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Choppies' insane comeback, explained
A deep dive into why Choppies jumped from P0.51 to P1.09 in 12 months
Boago Sephutho
December 11, 2025
Good morning, let’s get into it!
NB: This type of content is not very beginner-friendly due to the complex language in it. I should marked this long time ago, but perhaps if beginners are introduced to this type of language you’d get used to it to understand it, have a good read.
In the initial trading week of December 2025, the Botswana Stock Exchange (BSE) witnessed a significant valuation adjustment in the equity of Choppies Enterprises Limited (BSE: CHOPPIES, JSE: CHP). The share price, having languished in the sub-Pula range for an extended period, executed a decisive breakout, advancing from a close of P0.92 at the end of November to P1.09 by December 2, 2025. This movement, representing a cumulative appreciation of approximately 19.8% over two trading sessions, and a specific single-day gain of 9.0% on December 2 , marks a critical inflection point in the company’s post-restructuring narrative.
The catalyst for this rally was not a singular stochastic event but rather a convergence of fundamental, strategic, and governance-related developments that crystallized during the company's Annual General Meeting (AGM) held on November 28, 2025. The market's response—a robust re-rating of the stock—reflects a fundamental shift in investor sentiment from viewing Choppies as a distressed turnaround play to recognizing it as a stabilized, cash-generative regional retailer with a cleaner balance sheet and coherent growth strategy.
This report provides an exhaustive, multi-dimensional analysis of the rally. We will dissect the market microstructure that facilitated the price surge, reconstruct the historical context of the company's recovery from its 2018 crisis, and perform a deep-dive forensic analysis of the FY2025 financial results that underpinned the bullish thesis. Furthermore, we will explore the strategic implications of the company's exit from the Zimbabwean market, its ambitious pivot toward "Retail Tech," and the arbitrage dynamics between its primary listing in Gaborone and its secondary listing in Johannesburg.
1.1 The Quantitative Magnitude of the Move
To understand the significance of the move to P1.09, one must contextualize it within the trading history of the equity. For a substantial period, Choppies shares traded below the psychological P1.00 barrier, a level that often demarcates "penny stock" territory from institutional investability in the local context. The gap-up from P0.91/P0.92 to P1.00 on December 1, followed immediately by the push to P1.09 on December 2, represents a "breakout gap"—a technical chart pattern typically associated with a sudden shift in supply and demand dynamics caused by new information.
Date | Open (BWP) | Close (BWP) | Daily Change (%) | Volume | Implied Sentiment |
Nov 28, 2025 | 0.92 | 0.92 | 0.00% | 437,160 | High volume accumulation pre-AGM |
Dec 1, 2025 | 1.00 | 1.00 | +8.70% | 2,108 | Supply shock; gap up on low liquidity |
Dec 2, 2025 | 1.09 | 1.09 | +9.00% | 16,622 | Confirmation rally; breakout to new range |
Dec 3, 2025 | 1.09 | 1.09 | 0.00% | 87,614 | Price acceptance and consolidation |
As the data indicates, the rally was characterized by a specific sequence: accumulation, shock, and consolidation. The heavy volume on November 28 suggests that sophisticated investors were positioning themselves ahead of the AGM, anticipating positive outcomes or the ratification of the strategic direction. The subsequent low volume on December 1 implies that sellers withdrew from the market, forcing the price higher to find liquidity, before volume returned on December 3 to validate the new price level.
2. The Microstructure of the Rally: Deconstructing the December Surge
The price mechanism on the Botswana Stock Exchange, like many frontier and emerging markets, is driven largely by liquidity constraints and order book depth. The movement of Choppies shares offers a textbook case study in how information asymmetry and liquidity vacuums interact to produce sharp price re-ratings.
2.1 The Liquidity Vacuum and Supply Shock
The trading data reveals a distinct anomaly on December 1, 2025. On this day, the share price jumped 8.70% to reach parity with the Pula (P1.00), yet only 2,108 shares changed hands. In highly liquid markets, a price move of this magnitude typically requires substantial volume to "chew through" the ask orders. However, in this instance, the lack of volume suggests a complete withdrawal of supply. Sellers, digesting the news from the AGM held the previous Friday (November 28) and the subsequent announcements regarding the Zimbabwe exit and dividend declarations, likely pulled their sell orders. They recognized that the intrinsic value of the company had shifted overnight. Consequently, buyers were forced to bid up the price to P1.00 simply to execute negligible volume. This phenomenon is known as a "liquidity vacuum," where the absence of sellers, rather than an overwhelming flood of buyers, dictates the initial price surge.
2.2 The Role of Institutional Accumulation
Contrast the low volume of December 1 with the activity on November 28, the day of the AGM. On this date, 437,160 shares were traded. This volume spike is significant in the context of the BSE. It indicates that institutional investors or well-informed high-net-worth individuals were accumulating positions during or immediately preceding the AGM. These investors likely had a higher conviction regarding the meeting's outcome—specifically the confirmation of the dividend and the strategic clarity on the Zimbabwe divestiture. By absorbing the available float at P0.92, these accumulators cleared the path of resistance. When the market opened the following week, the "overhang" of loose shares had been removed, allowing the price to drift upward with minimal friction.
2.3 Psychological Barriers and the "Penny Stock" Stigma
The move from P0.91 to P1.09 is structurally significant because it crosses the P1.00 threshold. In the psychology of the BSE retail investor, a stock trading in "thebe" (cents) is often perceived as distressed or speculative. Crossing back into "Pula" (dollars) territory acts as a signal of normalcy and recovery. This psychological shifts often triggers a feedback loop: as the price crosses P1.00, it appears on the radar of screens and filters set by retail brokers and smaller funds that avoid "penny stocks." This fresh visibility likely contributed to the second leg of the rally on December 2, where the price jumped another 9% to P1.09. The sustained price at P1.09 through December 3 and 4 confirms that the market has accepted this new valuation tier, treating P1.00 now as a support level rather than a resistance ceiling.
2.4 Arbitrage Pressure from the JSE
A critical, often overlooked factor in the BSE price action is the influence of the company's secondary listing on the Johannesburg Stock Exchange (JSE). On the JSE, Choppies (ticker: CHP) experienced a parallel rally, closing at ZAR 4.50 on December 9, 2025, which represented a 7.1% gain and a 562% appreciation over a longer timeframe. Given the exchange rate dynamics between the Botswana Pula (BWP) and the South African Rand (ZAR), discrepancies in valuation between the two exchanges create arbitrage opportunities.
If the JSE listing rallies aggressively—driven by the deeper pool of capital and more active retail trading base in South Africa—it creates an "implied price" for the BSE listing. Sophisticated traders monitor the CHP/CHOPPIES spread. If the ZAR price converts to a significantly higher BWP value than the current BSE trading price, traders will bid up the BSE stock to close the gap. The rally to P1.09 (approx. ZAR 1.45-1.55 depending on the cross rate, although the share consolidation/split ratios must be considered if applicable, but usually direct fungibility drives sentiment) reflects this cross-border influence. The robust performance in Johannesburg validated the bullish thesis, giving Gaborone-based investors the confidence to chase the price higher.
3. Historical Context: The Road from Crisis to Stabilization
To fully appreciate why a move to P1.09 is celebrated as a "huge gain," one must revisit the depth of the valley from which Choppies has emerged. The company’s trajectory over the past seven years has been a volatile saga of rapid expansion, governance failure, suspension, and painstaking reconstruction.
3.1 The 2018 Governance Crisis
In 2018, Choppies was the darling of the BSE, with a footprint expanding aggressively across Sub-Saharan Africa. However, the narrative collapsed following delays in the publication of its financial results, which precipitated a suspension of trading on both the BSE and JSE. The ensuing crisis revealed significant accounting irregularities, leading to a forensic investigation by PwC and a complete overhaul of the board and governance structures.
The suspension trapped shareholder capital for an extended period and destroyed the stock's valuation, which plummeted by over 75% once trading resumed. The "audit scandal" created a persistent "governance discount" on the stock. For years, even as operations stabilized, the market priced Choppies with a skepticism premium, doubting the reliability of its reported numbers and the sustainability of its turnaround.
3.2 The Stabilization Phase (2020-2024)
Following the crisis, the company entered a phase of stabilization. Under the stewardship of CEO Ramachandran Ottapathu (who survived the boardroom coups to lead the turnaround) and CFO Minnesh Rajcoomar, the company focused on three pillars: recapitalization, exiting loss-making markets (such as South Africa and Kenya), and restoring audit regularity.
This period was characterized by a "grind." The share price languished as the company paid down debt and renegotiated covenants. The market awaited proof that the core business in Botswana was not just a cash cow being milked to pay for foreign mistakes, but a sustainable growth engine.
3.3 The 2025 Inflection Point
The rally in December 2025 signifies the end of the "Stabilization Phase" and the beginning of the "Optimization and Growth Phase." The AGM on November 28, 2025, was effectively the graduation ceremony. By passing all resolutions without drama and declaring a dividend , the company signaled that the crisis era is definitively closed. The market's reaction—the 20% gain—is the repricing of the stock from "distressed asset" to "going concern." The P1.09 price level is not merely a number; it is a vote of confidence that the forensic audits, legal battles with PwC , and trading suspensions are historical footnotes rather than current risks.
4. Financial Performance Analysis: FY2025 Deep Dive
While sentiment and history set the stage, the engine of the rally was the hard financial data released for the full year ended June 30, 2025. A forensic review of these numbers reveals a company that is structurally more profitable than headline earnings might initially suggest.
4.1 Revenue Growth vs. Economic Headwinds
Choppies reported revenue of P9.1 billion for FY2025, a significant increase from P8.0 billion in the previous year. This represents a year-on-year growth rate of approximately 13.75%.
Metric | FY2024 (Pula) | FY2025 (Pula) | Growth (%) | Context |
Revenue | 8.0 Billion | 9.1 Billion | +13.75% | Outpaces inflation; indicates volume growth |
Footfall | - | +10.5% | N/A | Strong organic demand |
Dividend | 3.0 Thebe | 2.2 Thebe | -26% | Prudent cash management amidst restructuring |
In the context of the Southern African retail environment, where consumers are battered by high interest rates and inflation, a 13.75% top-line expansion is impressive. Crucially, the company reported that retail footfall increased by 10.5%. This distinction is vital. In inflationary environments, revenue can rise solely due to price increases (inflation pass-through) even as volume declines. A 10.5% increase in footfall confirms that Choppies is growing volumes—more customers are walking through the doors. This suggests that Choppies’ value proposition (price leadership and private label goods) is resonating with cash-strapped consumers, allowing it to steal market share from competitors.
4.2 Deconstructing the "Profit Slip"
The headline reporting indicated that operating profit slipped by 5.1%. In a superficial analysis, a profit decline would be bearish. However, the market looked past the headline number to the quality of the earnings. The decline was attributed to "higher expenses and the loss booked on the sale of its Zimbabwe unit".
This is a classic case of "taking the medicine." The loss on the sale of the Zimbabwe unit is a non-recurring, one-off event. It is an accounting entry required to clear the books of a distressed asset. Sophisticated investors add this loss back to their models to calculate "Normalized Earnings."
Furthermore, the company reported that all remaining segments (Botswana, Namibia, and Zambia) achieved profitable EBITDA. This is the "Green Shoot" that ignited the rally. It proves that the core portfolio is healthy. The Zambian segment, previously a drag, has turned the corner, posting an adjusted EBIT profit of BWP 21 million compared to a loss of BWP 3 million in the prior year. This turnaround in Zambia validates management’s claim that they can replicate the Botswana success model in other jurisdictions.
4.3 Cash Flow and Dividends
The ultimate truth-teller in corporate finance is cash. Choppies declared a final dividend of 0.6 thebe per share, bringing the total annual dividend to 2.2 thebe. While this is lower than the previous year’s 3.0 thebe, the mere fact of the payout is bullish.
CFO Minnesh Rajcoomar stated, "Our cashflow is in a favorable position to sustain the business. So, we are now in a suitable position to pay dividends". For a company emerging from a crisis, retaining cash is often the default. The decision to return capital to shareholders indicates that the Board is comfortable with its liquidity position and debt covenants. It signals that the "emergency" is over and normal capital allocation has resumed. At a price of P0.91 (pre-rally), a 2.2 thebe dividend represents a yield of ~2.4%. While modest, it provides a floor for the stock price, attracting income-focused funds that were previously barred from holding a non-dividend-paying equity.
5. Strategic Portfolio Optimization: The Zimbabwe Divestiture
A central pillar of the bullish thesis driving the share price to P1.09 is the strategic exit from Zimbabwe. This divestiture is arguably the most significant corporate action Choppies has taken since its recapitalization, and its impact on the company’s valuation cannot be overstated.
5.1 The Economics of Subtraction
Operating in Zimbabwe presented unique challenges: hyperinflation, currency volatility, and the complexity of repatriating profits. Under International Accounting Standard 29 (IAS 29), companies operating in hyperinflationary economies must restate their financial results, which often distorts the group’s consolidated numbers. This introduces a "complexity discount" to the stock—analysts cannot easily model future cash flows, so they assign a lower valuation multiple to account for the uncertainty.
By selling the Zimbabwe unit, Choppies has amputated a gangrenous limb. While the sale resulted in a book loss (contributing to the 5.1% profit slip discussed earlier), it has:
Simplified Financial Reporting: Future earnings reports will be cleaner, easier to understand, and free from IAS 29 distortions.
Eliminated Currency Risk: The group is no longer exposed to the rapid depreciation of the Zimbabwe Gold (ZiG) or legacy currencies.
Freed Management Bandwidth: Executive time previously spent firefighting in Zimbabwe can now be allocated to growing the profitable operations in Zambia and Namibia.
5.2 Reallocation to Growth Markets
The capital and focus released from Zimbabwe are being redirected. The snippet evidence highlights a specific success story in Zambia, where the segment swung from a P3 million loss to a P21 million profit. This proves that the "Choppies Model"—high volume, value-focused, logistics-driven retail—works in Zambia. The market is effectively repricing Choppies from a "Botswana retailer with a Zimbabwe problem" to a "Pan-African retailer with a Zambia growth engine." The latter commands a significantly higher Price-to-Earnings (P/E) multiple.
6. The Digital Transformation Thesis: Retail Tech and Fintech Aspirations
Beyond the immediate financial cleanup, the rally to P1.09 is also fueled by a longer-term narrative: the transformation of Choppies into a "Retail Tech" entity. This strategic pivot was highlighted in the CEO's presentations and interviews surrounding the AGM.
6.1 From Grocer to Fintech
CEO Ramachandran Ottapathu has articulated a vision to "become a retail tech company or even a fintech company". While this may sound like buzzword-laden corporate speak, in the African context, it is a proven roadmap to value creation. Retailers with large physical footprints (Choppies has over 180 stores ) are uniquely positioned to offer financial services to the unbanked and underbanked population.
The Mechanism: By utilizing its point-of-sale (POS) systems, Choppies can offer money transfers, bill payments, micro-insurance, and airtime sales. These services carry high margins compared to low-margin grocery sales.
The Valuation Impact: Traditional grocery retailers trade at P/E multiples of 10x-15x. Fintech companies trade at 20x-30x. Even if Choppies only derives 10% of its profit from these services, the "blended multiple" of the group expands. The market is starting to price in this "optionality."
6.2 Operational Efficiency via Tech
The snippets also mention the adoption of "demand forecasting software" and "inventory management optimization". In the razor-thin margin world of retail (where net margins are often 2-4%), efficiency is everything. A reduction in shrinkage (theft/spoilage) or an improvement in stock turns driven by AI/data analytics flows directly to the bottom line. The P1.09 price reflects an expectation that these investments will begin to bear fruit in FY2026, leading to margin expansion even if the top line grows only moderately.
7. Comparative Market Analysis: BSE vs. JSE Dynamics
The 9% gain on the BSE cannot be viewed in isolation. It is inextricably linked to the performance of the company's shares on the JSE and the broader market context.
7.1 The Arbitrage Mechanism
As noted in Section 2.4, Choppies is dual-listed. The JSE listing (CHP) rallied 7.1% to ZAR 4.50.
Implied Valuation: If we assume an exchange rate of roughly 1 BWP = 1.35 ZAR (a hypothetical illustrative rate for the region), a price of ZAR 4.50 implies a BWP price of ~3.33. However, stock splits or consolidations often differ between listings, or liquidity discounts apply. Historically, there has been a divergence. But the trend is the key. A +7.1% move in Johannesburg acts as a magnetic pull on the Gaborone price.
Investor Base: The JSE attracts global emerging market funds. When these funds buy CHP, they are voting with their feet on the Choppies turnaround story. BSE investors, often local pension funds with a more conservative mandate, take their cues from this foreign flow. The rally in Gaborone is essentially a "catch-up" trade to the sentiment expressed in Johannesburg.
7.2 BSE Domestic Companies Index (DCI) Context
The snippet notes that the BSE Domestic Company Total Return Index was up +13.85% YTD. Choppies, with its 19.8% jump in early December, is now outperforming the index. This "alpha" generation attracts attention. Fund managers benchmarked against the DCI are forced to buy outperforming stocks to avoid lagging the index. This structural buying pressure likely supported the price at P1.09 after the initial breakout.
8. Macroeconomic Environment and Regional Retail Trends
The Choppies rally is occurring against a backdrop of specific macroeconomic conditions in Botswana and the region.
8.1 The "Flight to Value" in Inflationary Times
Inflation remains a challenge in Southern Africa. In such environments, consumer behavior shifts. Shoppers trade down from premium brands to value retailers. Choppies, with its slogan "Value for your Money," is positioned as the defensive stock of choice. The 10.5% increase in footfall is empirical evidence of this trend. The market is buying Choppies as a hedge against consumer austerity.
8.2 Tax Policy Tailwinds (and Headwinds)
Snippet mentions that the tax rate in Botswana is expected to increase to 23.5% in 2026. While a tax hike is generally negative, the market is forward-looking.
Comparative Advantage: Even at 23.5%, Botswana's tax rate is significantly lower than South Africa's 27%. This maintains Choppies' structural advantage over its South African domiciled competitors.
Timing: The tax hike is set for 2026. This gives Choppies a window of two years to maximize profitability at the lower rate and build up cash reserves. The market is discounting the future tax hike less than it is valuing the immediate profit recovery.
8.3 Regional Competitors
The retail landscape is fierce, with giants like Shoprite and Spar aggressively expanding. However, Choppies has a home-court advantage in Botswana and a first-mover advantage in many tier-2 and tier-3 towns where international competitors have not yet penetrated. The rally reflects a belief that Choppies has successfully defended its moat in Botswana while finding a profitable niche in Zambia.
The qualitative aspect of the rally is rooted in renewed trust in leadership.
9.1 The CEO's Vindication
CEO Ramachandran Ottapathu has been a controversial figure, having been suspended and then reinstated during the 2018/2019 crisis. His survival and the subsequent stabilization of the company have created a "founder-led turnaround" narrative. The snippet highlights his interview regarding the "journey from one store," emphasizing his deep operational knowledge. The market loves a redemption arc. By delivering the "clean" FY2025 results and the Zimbabwe exit, Ottapathu has vindicated his strategy, restoring institutional confidence.
9.2 Director Dealings and Insider Confidence
Snippets and allude to "Dealing in securities by a director." When directors buy shares (or receive shares in lieu of salary/bonuses and hold them), it signals alignment with minority shareholders. The lack of significant insider selling into the rally suggests that management believes the stock is still undervalued at P1.09.
9.3 The AGM as a Governance Milestone
The AGM on November 28 was the crucial hurdle. In previous years, AGMs were contentious, dominated by questions about auditors and legal risks. The 2025 AGM was business-as-usual. This "boring" AGM was exactly what the market needed. It allowed investors to focus on the P/E ratio and dividend yield rather than litigation risk. The P1.09 price is the removal of the "litigation discount."
10. Valuation Perspectives and Investment Thesis
Finally, we must ask: Is the P1.09 price justified fundamentally?
10.1 Valuation Metrics
Market Cap: At P1.09, with approximately 1.82 billion shares in issue , the market capitalization is ~P1.98 billion.
Revenue Multiple: With P9.1 billion in revenue, the Price-to-Sales (P/S) ratio is roughly 0.22x. This is extremely low by global standards (where 0.5x-0.8x is common for grocery retail). It suggests the stock is still undervalued relative to its sales volume.
Fair Value Models: Snippet mentions a "Fair Value" of P1.09 with the stock being "45.3% overvalued" at the previous lower price. This seems contradictory or based on a specific automated model that hasn't updated for the Zimbabwe exit. However, the market's repricing to exactly P1.09 suggests that the market has converged on what some analysts (or the specific Simply Wall St model cited) consider the "intrinsic value."
10.2 The Investment Thesis for P1.09
The buyer at P1.09 is betting on:
Continued Dividend Growth: That the 2.2 thebe dividend is a floor, not a ceiling, and will grow as debt is paid down.
Zambia Scaling: That the Zambian operation will become a material contributor to group profits, diversifying risk away from Botswana.
Tech Execution: That the "fintech" strategy will add a layer of high-margin service revenue.
The gain from P0.91 to P1.09 is the "easy money" made by closing the valuation gap between "distressed" and "fairly valued." Future gains will depend on earnings growth rather than just re-rating.
11. Conclusion
The 20% rally in Choppies Enterprises shares in early December 2025—specifically the 9% surge on December 2 that pushed the price to P1.09—is a rational market response to the successful conclusion of a multi-year turnaround strategy.
What Happened:
The stock broke out of a consolidation range (P0.91-P0.92) following the AGM on November 28.
It gapped up to P1.00 on low volume due to a supply shock (sellers withdrawing).
It rallied further to P1.09 on higher volume as the market repriced the equity to match its improved risk profile and the parallel rally on the JSE.
Why It Happened:
Strategic Clarity: The AGM and annual report confirmed the exit from the loss-making Zimbabwe market, removing a major drag on earnings and investor sentiment.
Financial Resilience: Revenue growth of 13.75% and footfall growth of 10.5% proved the core business is winning market share despite economic headwinds.
Return of Capital: The confirmation of a dividend signaled that cash flow issues are resolved.
Operational Success: The turnaround of the Zambian segment to profitability provided a new growth narrative.
In summary, the "huge gain" was the market exhaling. After years of holding its breath through suspensions, scandals, and losses, the Botswana market has finally acknowledged that Choppies Enterprises is back to business as usual. The price of P1.09 is the new baseline for a normalized, dividend-paying regional retailer.
