Ross812 Posted September 3, 2014 Author Share Posted September 3, 2014 Regarding the subs, I would be surprised if they would sell them. They have a business model that is quite similar to Berkshire and this have been a subject with Bidvest in the past. As far as I know, Joffe think that the conglomerate as a whole create better value than dividing the parts of it. Good results overall, as usual. Happy to be a shareholder of that business. Partner, I agree, the food service business is not for sale as we have observed past offers being rejected. I would anticipate a spinoff of the Food Service Business leaving Bidvest Africa as a standalone business. A spinoff of Bidvest Foodservice domiciled in England would make financing expansion much easier. I think Bidvest SA is still an attractive business, but it is much more cyclical than their food services division. Perhaps Bidvest SA needs the food service division to provide an anchor? It just seems that Financing and the Rand may hold back their international expansion of the food service division. Food service is growing at 20% a year. 5 years and 10 years down the line they will need 2x then 4x the financial resources required today. Do you think a London listing in which they keep a controlling interest would help the country as a whole? Sysco is growing at ~6% and sells at a PE of 20x. Bunzl, listed on the LSE: Rev: 6.2B (Pounds) Profit: 206M Margins: 3.4% Growth: 6-8% PE range: 17-25x Market Cap: 5.45B Bidvest FS: Rev: 5.8B (Pounds) Profit: 187M Margins: 3.24% Growth: 16-20% Implied market cap : 1.9B (income) - 3B (revenue) Implied PE range: 10-16x Its pretty clear that the conglomerate/S.Africa discount is in the neighborhood of 50% for the Food Service Division. Link to comment Share on other sites More sharing options...
60North Investments Posted March 14, 2015 Share Posted March 14, 2015 Got around to looking at BIDVest finally, thanks for the initial idea Ross! H1 2015 results were reported earlier in March. YoY turnover was up 16%, EBIT +5%, HEPS +5%. Food service again the star with 20% increase in turnover and +31% in trading profit. I've got a couple of things I'm wondering about still with this. Firstly, how do people work with the currency/inflation situation? Do you simply look at it from ZAR perspective by taking the published financials and turning the ADR price to ZAR? South Africa seems to have been around 4-6% inflation for the past few years, do you take that into account in any way? The current price seems too high to initiate a position, looks like p/e is almost 23 and the multiple to FCF is high as well. If it were to drop below 250ZAR it'd look a lot more interesting. Am I seeing this about right, or completely in the woods? Link to comment Share on other sites More sharing options...
Ross812 Posted March 17, 2015 Author Share Posted March 17, 2015 Got around to looking at BIDVest finally, thanks for the initial idea Ross! H1 2015 results were reported earlier in March. YoY turnover was up 16%, EBIT +5%, HEPS +5%. Food service again the star with 20% increase in turnover and +31% in trading profit. I've got a couple of things I'm wondering about still with this. Firstly, how do people work with the currency/inflation situation? Do you simply look at it from ZAR perspective by taking the published financials and turning the ADR price to ZAR? South Africa seems to have been around 4-6% inflation for the past few years, do you take that into account in any way? The current price seems too high to initiate a position, looks like p/e is almost 23 and the multiple to FCF is high as well. If it were to drop below 250ZAR it'd look a lot more interesting. Am I seeing this about right, or completely in the woods? The way Bidvest reports their results is a little different from NYSE companies and I think many financial websites do not handle the data correctly. I'm getting a PE of 18.6 (EPS 1749c and the share price is 32,600c). Keep in mind that 1749 number includes a one time charge of 30c per share for the Adcock Ingram impairment. S. Africa and Europe have had a tough few years, yet Bidvest has been able to grow their business despite the macro economic climate. I like to buy at a PE of around 14, right around your ZAR 25,000c number so I think you are good on that front. I try to ignore the macro and just buy the company when it hits my price target. In the passed 5 years I'm up about 50% in Bidvest (~8% annualized) and it has been one of my worst investments. This is all driven by currency though as the dollar is worth nearly twice what it was worth vs the rand 5 years ago. If and when the Rand and Euro appreciate against the dollar, I expect to realize the real (~16%) growth the company has seen over the passed 5 years. It seems like Bidvest goes on sale every year or so and I've been pretty good about posting when I see it on sale. Right now, I'm waiting for a sale. Link to comment Share on other sites More sharing options...
60North Investments Posted March 17, 2015 Share Posted March 17, 2015 The current price seems too high to initiate a position, looks like p/e is almost 23 and the multiple to FCF is high as well. If it were to drop below 250ZAR it'd look a lot more interesting. Am I seeing this about right, or completely in the woods? The way Bidvest reports their results is a little different from NYSE companies and I think many financial websites do not handle the data correctly. I'm getting a PE of 18.6 (EPS 1749c and the share price is 32,600c). Keep in mind that 1749 number includes a one time charge of 30c per share for the Adcock Ingram impairment. S. Africa and Europe have had a tough few years, yet Bidvest has been able to grow their business despite the macro economic climate. I like to buy at a PE of around 14, right around your ZAR 25,000c number so I think you are good on that front. I try to ignore the macro and just buy the company when it hits my price target. In the passed 5 years I'm up about 50% in Bidvest (~8% annualized) and it has been one of my worst investments. This is all driven by currency though as the dollar is worth nearly twice what it was worth vs the rand 5 years ago. If and when the Rand and Euro appreciate against the dollar, I expect to realize the real (~16%) growth the company has seen over the passed 5 years. It seems like Bidvest goes on sale every year or so and I've been pretty good about posting when I see it on sale. Right now, I'm waiting for a sale. I appreciate the response Ross. It seems that you're taking the H1 EPS, whereas I took the FY14 number (which I missed mentioning in the first place). Either way, waiting time for now as you say. Supposedly it's quite useless to try and analyze very deeply the different parts of BIDVest. So, to take a huge shortcut I'll summarize and say that in order for this to be a great investment (reasonable to expect +15% p.a. returns) from the 250ZAR level I guess you need i) net margins at or above 3%, ii) close to 10% growth in the next years, iii) no further depreciation of ZAR versus USD/EUR. Will be watching whether it gets back to those levels. Link to comment Share on other sites More sharing options...
no_free_lunch Posted August 21, 2015 Share Posted August 21, 2015 Ross, you had said you would try to update us next time bidvest was cheap. Just wondering what you think of it at these levels. Link to comment Share on other sites More sharing options...
Ross812 Posted August 21, 2015 Author Share Posted August 21, 2015 Ross, you had said you would try to update us next time bidvest was cheap. Just wondering what you think of it at these levels. The rand has been so week it is hard to peg where HEPS will end up for the this last half (ending June reported next month). In ZAR its looking about 1900 (1870 with the impairment). They may go over analyst estimates as the Euro has been gaining against the Zar for the last 6 months (as opposed to the Zar strengthening to the Euro 8% for the last half of 2014) We're also half way through the next quarter so id expect earnings power at 20 rand per share right now. At 14x (when start adding) we are looking at a share price of 280 zar. That is about $43.25 per ADR. I cannot believe how weak the ZAR has been for the passed few years. Link to comment Share on other sites More sharing options...
no_free_lunch Posted August 22, 2015 Share Posted August 22, 2015 Great, appreciate the response Ross. Link to comment Share on other sites More sharing options...
fareastwarriors Posted May 18, 2016 Share Posted May 18, 2016 Any updates? :) Link to comment Share on other sites More sharing options...
60North Investments Posted May 18, 2016 Share Posted May 18, 2016 Ross will probably chime in with more updates, but this has continued being expensive in my eyes. January saw it being little less expensive but didn't set alarms ringing on my list. Link to comment Share on other sites More sharing options...
Partner24 Posted May 18, 2016 Share Posted May 18, 2016 Brian Joffe is no longer the CEO since a few months ago. I do not know the new one, but as far as I know, the plan is not to change decentralized business model like they have actually. I will dig further when I'll have time to do so. Link to comment Share on other sites More sharing options...
Partner24 Posted May 18, 2016 Share Posted May 18, 2016 Regarding the price, I do see it actually as being a reasonable one. Not a bargain, not very expensive, just being fair. Cheers! Link to comment Share on other sites More sharing options...
tripleoptician Posted July 11, 2016 Share Posted July 11, 2016 What happened to the pricing action on this? I just got an alert that ADR is down over 60% from 52 down to 18.85. Was there a stock split or large dividend? Haven't followed for some time.... Link to comment Share on other sites More sharing options...
Ross812 Posted July 11, 2016 Author Share Posted July 11, 2016 Special dividend of $34.63 a share for the food service spin off. I thought ADR shares would be converted but apparently a dividend was issued. Hopefully it isn't taxed by sa. Link to comment Share on other sites More sharing options...
sys Posted August 2, 2016 Share Posted August 2, 2016 is there an adr for the food service? i see a bpppf, which i assume is an otc for the group? Link to comment Share on other sites More sharing options...
fareastwarriors Posted August 30, 2017 Share Posted August 30, 2017 Special dividend of $34.63 a share for the food service spin off. I thought ADR shares would be converted but apparently a dividend was issued. Hopefully it isn't taxed by sa. Ross, Saw your post about selling out of Bidvest. Could you share why? Link to comment Share on other sites More sharing options...
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