While South Africa’s sluggish economic growth and persistent structural challenges continue to weigh on investor confidence, Foord Asset Management believes long-term opportunities can still be found by investors who look beyond the macro headlines.

Speaking at Foord’s latest Mind of the Manager webinar, Portfolio Manager Wim Murray said that current equity valuations are pricing in pessimism, creating an attractive entry point for investors. “We’re seeing this broad-based pessimism indiscriminately being applied to companies and, in some instances, unrightly so,” said Murray. “Valuations on mid-cap SA Inc. stocks have come down by more than 30% over the past decade, yet many companies are actually better positioned now than they were then.”

To navigate this environment, Murray highlighted three-buckets for identifying local equity opportunities: market share winners, self-help stories, and last-man-standing plays. Capitec, Tiger Brands and Wilson Bayly Holmes-Ovcon (WBHO) each demonstrate how this approach finds value in unlikely places.

Capitec: the market share winner

Capitec, one of South Africa’s most successful banks, has delivered exceptional total returns for shareholders over the past decade. “Anyone who invested in the company 10 years ago would have earned R8 today for every R1 invested,” said Murray.

Crucially, Capitec has grown its client base by offering the best value proposition, enabled by being South Africa’s lowest-cost bank and passing on all scale benefits to clients through lower prices. As a consequence, its client base increased from 6 million in 2015 to over 24 million in 2025. Main banked clients – the key income driver – rose from 2.4 million to 9.8 million over the same period. Meanwhile, Capitec has become increasingly selective on credit, limiting its growth into unsecured lending despite its surging client base.

Murray emphasised Capitec’s transition from a credit-focused bank to a more diversified business. “Transactional revenue is now a major profit driver, alongside insurance and value-added services like airtime, bill payments and electricity sales. These segments contribute close to half of bottom-line profitability today, compared to zero a decade ago.”

Despite this progress, Capitec monetises each client at only a third of the rate of its big-bank peers – a gap Foord believes will reduce over time. “If they deliver on earnings over the next five to seven years, the share price is sure to follow,” said Murray.

Tiger Brands: a self-help story

Once a dominant player, Tiger Brands has underperformed for much of the last decade, but a new management team is driving rapid change. “They’ve cut back a bloated head office and moved decision-making closer to operations, enabling faster and better decisions,” said Murray.

Since appointing Tjaart Kruger as CEO in late 2023, Tiger has disposed of R4.5 billion in non-core brands and announced further potential disposals worth up to R3.5 billion. These changes are freeing up capital for reinvestment. “We’re seeing a step-up in capex and marketing behind the brands that offer attractive returns,” said Murray. “That should drive efficiencies, volume growth and meaningful margin expansion.”

Importantly, Murray noted that Tiger’s turnaround does not depend on an improving economic environment. “The factors driving growth are under management’s control. It’s a branded business that, if run well, can deliver strong earnings and generate significant free cash flow.”

WBHO: the last man standing

In construction, most of South Africa’s major firms have disappeared over the last decade, yet WBHO has not only survived; it has thrived. “Wilson Bayly’s market share of large construction projects has increased from 12% in 2015 to 35% today,” said Murray. “It’s one of the few firms with the skills, balance sheet and BEE credentials to take on major infrastructure projects.”

As a result, WBHO’s order book has grown across both building and civils, as well as road and earthworks. “They’re now in a position to be more selective on projects and negotiate better contract terms. This will drive margin expansion, going forward” he said.

Foord expects strong earnings growth from WBHO over the next three to five years, supported by industry consolidation and favourable project economics.

Murray concluded that these examples – Capitec, Tiger Brands and WBHO – show that “we continue to find opportunities across a broad range of sectors that offer attractive returns to our clients despite the current tough environment.”