocks instead of value investments.

“You must be prepared to pay a lot for a company which will grow significantly,” Watkins explained.

He said the company is trading at a price-to-earnings (P/E) ratio of nearly 30, with expected growth of between 20% and 25% per year.

He advised investors to stay with Boxer, adding that one of the directors, Dineo Molefe, recently bought shares at R65.