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Background and overview of AVI
AVI is listed under the Food producer grouping on the Johannesburg Stock Exchange (JSE), but their list of brands expand way past just food. Their list of brands include but are not limited to the following well known and loved brands: They are ideally posistioned in the Fast moving consumer goods market (FMCG):
- Five Roses,Freshpak
- House of Coffees,Frisco,Koffiehuis,Ellis Brown,Lavazza,Douwe Egberts Cafitesse
- Bakers,Pyotts, Provita
- I&J
- Yardley, Lentheric, Coty, Spitz, Carvela, Lacoste, Gant, Green Cross Shoes
Scroll over or click on the funnel chart to get more details of AVI's latest financial results
Financial review:
The net profit margin achieved by AVI amounted to 14.1% This is an extremely healthy profit margin achieved for a company operating in the FMCG market which is extremely competitive in South Africa, with companies such as Pioneer and Tiger Brands active in the market. Strong well known brands helping to keep margins strong and healthy. A net profit of almost R900million out of R6.4billion revenue is a effort AVI management and shareholders can be proud of.
The pie chart below shows the contribution of AVI's different segments to their revenue and pre-tax profit earnings.
What is interesting to note from the pie charts above is the fact that the food and beverages division have lower overall profit margins as its percentage contribution to operating profit is less than their contribution to revenue. Clearly the fashion brands are earning stronger margins than their food and beverage brands.
Earnings per share for the group came in at R2.77 for the half year, placing AVI on a PE ratio of around 15.5. Cash generated per share came in at roughly R3.50 a share. And total cash on AVI's balance sheet amounted to R577million. AVI pays both a half year and full year dividend. The half year dividend announced was R1.50 (gross dividend) a share. Assuming a similar dividend at year end that amounts to a R3 dividend for the year which would put them on a dividend yield of 3.6%. While its not the biggest dividend yield around, it is not one to be snuffed at. Below we look at a few more financial ratios for AVI
Earnings per share for the group came in at R2.77 for the half year, placing AVI on a PE ratio of around 15.5. Cash generated per share came in at roughly R3.50 a share. And total cash on AVI's balance sheet amounted to R577million. AVI pays both a half year and full year dividend. The half year dividend announced was R1.50 (gross dividend) a share. Assuming a similar dividend at year end that amounts to a R3 dividend for the year which would put them on a dividend yield of 3.6%. While its not the biggest dividend yield around, it is not one to be snuffed at. Below we look at a few more financial ratios for AVI
A few financial ratios to mull over for AVI calculated using our Financial Ratios Calculator:
- Debt to Equity Ratio: 1.09 (more than 2 shows high levels of financial leverage).
- Current Ratio: 1.06 (a measure of liquidity. Less than one signals possible trouble in paying off current liabilities).
- Quick Ratio: 0.66 (Another liquidity measure. Shows how much in liquid assets is available to cover current liabilities or short term debt).
- Return on Assets (ROA): 9.94%
- Return on Equity (ROE): 20.74%
- Net Profit Margin: 14.05%
- Dividend Yield: 3.55%
Valuation:
While the market AVI group operates in is tough, they have extremely strong brands that will carry them through any tough times. We value AVI at between R96.39 and R96.69
With strong brands, a good management team and a strong foothold in the South African market, we feel at their current price they do offer excellent value to investors over the long term, looking to invest in a company with strong brands in the FMCG market.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.
With strong brands, a good management team and a strong foothold in the South African market, we feel at their current price they do offer excellent value to investors over the long term, looking to invest in a company with strong brands in the FMCG market.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.