Hold­sport

Finweek English Edition - - INVESTMENT - HOLD­SPORT HAS SPENT QUITE A LOT OF THE PRE­VI­OUS AND CUR­RENT FISCALS ON CAP­I­TAL EX­PEN­DI­TURE: THREE NEW STORES BE­GAN TRAD­ING FROM DE­CEM­BER 2012:

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.

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