PnP: Should Benefit From The Investment Brains Of Allan Gray

9 October 2017 | Jeremy Woods: Out of the Woods
 


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Almost unnoticed, Allan Gray and its clients have snapped up 5.01% of PnP’s ordinary shares which could have fascinating effects on PnP’s share price and future income streams.

For a start, PnP have suddenly announced that it will be giving credit cards to its customers. Another boost for the PnP share price is a recent increase in profits.

There are doubtless other surprises in the making, but the credit card situation can be viewed in two lights.

One view is that PnP customers, like many others, are short of funds with the economy at such a low ebb.

Buying food on a credit card has its downfalls, but from PnP sales point of view, it could give a useful boost to profits.

The other view is that food is a necessary and disposable commodity, and if consumers have to pay for it with a credit card, their future could be fraught with debt problems. One debt analyst who asked that his name not be mentioned said: "Even if the credit comes at a reduced cost, you should not be buying food on credit. Food is an essential living expense and therefore funding it on credit is unsustainable and costly. If you need credit to buy food, you may already be over indebted."

But, assuming all goes well, the benefactors will undoubtedly be the shareholders.

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credit: Graph Provided by Sharenet Advanced Online Charts

Trade PIK From 0.3%

None of us should forget what Allan Gray did to Group Five not long ago. That was a well-orchestrated approach to a board which was just not performing.

Woolworths, who has offered a store card to its customers for many years, has only recently introduced a credit card. PnP, on the other hand, is going straight for the credit card.

Whichever way the new credit card goes, I believe PnP shareholders will have good security from the Allan Gray 5.01% shareholding.

Time will tell, but my belief in the PnP share price with this new credit card is positive.

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Jeremy Woods

Jeremy Woods trained for three years as a journalist on the Herts Advertiser, St Albans, in the U.K. Once qualified, he left England to work as a crime reporter on the Vancouver Sun in Canada. After three years, he worked for the Los Angeles Times as a trainee financial journalist, spending most of his time reading company accounts and finding publishable stories in them. He moved to South Africa and for the last five years in journalism worked for the Sunday Times, Business Times, as Investment Editor. He has also published a financial thriller called "Special Payments", which was a best-seller on publication, and optioned three times for a film.


Disclaimer:
The information contained in this article is for informational purposes only and must not be regarded as a prospectus for any security, financial product or transaction. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial issue. Investors should consider this research/article as only a single factor in making their investment decision. We recommend you consult a financial planner/advisor to take into account your particular investment objectives, financial situation and individual needs. The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Sharenet.

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