Energetic player in an established position
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. ●