En­er­getic player in an es­tab­lished po­si­tion

Financial Mail - Investors Monthly - - Analysis - Petri Redel­inghuys

Much ex­cite­ment swept the mar­ket when En­gen an­nounced its in­ten­tion to list on the JSE next year, but there is al­ready a fuel re­tailer listed on the JSE.

Founded in De­cem­ber 2011, Vivo En­ergy quickly ex­panded its foot­print across Africa, and in 2018 it listed on the Lon­don Stock Ex­change with a sec­ondary list­ing on the JSE.

In 2019 a trans­ac­tion was con­cluded which added more than 225 En­gen-branded ser­vice sta­tions in eight coun­tries to its net­work. Vivo now has more than 2,130 ser­vice sta­tions in 23 African coun­tries (though none in SA).

The group mar­kets its prod­ucts to com­mer­cial cus­tomers through its com­mer­cial fu­els and lu­bri­cants busi­nesses and ex­ports lu­bri­cants to more than 10 African coun­tries.

They pro­vide fu­els, lu­bri­cants and liq­ue­fied pe­tro­leum gas to busi­ness cus­tomers across a range of sec­tors. Vivo even sells jet fuel through a part­ner­ship with Vi­tol Avi­a­tion.

At its ser­vice sta­tion lo­ca­tions, the group pro­vides cus­tomers with grow­ing con­ve­nience re­tail and quick-ser­vice and fast-ca­sual restau­rant of­fer­ings in part­ner­ship with ma­jor food and re­tail brands, as well as ve­hi­cle ser­vices, in­clud­ing car­wash fa­cil­i­ties.

Vivo En­ergy ben­e­fits from an in­te­grated busi­ness model, own­ing or hav­ing ac­cess to about 1,081,000m³ of fuel stor­age ca­pac­ity at 97 lo­ca­tions across Africa, and en­joys a strong over­all mar­ket po­si­tion in the coun­tries it op­er­ates in, be­ing ei­ther the No 1 or No 2 re­tailer of fu­els by vol­ume sold.

The group’s joint ven­ture, Shell & Vivo Lu­bri­cants, sources, blends, pack­ages and sup­plies Shell-branded lu­bri­cants, and has blend­ing ca­pac

ity per year of about 158,000t at plants in six coun­tries (Ghana, Guinea, Ivory Coast, Kenya, Morocco and Tu­nisia).

About 57% of the group’s rev­enue is de­rived from its re­tail busi­ness, be­ing Shell- and En­gen-branded fuel sta­tions, 30% is de­rived from its com­mer­cial-fac­ing busi­ness, and 13% from lu­bri­cants. Over­all the group serves more than 800,000 cus­tomers daily.

It is a truly sig­nif­i­cant player on the con­ti­nent. The op­por­tu­ni­ties for growth in Africa are huge, with only 66 ve­hi­cles per 1,000 peo­ple, com­pared to 560 ve­hi­cles per 1,000 in Europe.

Be­tween 2016 and 2021 it is es­ti­mated that ve­hi­cle growth in Africa with be 7% on a com­pound an­nual growth rate ba­sis. With 60% of global pop­u­la­tion growth tak­ing place in Africa and rapid ur­ban­i­sa­tion, it is es­ti­mated that the ur­ban pop­u­la­tion in Africa will grow be­tween 40% and 56% be­tween 2015 and 2050.

Add to this that the av­er­age com­pound an­nual growth rate of GDP in the coun­tries Vivo En­ergy op­er­ates in is 5%.

It seems clear that from a long-term per­spec­tive, there is a lot of up­side to be had for this com­pany if it can main­tain its well-es­tab­lished mar­ket po­si­tion, which is ex­tremely likely.

It is the sec­ond-big­gest fuel re­tailer in Africa, out­side of SA, in terms of site num­bers. ●

break be­low the lower range bound­ary.

For now the range re­mains in­tact and the 72,000 sup­port level has held. It would be con­cern­ing if the price turns lower be­fore it gets to the up­per range bound­ary at 80,000. Such a de­vel­op­ment would make it vul­ner­a­ble to break­ing down be­low 72,000. It seems the in­dex is bounc­ing and the 72,000 sup­port area is safe for the time be­ing. But be cau­tious if it turns lower mid­way up the range in the com­ing months. ●

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