Bev­er­ages

Finweek English Edition - - MONEY -

San­lam In­vest­ment Man­age­ment’s Small Cap Fund is bet­ting on spe­cialised pack­ag­ing group Bowler Met­calf, pri­vate ed­u­ca­tion provider Curro Hold­ings and gambling business Grand Pa­rade In­vest­ments for re­turns.

The fund, the s e c o n d- b e s t per­former in its peer group over the past year ac­cord­ing to Morn­ingstar Re­search, is bullish on Bowler’s ven­ture into soft drinks, ac­cord­ing to Vanessa van Vu­uren, man­ager of the fund. The fund re­turned 16.2% over the past 12 months and 17% over the past three years on an an­nu­alised ba­sis.

Bowler’s soft drinks unit, Qual­ity Bev­er­ages, which pro­duces the Jive brand of cold drinks popular in the Western Cape, will be merged with MIH Hold­ings’ Shorel i ne unit, which pro­duces the Coo-ee brand in KwaZulu-Natal, to form a new company called SoftBev. Bowler will hold 42% of this new company. The stock re­turned 11.8% over the past year.

“The t wo com­pa­nies will emerge as a strong na­tional soft-drink player, wit h t he Gaut­eng mar­ket be­ing the big op­por­tu­nity for them to tap into,” Van Vu­uren said. “The Bowler man­age­ment team have been pru­dent cap­i­tal al­lo­ca­tors and I be­lieve that this re­cent deal will cre­ate sig­nif­i­cant value for Bowler share­hold­ers over the medium to long term.”

The fund bought into Grand Pa­rade In­vest­ments at the be­gin­ning of the year as the company en­trenched its fo­cus on gaming and food in South Africa, Van Vu­uren said. The stock re­turned 75.2% over the past year.

The fast-food and quick-ser vice restau­rant in­dus­try is a re­silient sec­tor of the econ­omy with de­cent growth prospects and its Burger King in­vest­ment is yield­ing strong re­sults and a great up­take of its prod­uct, Van Vu­uren said. The company is also bid­ding for SA’s third na­tional lot­tery con­ces­sion.

Grand Pa­rade’s planned sale of its stakes in Grand West and Worces­ter’s casino, to Tsogo Sun, and a stake in its limited-pay­out ma­chine business to Sun In­ter­na­tional, will leave the company with a “for­mi­da­ble cash pile” to pur­sue new ven­tures, she said. This will prob­a­bly hap­pen in the fast-food value chain, ac­cord­ing to her.

“Should t hey not f i nd t he right in­vest­ments, they have been known to pay out de­cent spe­cial div­i­dends,” Van Vu­uren said.

Zeder, the agri­cul­ture in­vest­ment hold­ing company, and Curro, which op­er­ates pri­vate schools, are both among the fund’s top-10 stock picks, ac­cord­ing to its lat­est fact sheet. Zeder re­turned 43.5% over the past year and Curro 28.4%.

Zeder’s un­der­ly­ing as­sets, which in­clude a stake in Pi­o­neer Foods, chicken pro­ducer Quantum Foods and Zam­bian pro­ducer Chay­ton, op­er­ate in sec­tors where the de­mand for their prod­ucts will grow, ac­cord­ing to Van Vu­uren.

“I view Zeder and its un­der­ly­ing port­fo­lio as a long-term in­vest­ment and do not see it as a share that will yield short-term quick wins,” she said.

With re­gard to Curro, she said that the de­mand for pri­vate school­ing in SA is a “sec­u­lar growth story” that has “sig­nif­i­cant mo­men­tum” and this will con­tinue for many years. The company saw the num­ber of stu­dents en­rolled at its schools jump 32% to 28 899 in the six months ended June com­pared with a year ear­lier.

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