The Bidvest Group is a service, trading and distribution company focused mainly in South Africa. The company specialises in services including cleaning, security, landscaping, indoor plants and flowers, travel, banking, and foreign exchange; Private sector freight management; Commercial, which involves the manufacturing and distribution of electrical products, office stationery, office furniture, packaging closures and catering equipment; and Automotive retail, among others.
Bidvest is a well-run business with a committed and highly regarded management team. The company is diversified across both cyclical and non-cyclical segments and boasts a strong balance sheet position.
Technically, a price in an inclining channel pattern makes the share attractive as an investment opportunity (see the red and green parallel trendlines on the main chart as well as the insert).
The pattern consists of two parallel trendlines - resistance and support. The trendlines connect the higher lows (support) and higher highs (resistance) of the price, signalling an overall upward trend. The support trendline suggests a potential buying opportunity, with the price expected to rebound and continue its upward trajectory.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R300. This classifies our profit target of R278 as realistic.
We suggest a low capital at risk allocation to this trade. Increase exposure for a break above R251.00.
Share Information
| Share code | BVT |
|---|---|
| Industry | Industrials Goods and Services |
| Market Capital (USD) | 84 billion |
| One year total return | 17.82% |
| Return year-to-date | 17.09% |
| Current price(USD) | 246.85 |
| 52 weeek high(USD) | 272.30 |
| 52 week low(USD) | 192.84 |
| Financial year end | June |
| Closing paragraph | The share price has captured solid upside year-to-date and remains above its 200-day simple moving average of ~R225. This indicates that the long-term trend is generally positive. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (GBP) | 14.90 | 18.69 | 20.04 | 21.67 |
| Growth (%) | 25.44 | 7.20 | 8.15 | |
| Dividend Per Share (GBP) | 9.24 | 7.44 | 8.54 | 10.05 |
| Growth (%) | 14.73 | 8.25 | 8.76 | |
| Forward PE (times) | 13.21 | 12.32 | 11.39 | |
| Forward Dividend Yield (%) | - | 3.46 | 3.74 | 4.07 |
| Closing paragraph | Solid earnings growth is expected for FY23, after which, growth is expected to moderate towards the high-single-digits on a consistent basis. | |||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | SPP - Stop-loss (Close the position) | TFG - BUY (Continue to hold) | LHC - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 83.54 | 19.30 | 129.35 |
| Current | 105.70 | 86.410 | 19.56 |
| Movement | -18.3% | 3.4% | 1.3% |
| Summary text |
The trade reached our stop-loss level, and we closed the position.
The company's trading update last week was weak and highlighted increased finance costs, higher prices in fuel and labour (particularly in Europe), a sharp increase in marketing costs, and IT costs related to its SAP implementation. |
The share is currently trading below its 200-day simple moving average, indicative of a bearish sentiment. Fading downside price momentum is supportive. Bullish divergence also remains notable.
Our take profit target remains at R132, with a trailing stop-loss at R68. Time exit: 8 July 2024 |
The price has shown signs of a potential upward trend. Testing its 200-day simple moving average. Diminishing upside price momentum raises concerns
Our take profit target remains at R22.20, with a trailing stop-loss at R18.30. Time exit: 26 June 2023. |
| Share Name and position | INL - BUY (Continue to hold) | BAW - BUY (Continue to hold) | PRX - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 105.00 | 85.56 | 1387.97 |
| Current | 105.67 | 85.83 | 1383.50 |
| Movement | 0.6% | 0.3% | -0.3% |
| Summary text |
The price has progressed to the "leading" quadrant out of the RRG analysis and remains of interest. The share remains above its 200-day simple moving average. Fading downside price momentum supports the bullish trend.
Our take profit target remains at R121, with a trailing stop-loss at R99. Time exit: 7 August 2023 |
The share is trading below its 200-day simple moving average but seems to be approaching it. Fading downside price momentum is supportive.
Our take profit target remains at R104, with a trailing stop-loss at R78. Time exit: 3 July 2023 |
The share continues to hold above crucial support. Trading above its 200-day simple moving average
Our take profit target remains at R1606, with a trailing stop-loss at R1295. Time exit: 15 August 2023 |
