TFG is an investment holding company with a core business focus in retail and financial services. The group comprises of several brands trading throughout southern Africa offering a prominent lifestyle range of household name brands including Foschini, @Home, Sterns, Totalsports, Sportscene and Jet, among others. The group owns Phase Eight and Whistles in the UK, as well as RAG in Australia.
Fundamentally, the company is the market leader locally in 'Quick Response' and has the design and manufacturing capability to lead the market from a stock perspective. TFG is focused on investing in innovation and developing existing brands to ensure that the business is best positioned to continue to gain market share, despite the currently constrained consumer environment.
TFG is trading in oversold territory and in a bearish trend that seems too steep. The bearish trend is at a 60-degree angle, while a "healthy" bearish trend is typically at an angle of 45 degrees. The very steep angle is not sustainable, and we therefore expect a correction. The correction can be temporary or can develop into a full-blown correction (see the insert). Our conservative expectation is for the price to correct from an overextended scenario. Also notice how the price remains above key support (see the black trendline on the main chart).
Downside price momentum according to the to the Moving Average Convergence Divergence (MACD) histogram remains a concern, but early signs indicate this momentum might be fading.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R93.00.
Share Information
| Share code | TFG |
|---|---|
| Industry | Apparel Retailers |
| Market capatalisation (ZAR) | 27.45 billion |
| One year total return | -32.67% |
| Return year-to-date | -16.54% |
| Current price(ZAR) | 82.91 |
| 52 weeek high(ZAR) | 151.84 |
| 52 week low(ZAR) | 82.28 |
| Financial year end | March |
| Closing paragraph | The share recently crossed below its 200-day simple moving average, which is a concern. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 10.01 | 10.76 | 11.47 | 13.09 |
| Growth (%) | - | 7.53 | 6.57 | 14.09 |
| Dividend Per Share (ZAR) | 5.00 | 5.34 | 5.85 | 6.68 |
| Growth (%) | - | 6.76 | 9.52 | 14.25 |
| Forward PE (times) | - | 7.70 | 7.23 | 6.34 |
| Forward Dividend Yield (%) | - | 6.44 | 7.05 | 8.06 |
| Closing paragraph | Growth is expected to remain reasonable over the forecast horizon. The company offers an attractive dividend yield. | |||
Buy or Sell Rationale
Technical Analysis :
Long term fundamental view:
| Share Name and position |
N91 - Stop-loss (Close the position) |
REM (Close the position) |
VOD - BUY (Continue to Hold) |
|---|---|---|---|
| Entry | 42.81 | 137.48 | 126.50 |
| Current | 39.29 | 129.12 | 124.85 |
| Movement | -1.3% | -2.9% | -4.6% |
| Summary text | The trade reached our trailing stop-loss, and we closed the position. A bearish MACD crossover and a price action that crossed below its 200-day simple moving average is a concern. | The share reached our trailing stop-loss, and we closed the position. Strong downside price momentum is a concern. |
The price is hovering near a significant support level and dipped below its 200-day simple moving average. Fading upside momentum is a concern.
Take profit target set at R144, with a trailing stop-loss at R120. Time exit: 1 May 2023. |
| Share Name and position |
LHC - BUY (Continue to hold) |
OMU - BUY (Continue to hold) |
MTN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 19.30 | 13.00 | 132.49 |
| Current | 18.74 | 11.02 | 126.07 |
| Movement | -2.9% | -5.6% | -4.8% |
| Summary text |
TCurrently testing its 200-day simple moving average and still near a major resistance level.
Take profit target set at R22.20, with a trailing stop-loss at R18.05. Time exit: 26 June 2023. |
The share is testing its 61.8% Fibonacci retracement level as well as its 200-day simple moving average. Downside price momentum is a concern.
Take profit target is R16.00, with a stop-loss at R10.00. Time exit: 17 November 2023. |
The price is starting wave 3 of a 5-wave analysis. Crossed below its 200-day simple moving average. Downside momentum remains a concern.
Take profit target set at R190.00, with a trailing stop-loss at R113.00. Time exit: 6 November 2023. |
