Our opinion on the current state of BIDVEST(BVT)Bidvest (BVT) is a highly diversified South African company with numerous subsidiaries, organized into six main divisions: Services, Freight, Automotive, Office, Print & Commercial Products, Financial Services, and Electrical. The company operates with a decentralized management structure, allowing directors of each operating company significant autonomy as long as they produce good returns. This strategy contrasts with most listed companies that typically focus on a single area of business and divest non-core assets. Bidvest's diversification reduces risk by balancing performance across its divisions, with some performing well even when others may not be.
Bidvest's notable investments include a 66% stake in Bidvest Namibia, which also owns a large property portfolio leased to various Bidvest companies, and a 56.13% stake in Adcock Ingram. The company's ongoing strategy includes regular acquisitions to drive growth. The acquisition of PHS, the UK's largest cleaning service provider, was particularly well-timed, as it preceded a significant increase in demand for cleaning services following the COVID-19 pandemic. Bidvest's investment in alternative energy sources is also viewed as a promising area for future profits.
On 3rd July 2024, Bidvest announced its intention to seek buyers for Bidvest Bank and FinGlobal, alongside its acquisition of Citron Hygiene LP. In its results for the year ended 30th June 2024, Bidvest reported revenue growth of 6.7% and a 6.6% increase in headline earnings per share (HEPS). The company attributed its success to top-line growth, effective gross margin management, and excellent expense control, which resulted in an 8.5% increase in group trading profit. Additionally, cash flow from operating activities grew strongly by 18.7%.
Bidvest currently trades at a price-to-earnings (P:E) ratio of 14.92, which, despite the recent performance, still suggests good value at these levels. Technically, the share has just emerged from an island formation and is on a strong recovery path, indicating potential for continued growth.
