• Bidvest has just released a positive trading statement and business update for the   ten months to April 2021. The company is a diversified investment holding   business with a focus on hygiene products and services and is a good proxy   for South Africa’s economy. However, it has a growing presence in the UK and   Ireland. This model is similar to that of the local SA operations after having successfully bedded-down recent acquisitions. It is a capital light   business model and provides strong annuity income, despite challenging operating conditions due to the Covid pandemic.

  • Trading   profits growth was strong in most of the businesses, reinforced by robust   cash generation. It has a decentralised management model which is proving to   be resilient in the volatile and uncertain trading environment.

  • The   turnaround after the soft interim results has resulted in a robust trading   update, whereby earnings are expected to be more than 20% higher than that of   the past year to June 2020. A further update is expected in due course with   more specific details.

  • Bulk   terminals performed strongly due to good volume growth in agricultural, LPG,   and bulk commodities. Other divisions, including industrial and vehicle   trading also delivered sound results, with tight expense controls resulting   in margins being maintained or improved.

  • Non-core   operations, such as Bidvest Car Rentals and BidAir, are at an advanced stage   of being disposed of as part of a streamlining the group’s operations. They   are also selling lower-margin legacy operations.

  • Travel,   tourism, hospitality and financial services businesses still remain under   pressure, but should benefit from a reopening of the economy.

  • A strong balance sheet as a result of robust cash generation has enabled   Bidvest to grow both locally and internationally, mainly via bolt on   acquisitions which have been earnings accretive.

  • Branded   products segment revenues have moderated, however proactive cost management   enabled this division to deliver acceptable results - as did the Commercial   Products segment thanks to proactive margin management.

  • Bidvest   is a dominant player in most of their markets. It has exhibited good organic   a growth, and has a solid capital allocation record. The share price has   reflected the strength of its management and business model, having risen by   22.5% from R160 in March 2021 to the current level of R196. I have been a   long term investor of this quality counter in my segregated client   portfolios, and will add to my positions into any market weakness.