Finweek English Edition
Profits are the focus now
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. ■