By Peet Serfontein & Jalpa Bhoolia
The Bidvest Group is a service, trading and distribution company operating 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 that is in an inclining channel pattern makes for an attractive investment opportunity (see the black parallel trendlines on the main chart).
The pattern shows a consistent uptrend, characterised by a series of higher highs and higher lows. The lower boundary of the channel acts as a support level, while the upper boundary acts as resistance. When the share consistently bounces off the support level and trends upward, it reinforces bullish sentiment.
The insert on the graph shows the average monthly returns for the share, since 2000. Positive returns throughout most of the year further underscores bullish support for the share.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R295. This classifies our profit target of R292 as realistic.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R265.
Share Information
| Share Code | BVT |
|---|---|
| Industry | Industrials Goods and Services |
| Market Capital (ZAR) | 87.77 billion |
| One Year Total Return | 11.66% |
| Return Year-to-Date | 4.22% |
| Current Price (ZAR) | 257.94 |
| 52 Week High (ZAR) | 297.73 |
| 52 Week Low (ZAR) | 226.02 |
| Financial Year End | June |
| The share price has captured decent upside year-to-date, and several technical indicators point to further upside in the price. The share is testing its 200-day simple moving average. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 17.53 | 19.53 | 21.56 | 23.90 |
| Growth (%) | 11.41 | 10.41 | 10.86 | |
| Dividend Per Share (ZAR) | 8.76 | 9.31 | 10.19 | 11.35 |
| Growth (%) | 6.32 | 9.45 | 11.37 | |
| Forward PE (times) | 13.21 | 11.96 | 10.79 | |
| Forward Dividend Yield (%) | 3.61 | 3.95 | 4.40 | |
| Solid double-digit earnings growth is expected over the forecast horizon. | ||||
Buy/Sell Rationale:
Technical Analysis:
Long-term fundamental view:
| Share Name and position | SLM - Take Profit (Close the Position) | MNP - Take Profit (Close the Position) | MRP - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 64.61 | 332.67 | 157.50 |
| Current | 73.58 | 367.60 | 185.00 |
| Movement | 13.9% | 10.5% | 17.5% |
| We suggest taking profit early on this position to lock in portfolio gains. | We suggest taking profit early on this position to lock in portfolio gains. |
A price coinciding with a trough in the business cycle remains of interest. The start of upside price momentum supports the trade strategy. The price remains above its 200-day simple moving average.
Our take profit target remains at R213 with a trailing stop-loss level at R162. Exit the trade on 7 April 2025. |
| Share Name and position | INL - BUY (Continue to hold) | DCP - BUY (Continue to hold) | SHP - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 120.71 | 32.49 | 258.45 |
| Current | 125.77 | 33.54 | 261.53 |
| Movement | 4.2% | 3.2% | 1.2% |
|
A developing rising wedge pattern remains of interest. Fading downside price momentum is positive. Remains above its 200-day simple moving average.
Our take profit target remains at R137 with a trailing stop-loss level at R119. Exit the trade on 29 July 2024. |
The share is in a developing symmetrical triangle pattern. Muted downside price momentum is supportive. Remains above its 200-day simple moving average.
Our take profit target remains at R37 with a trailing stop-loss level at R31. Exit the trade on 1 July 2024. |
A price that is in a developing rising wedge pattern remains of interest. Fading downside price momentum is supportive. Remains just above its 200-day simple moving average.
Our take profit target remains at R295 with a trailing stop-loss level at R248.50. Exit the trade on 22 July 2024. |
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