Pick n Pay's lack of credibility among investors has resulted in a negative effect for them, which is further exacerbated when the value of Boxer is excluded from the calculation.

Boxer, a wholly-owned subsidiary of the Pick n Pay Group, published on 11 November, 2024, its pre-listing statement as it commences the process of listing on the Main Board of the Johannesburg Stock Exchange (JSE) on 28 November 2024. Boxer, has emerged as the retail group's top performer in recent times,

In light of Pick n Pay's current financial struggles, the company has been compelled to implement significant measures in an effort to improve its operations. In May 2024, Pick n Pay announced that it was facing technical insolvency due to its liabilities exceeding its assets.

Pick n Pay revealed its plan to recapitalise in two steps, with the goal of improving its balance sheet and regaining solvency.

The first step, which involved a successful R4 billion rights offer, was completed three months ago. This helped the Pick n Pay Group restore its equity position to a positive R2.9 billion.

Next, the Boxer IPO is set to raise from R8 billion to R8.5 billion for the second stage.

The funds from the Boxer IPO will be used to pay off existing debt and also reinvest in their main supermarket operations.

Boxer Superstores is an impressive enterprise, holding the top spot as South Africa's foremost discounted grocery retailer with an annual revenue of R37.4 billion, with a trading profit of R2.1 billion.

Boxer's annual revenue experienced a compound annual growth rate of 18.6% from fiscal year 2022 to fiscal year 2024, while also achieving an impressive growth rate of 7.7%.

With 489 stores under its belt, the company boasts a dominant 68% market share in the discount grocery retail industry in South Africa. By the end of this financial year, it plans to increase its store count by 65.

Given these statistics, it is evident why Boxer stands out as the shining star of the Pick n Pay group.

Boxer's finances

In the 2023 and 2024 fiscal years, Boxer's revenue experienced a remarkable growth of 19% and 17% respectively, reaching R37.8 billion. Boxer's financials are healthy and largely responsible for keeping Pick n Pay afloat.

Boxer plans to offer 190,476,191 shares in addition to a potential extra 11,904,762 shares if there is an oversubscription for the IPO.

Boxer shares are expected to fall within the price range of R42 to R54 per share, resulting in a market capitalisation between R23 billion and R29 billion.

What's intriguing is that Pick n Pay, the current sole owner of Boxer, carries a market cap of only R19 billion.  It becomes apparent that the Pick n Pay stores carry a negative valuation.

Boxer's anticipated market cap at its lowest level results in a price-to-sales ratio of 0.6 and a price-to-book ratio of 12.3.

When examining Pick n Pay's financials at their current market valuation, their price-to-sales ratio is -0.01 and their price-to-book ratio is -3.6.

Should Boxer reach its minimum projected R23 billion market cap, this would indicate that Pick n Pay stores had a detrimental effect on the group's overall worth of R3.5 billion.

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