Massmart Declines Most in Four Months on Analyst Downgrade

Massmart Holdings Ltd. (MSM), a South African retailer controlled by Wal-Mart Stores Inc., fell the most in more than four months after the stock was cut to “underperform” from “neutral” at Macquarie Research, with a 160-rand price estimate.

Massmart declined as much as 3.9 percent before closing 2.3 percent lower at 174.47 rand in Johannesburg, the biggest fall since Oct. 4 and the lowest since Dec. 30.

Macquarie’s cut followed Investec Ltd. yesterday revising its price estimate for the stock to 160 rand from 166 rand. Syd Vianello, an analyst at Nedbank Group Ltd.’s securities unit, said fair value for the stock is 126.20 rand.

“Over a four-year period to June this year earnings per share will have been flat, whereas its competitors would have shown very substantial growth in EPS,” Vianello said by phone from Johannesburg.

The group will report earnings per share excluding one-time items of 677 cents for the year to June, according to the mean estimate of 13 analysts polled by Bloomberg. It reported earnings per share excluding one-time items of 663 cents in the 12 months through June 2008.

Shoprite Holdings Ltd., (SHP) South Africa’s largest retailer by market value, may report earnings per share on the same basis of 619 cents in the year through June, according to the mean estimates of 13 analysts polled by Bloomberg, double the 310 cents reported in fiscal 2008.

Massmart’s net income rose 21 percent from a year earlier to 893 million rand ($115 million) in the fiscal first half ended Dec. 25, the Johannesburg-based company said in a statement on Feb. 22.

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net;

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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