We recently featured this JSE-listed retail group on Finweek.com after it was announced t hat asset management firm Coronation now holds 25% of its stock. Holdsport is a retailer with a market capitalisation of R2.1bn and annual turnover of R1.37bn.
It owns the Sportsman’s Warehouse and Outdoor Warehouse retail chains. It also owns Performance Brands, which incorporates the First Ascent and Capestorm brands.
The three biggest shareholders in the group are now Coronation Asset Management (25%), the Moresport Investment Trust (22.5%) and the Public Investment Corporation (PIC) with 5.7%. WHAT IS HOLDSPORT'S CASH POSITION? For investors looking at Holdsport, the immediate question that springs to mind is how a business that is generating R239m in cash per year and turning over R1.37bn in revenue can only have cash resources of R36.28m in the bank. This is down from R77.3m at the start of the fiscal. Entered into a 50:50 joint venture with Redefine Properties to develop a retail distribution centre in Philippi in Cape Town and acquired a new warehouse for Performance Brands to the value of R12m. It spent R31m in 2013 and expects to spend a further R43m in 2014
THE HOLDSPORT FOOTPRINT AND WHERE IT MAKES ITS MONEY: on these two projects. Purchased Capestorm trademark for R8m. Relocated its Polokwane Sportsman’s Warehouse branch. Expanded Sportsman’s Warehouse in Fourways. 1 600m² Sportsman’s Warehouse in Bloemfontein. 1 400m ² Sportsman’s Warehouse i n Rustenburg. 800m² Outdoor Warehouse in Rustenburg.
Holdsport will spend R40m on refurbishments and expansion in 2014, including two new stores and three expansions. WHAT LIKES: Coronation is well respected in the South African asset management industry and for it to have taken such a big stake in the business is clearly a long-term vote of confidence in the company. The share is also relatively illiquid with just R8.4m worth of shares trading each week. With the share tightly held, this tends to reduce some of the volatility in the price.
Since 2007, Holdsport has grown its turnover by 11.8% per annum and its headline earnings per share by 19.2% per annum.
Provided the group can manage its cash f lows appropriately to match its growth ideals, Holdsport should be a good long-term buy.