114-year-old company taking over petrol stations across South Africa
KAL Group is gradually expanding its presence at numerous forecourts along South Africa’s major highways through its subsidiary, PEG.
Sean Culverwell, Investment Analyst at Anchor Capital, said that 1912-founded KAL Group is steadily transforming from a niche agricultural supplier to a scaled convenience and fuel retailer.
Culverwell said that while the company’s Agrimark chain still anchors earnings, the rapid expansion of its PEG fuel station business is reshaping the group’s fundamental profile.
PEG operates an extensive network of service stations, with nearly 50% of these located along national highways.
The company collaborates with all of South Africa’s major petrol station brands, including BP, Engen, Sasol, Shell, Total Energies, and Astron Energy.
Culverwell said that the shift in KAL’s investment profile started when it acquired PEG in 2023 and merged it with The Fuel Company.
The acquisition doubled KAL’s footprint to 89 service stations, making it the country’s largest independent operator.
“PEG now contributes around one-third of group profits and, in our view, will be the primary growth engine,” said Culwerwell.
“Fuel dominates PEG’s revenue line, but profitability is driven by convenience retail and quick-service restaurants.”
While PEG sells around 300 million litres of fixed-margin fuel per annum, it generates roughly R4/litre in retail and quick service restaurant (QSR) revenue.
Although some regions are oversupplied with low-margin fuel sites, PEG is looking to expand its footprint to high-traffic, peri-urban locations with above-average retail spend per litre.
Culwerwell added that recent acquisitions include sites generating up to R7 retail spend per litre at roughly 25% EBIT margins.
Looking good for the company
Looking ahead, Anchor Capital believes that PEG’s bolt-on strategy offers meaningful optionally for investors.
As one of the largest Famous Brands franchisees, KAL can acquire sites in prime locations and bolt on multiple QSR chains to increase spend per litre.
Culverwell added that PEG is acquiring sites at low single-digit earnings multiples, which make deals immediately earnings accretive.
Retail and QSR inventory turns at fuel stations are high, keeping capital requirements low relative to returns.
The company is also viewed as the “partner of choice” by oil majors thanks to its scale and operational track record, giving it favourable terms vs smaller competitors.
With three sites added in late FY25 and five more planned in the coming financial year, PEG is expcted to deliver a strong performance in FY26.
This is also supported by the low fuel price environment, which boosts domestic travel and is expected to continue into 2026, providing consumer relief.
Looking at the broader group, KAL now has its strongest balance sheet in more than a decade, bolstered by recent disposals of lower-return businesses.
“This gives the Group the capacity to continue to acquire value-accretive sites at attractive multiples,” said Culverwell.
“We expect earnings to compound at double-digit levels over the medium term, while the recent drop in the group’s dividend cover will provide an uplift to shareholder returns.”
Despite strong FY25 results, the share traded at a forward multiple of just 6x in December 2025, which Anchor believes is compelling in the context of a clear growth runway and improving fundamentals.
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