Finweek English Edition

Profits are the focus now

- By Simon Brown

Bidvest is a large conglomera­te and recent results for the year ending June saw headline earnings per share (HEPS) at 1 183c and a dividend of 600c. This put the share on a price-to-earnings ratio (P/E) of 15 times and a dividend yield of 3.2% as the company experience­d a strong second-half recovery from Covid19 restrictio­ns. Bidvest’s balance sheet is strong with capacity to fund some deals if they find attractive opportunit­ies, most likely bolt-on ones that strengthen existing operations.

Bidvest’s business is predominan­tly focused on SA, with 83% of revenue and earnings before interest, tax, depreciati­on, and amortisati­on generated locally. The latter seems to scare off many investors, who see Bidvest as reflecting the SA economy. But there is money to be made locally and Bidvest can use its scale and pricing power to gain market share. New management has also been firm that profits, not revenue growth, is the focus. While the current share price reflects fair value, improving supply chains next year and improved margins place the stock on a forward P/E of some 12 times, which offers value and dividend yield. ■

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