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In earlier results of the International Under-18 Series, England beat France 23-6 and Italy overcame SWD Schools XV 38-21 in a lively and high-scoring match.
The South African schoolboy side delivered a compelling performance in the first hour of the match, racing to a 40-3 lead, but to their credit Wales came back well in the last ten minutes of the match.
Earlier in the day, England scored a good win over France and retained their unbeaten status to set up a mouth-watering clash with South Africa when the series concludes in Stellenbosch on Saturday.
The South African Schools team made a number of changes after their opening win against France in Cape Town on Friday and that worked to their advantage and they came out firing from the opening play.
They raced into an early lead courtesy of a well-worked set piece play.
Daniel Pienaar THS prop Lupumlo Mguca found himself in space from a line-out move near the Welsh line and his off-load found Southdowns College lock Aston Fortuin who dotted down under the posts in the second minute of play.
Flyhalf Thinus de Beer kicked the easy conversion and was involved again seven minutes later when the Waterkloof High School pivot slotted a good penalty kick.
De Beer converted his second of the afternoon when good follow-up play by Menlo Park winger Andell Loubser resulted in a try for Daniel Pienaar THS midfielder Heino Bezuidenhout.
The flyhalf also kicked penalties in the 19th, 22nd and 29th minute of the half as Wales found it difficult to halt the South African attacks legally.
The SA Schools side enjoyed territorial advantage and had most of the possession as well, with a fourth minute penalty by Davy Jones the only answer the Welsh had in the first half.
The second half started in spectacular fashion when local Outeniqua High School lock Eduard Zandberg raced 50 meters down the touchline with the run resulting in a try for Garsfontein High School scrumhalf Embrose Papier.
De Beer converted and at 33-3, it was all over bar the shouting.
There was more for the locals to get excited about as SWD midfielder JT Jackson rounded off a fine counter-attack started way back in the SA Schools half.
Jackson, who hails from nearby Oakdale Agric in Riversdale, ran a great support line and was rewarded for that.
Again De Beer converted.
De Beer was then yellow carded for a late tackle and this gave Wales the breathing space they needed to regroup.
They attacked well in this period, applying pressure and enjoyed much better field position.
Centre Owen Watkin scored under the sticks, dancing inside the South African defence and flanker Josh Middelton scored after the buzzer went to give Wales something to build on for the final series of matches in Stellenbosch on Saturday.
Scorers:
SA Schools 40 (26) - Tries: Aston Fortuin, JT Jackson, Embrose Papier, Heino Bezuidenhout; Conversions: Thinus de Beer (4); Penalties: De Beer (4)
Wales Under 18: 15 (3) - Tries: Owen Watkin, Josh Middleton; Conversion: Davy Jones; Penalty: Jones
Remaining SARU 2014 Under-18 International Series fixtures (23 August 2014 - Paul Roos Markötter Stadium, Stellenbosch):
12:00 - Italy vs SARU Regional Academy XV
14:00 - France vs Wales
16:00 - SA vs England
