Peet Serfontein & Motheo Tlhagale
We initiate a long position. Our upside target is set at R42.00. We recommend a stop-loss at R34.50.
Dis-Chem is one of the leading pharmaceutical and consumer wellness groups in South Africa. The company takes a 'Pharmacy First' approach with the main aim of serving the primary pharmaceutical needs of individuals. Other products on offer include personal and beauty products, health, nutrition and baby care products, as well as confectionery, dry grocery, household and other ancillary goods. The group utilises its wholesale business to service third parties and Dis-Chem retail pharmacies through its CJ distribution business.
Technically, the price is in a developing ascending triangle pattern, which makes the share an interesting candidate for a long position (see the black trendlines on the main chart). The pattern of rising support beneath flat resistance signals growing buying pressure and potential for a breakout, a view strengthened by the AI model's projected upside trend (see the insert).
The Wyckoff accumulation phase supports a constructive outlook. This phase is typically characterised by higher lows, stabilising price action, and the absorption of supply by stronger market participants. As this process unfolds, the likelihood of a breakout increases, particularly if resistance levels are cleared with supporting volume, signalling a transition into the markup phase where stronger and more sustained upside momentum can develop.
The price is trading above its 200-day simple moving average (SMA) at R34.67, which signals a bullish trend, with the level acting as strong support and reinforcing positive momentum.
Muted downside momentum in the Moving Average Convergence Divergence (MACD) histogram supports the trade idea by indicating that selling pressure is easing and bearish control is weakening.
| Share Information | |
|---|---|
| Share Code | DCP |
| Industry | Consumer Staples Distribution |
| Market Capital (ZAR) | 31.66 billion |
| One Year Total Return | 15.09% |
| Return Year-to-Date | 5.17% |
| Current Price (ZAR) | 36.81 |
| 52 Week High (ZAR) | 39.00 |
| 52 Week Low (ZAR) | 30.20 |
| Financial Year End | February |
| While the share price is up 5.2% year-to-date, the stock could still see further near-term upside given the bullish bias seen across several technical indicators. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY25 | FY26E | FY27E | FY28E | |
| Headline Earnings per Share (ZAR) | 1.37 | 1.42 | 1.68 | 1.98 |
| Growth (%) | 3.42 | 17.95 | 18.02 | |
| Dividend Per Share (ZAR) | 0.55 | 0.57 | 0.68 | 0.77 |
| Growth (%) | 3.83 | 18.77 | 13.59 | |
| Forward PE (times) | 25.90 | 21.96 | 18.61 | |
| Forward Dividend Yield (%) | 1.55 | 1.84 | 2.09 | |
| Consensus expectations point to modest near-term growth followed by stronger earnings acceleration, with steadily rising dividends and improving valuation over time. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view:
| Share Name and Position | SSW SA - Buy (Continue to hold) |
BTI SA - Buy (Continue to hold) |
GLD SA - Buy (Continue to hold) |
OMU SA - Buy (Continue to hold) |
|---|---|---|---|---|
| Entry | 53.67 | 976.99 | 727.25 | 13.85 |
| Current Price | 50.89 | 1 080.00 | 700.26 | 12.79 |
| Movement | -5.2% | +10.5% | -3.7% | -7.7% |
| Comment |
The price action within a developing broadening-top pattern remains noteworthy as the share continues testing its 200-day SMA. Fading downside momentum supports the trade idea.
We maintain our profit target at R76.00 with a trailing stop-loss at R46.80. |
Price action within a developing bullish pennant remains constructive, with the share holding just above its 200-day SMA. Improving upside momentum supports the trade idea.
We maintain our profit target at R1 202.00, with a trailing stop-loss at R1 029.00. |
The favourable AI forecast and Elliott Wave Theory alignment, indicating the potential onset of wave 5, remain of interest. The share continues trading above its 200-day SMA, although downside momentum remains a concern.
We maintain our profit target at R850.00, with a trailing stop-loss at R677.00. |
The potential onset of wave 5 from the Elliott Wave Theory remains of interest. The share has dipped below its 200-day SMA with sudden downside momentum being a concern.
We maintain our profit target at R16.30, with a trailing stop-loss at R12.90. |
| Time to exit | 20 July 2026 | 4 November 2026 | 17 August 2026 | 29 June 2026 |
| Share Name and Position | REM SA - Close the position (Time exit) |
|---|---|
| Entry | 181.66 |
| Current Price | 187.00 |
| Movement | +2.9% |
| Comment | The share reached the predefined time-based exit, resulting in the position being closed in line with the trade strategy. |
| Time to exit | 18 May 2026 |
