Bidvest share price correcting from overbought territory after results release

Key Takeaways

1. In the fiscal year ending June 30, 2024, Bidvest demonstrated strong financial performance with a 6.7% increase in revenue to R122.6 billion and an 8.5% rise in trading profit to R12.4 billion.
2. Bidvest's diversified portfolio proved resilient with five out of seven divisions reporting profit growth over the period, four of which achieved double-digit increases.
3. The Group declared a final dividend of 447 cents per share, aligning with its dividend policy. The sale of Bidvest Bank and FinGlobal is underway to recycle capital for further growth.
4. Bidvest is optimistic about its growth strategy and the potential for a more business-friendly environment in South Africa following successful national elections.
5. Bidvest is positioned to capitalise on global megatrends, with positive signs emerging in the UK and European markets.

Strong financial performance and cash flow

In the fiscal year ending June 30, 2024, Bidvest reported a 6.7% increase in revenue, totalling R122.6 billion. The company also achieved an 8.5% rise in trading profit, amounting to R12.4 billion, and generated R14.0 billion in cash from operations, reflecting a 15.3% increase. The Group's focus on innovation and technology deployment has driven growth across operating regions, despite challenges in the renewables and new vehicle sectors. The diversified portfolio proved resilient, with five out of seven divisions reporting profit growth, including four with double-digit increases.

Financial health and dividend

Bidvest maintained sturdy financial metrics with a Return on Funds Employed (ROFE) of 37.3% and a net asset value per share climbing from R97.07 to R103.93. Basic earnings per share (EPS) rose by 6.6% to 1,873.8 cents, supported by solid operational performance. The Group declared a final dividend of 447 cents per share, aligning with its dividend policy and providing value to shareholders. The sale of Bidvest Bank and FinGlobal is underway, aiming to recycle capital for further growth while enhancing the company's strategic focus.

Positive outlook amidst reforms

Looking ahead, Bidvest remains confident in its growth strategy and the potential for a more business-friendly environment in South Africa following successful national elections. Reforms in the electricity and logistics sectors are expected to unlock higher economic growth. The performance of Eskom and Transnet's recovery plan are pivotal in restoring business confidence and supporting future investments. Additionally, green shoots are emerging in the UK and European markets. Despite possible headwinds in the first half of the coming year, including challenges in the export maize market, Bidvest anticipates benefiting from its strategic acquisitions and brand diversification. The Group is poised to capitalize on global megatrends, drive operational excellence, and create social value while pursuing continued innovation and cost benefits for its customers.

Bidvest – technical analysis

The share price of Bidvest trades within a long term upward channel. In the near term the price looks to be correcting from recent highs and overbought territory. Trend followers might prefer to wait out short term weakness while hoping to accumulate long positions on a bullish price reversal closer to either the 27400 or 26850 support levels. In this scenario 30265 and 31500 become longer term upside targets, while a close below a reversal low might be used as a stop loss indication.