How JSE-listed companies are defying domestic growth constraints

RECENT returns on the JSE have mainly been driven by a handful of precious metal miners, sending the JSE All Share Index to all-time high levels and, to a large degree, masking the general economic lethargy that domestic-focused companies and consumers face.

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Given growth constraints and challenges faced by domestic-oriented JSE-listed companies, the ability to deliver meaningful and peer-leading growth has become more critical than ever. Despite these headwinds, several local champions are demonstrating that companies with multiple (and sustainable) growth levers can not only survive but thrive, consistently outperforming market expectations and being appropriately recognised by the market in the form of premium valuations and generous shareholder returns.

While external factors can have a material impact on company fundamentals (and share price performances), in our view, the most attractive and sustainable company growth drivers are within the scope of management’s control.

Market share gains in competitive sectors deliver a clear path to success

Top-line revenue growth remains the most direct path to growth, achievable through market share gains, pricing power, or expanding product/service offerings and client bases. Retail giant, Shoprite, has excelled at this, having achieved an impressive sixth consecutive year of market share gains in its recently released full-year results, despite operating in an intensely competitive environment.

Perhaps no company better illustrates the power of multiple growth levers than Capitec, which briefly overtook FirstRand in August to become South Africa's largest bank by market capitalisation. Through continued innovation, transparent pricing that consistently beats competitors, and a deep understanding of client needs, Capitec has rapidly expanded its market share to now serve over 24 million active clients.