Update on Santova & Karooooo

June 19, 2024

A quick update on 2 of my largest holdings.


  • In Q3 2023, Karooooo reported total revenue of ZAR930 million, a growth of 29% compared to Q3 2022 (ZAR720 million).
  • Earnings per share for the quarter were ZAR4.70, similar to the previous year (ZAR4.72).
  • The company recorded strong and record-high free cash flow generation from its SaaS business model, resulting in a balance sheet with net cash and cash equivalents of ZAR819 million at the end of November 2022 (compared to ZAR799 million in Q3 2022).
  • A cash dividend of USD18.6 million (USD0.60 per share) was paid to shareholders in the quarter.
  • The company's Cartrack subscriber base grew 14% to 1,678,606 by November 30, 2022, with net subscriber additions of 78,593, up 27% compared to Q3 2022.
  • Karooooo's Operations Cloud collects and contextualizes over 120 billion data points per month through system integrations.  

Why I continue to hold:

The company's consistent growth, large total addressable market, ability to cross-sell and upsell, high-margin business model, recurring revenue, and potential in South East Asia make it an attractive investment opportunity. The company's large commercial fleet also reduces customer concentration risk.



  • Santova remains my largest holding due to its attractive characteristics.
  • Shipping rates have recently decreased but the company has been successful in onboarding new clients, which contributed to its impressive revenue growth in the previous year. We'll have to wait & see what impact it has on their margins.
  • Santova recently reported (6-month period) Revenue growth of 13.5%, Cash generated from operations +45.5%, Return on Equity increased to 28.2%, HEPS grew by 62.4%.
  • The company's relatively low market capitalization, complex product offering, and low liquidity are reasons why its stock may be valued at a PE of around 5. Additionally, fears of the impact of lower shipping rates on the company's financial performance may also be contributing to its current valuation.

Why I continue to hold:

Santova's management, geographical and industry diversification, low customer concentration risk, attractive valuation, history of execution, continued share buybacks, large and growing industry, strong financial metrics (including revenue per employee, ROIC, ROE, and PE), and asset-light business model.

Santova also has a massive global opportunity, which recently also expanded to the US through the acquisition of A-Link.



(Disclaimer: This is not financial

advice, always do your own due diligence when managing finances)

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