Kaap Agri Investment Case

June 19, 2024

The recent expansion into oil has piqued our interest. Let's investigate.

Kaap Agri is often thought of as an agricultural company, and yes, it is. But there lies more beneath the surface than that. 

54.5% of their total profits for FY 2022 came from non-agri business operations. Their retail fuel and convenience segment had an increase of 107.1% in revenue and attributed to 30% of the groups total profits in FY 2022.

This resulted from acquiring fuel stations and convenience stores situated all over the national highway. So, is oil, oil Kaap Agri needs to succeed?



Established in 1912 in the Western Cape's Swartland region, Kaap Agri was established when several farmers bought guano (bird manure) to use and sell as fertilizer.

The company expanded through the years by merging with surrounding cooperations. Due to all its prior mergers, Kaap Agri has a diverse market strategy and leverages its purchasing power to offer the best pricing for agricultural inputs.

Today Kaap Agri employs 6 752 people and operate across South Africa and Namibia with over 200 operating points. The company provides its services as a growth-focused trader and retailer within the agricultural and related-retail markets of Southern Africa. 


Kaap Agri operations:

Trade: 50% revenue contribution

  • Production inputs, mechanization equipment & services and goods to agricultural producers & public

Retail fuel & Conveniences: 40% revenue contribution

  • Providing fuel, convenience stores & fast-food outlets

Grain: 9% revenue contribution

  •  Storage, handling and selling of grain products

Manufacturing: 1% revenue contribution 

  • Manufacture and sells irrigation equipment and plastic bulk bins


Key Financials

  • Ticker: JSE: KAL
  • Share Price: R 43.07
  • Market Cap: R 3.21B
  • P/E: 7.79
  • Div Yield: 5.67 %
  • 52 Week Low: R 58.5
  • 52 Week High: R 34.76


Latest results (FY 2021 to FY 2022)

  • HEPS:  +22.3% to R5.56
  • Revenue: +48.4%
  • Physical footprint: +19.8% (227 units 272 units)
  • Total Dividend per share: +11.3% to R1.68
  • Debt/Equity: 0.49 (FY 2021) to 0.74 (FY 2022)


Side note: Fuel Acquisition

Kaap Agri has acquired a 100% shareholding in PEG Retail Group, a holding company operating in the retail fuel industry (including fast-food and convenience stores), at a whopping R1.1B. The acquisition was effective on 1 July 2022 and the first three months of PEG earnings was included in the Kaap Agri FY 2022 financial results.

Why the deal: 

  • Creating a diversified retail fuel group (BP, Shell, Engen, Sasol)
  • PEG consist of a strong management team and stable income streams, almost doubling Kaap Agris service/retail fuel stations from 43 to 84.
  • Becoming the leading BEE retail fuel operator in SA



The groups revenue increased by 48.4% to R 15.7B in the FY 2022, attributing to a gross profit of R2b and earnings of R396.4m. The groups revenue has been steadily increasing over the past 5 years despite global economic uncertainty.

Revenue growth per segment FY 2022:

  • Trade: 24.8%
  • Retail fuel & Conveniences: 107.1%
  • Grain: 32.7%
  • Manufacturing: -11.6%

Revenue drivers per segment:


  • Market share increased for B2B & B2C
  • Growth from production inputs (23.7%) & goods and services.

Retail fuel & Conveniences: 

  • The acquisition of PEG (expanding footprint)
  • Oilco collaboration                                               


  • Experiencing the highest wheat harvest in 15 Years


  • High input prices negatively affect spending on farm infrastructure
  • Manufacturing decreased 



Bullish arguments

  • Trading at low PE and valuation multiples
  • Expansion into the retail sector & launch of new products
  • Fuel segment results and earnings potential

Bearish arguments

  • High inflationary environment
  • Loadshedding
  • Average harvest expectations for 2023
  • Big debtors book



Kaap Agri performed well during the past five years with the management team proving themselves. Future prospects look solid as the company continues to diversify and create opportunities for growth. 

Kaap Agri has produced earnings at a compounded growth rate of 15% over the past five years (without new fuel expansion) and is trading at a P/E of 7.79 with a small market cap. We believe this stock has quite a bit of an upside runway.

FinMeUp is taking a position as of 09 Dec 2022 to hold for the medium-long term.

Just a friendly reminder - This is not financial advice. Always do your own research before taking a position. Content is for informational and educational purposes only.


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