• Bidcorp   the global food service group that specializes in foodservice solutions,   including fresh, chilled and frozen foods, released a positive trading update   for the ten months ended April 2021.

  • The company’s sales appeared to be largely in line with market   expectations, with the UK and Europe showing a significant turnaround in May   thanks to the lifting of lockdown restrictions. In addition they had a robust   recovery in Australasia, with sales achieving between 89% and 99% of normal   demand during the third quarter.

  • Emerging markets were impacted by Covid for a longer period, except   for Greater China which made a quicker recovery.

  • Management seems to be confident that it is benefiting from an   increase market share in the jurisdictions in which it operates. The results   were also buoyed by a recovery in demand in discretionary spend, despite an   operating environment that remains volatile and challenging.

  • Gross profit margins have been largely maintained at similar levels   to the comparable period in 2020.

  • The groups net debt at 31st May of R138m which was R229m better than   in the prior period, and the Bidcorp debt coverage of 2.5x, was well within   the covenant range.

  • Bidcorp is a mix of small independent customers, which proved to be   a resilient plus factor, whilst the addition to some gains in the food chain   operators should prove beneficial in the longer term.

  • Although the acquisitive activities remain muted, a number of   bolt-on deals amounting to around R200m were concluded. There is a potential   for further opportunities, facilitated by a strong balance sheet, once global   conditions stabilize. Operating challenges still remain due to ongoing   government interventions, making it difficult to confidently predict levels   of sustained activity.

  • The share price has strengthened following a quality set of results.   Bidcorp has had a long history of strong sustained profit growth delivery as   well as predictable execution. It has experienced growth both organically and   thanks to their global acquisition strategy.

  • The market cap of Bidcorp is R102bn, and it is a pure Rand hedge   investment (except for a minute contribution from SA), which should also   benefit from rising global food prices. We are and remain long term investors   in this quality company, which can be bought into any major weakness in the   share price