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Bidcorp reported earlier today that JP Morgan Chase & co owns a large stake in their securities. So what does Bidcorp do, are their shares offering good value and why is JP Morgan Chase & co acquiring such a big shareholding in the group?
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About Bidcorp (BID)
Bid Corporation Limited known as Bidcorp separated from Bidvest and listed on the JSE on Monday May 30 2016. The unbundling provides Bidvest shareholders with the opportunity to participate directly in Bidcorp’s foodservice operations, as well as enabling each of the businesses to achieve their respective strategic goals. Bidcorp will focus on realising the potential that exists in its current foodservice operations as well as acquisitive growth opportunities. Bidcorp is an international broad-line foodservice group, listed on the JSE, South Africa, and present in developed and developing economies in five continents. Focused on foodservice, the business comprises a mix of well-established leading and rapidly growing market positions, offering significant future upside. The profile of the customer base is strategically targeted to fully service the foodservice industry’s needs.
Bidcorp is a broadline foodservice group with a geographic reach encompassing over 34 countries on five continents. Bidcorp, operating as Bidfood in most geographies, has adopted a decentralised model of management which encourages the entrepreneurial spirit contained in each of its businesses. Each business is directly responsible for its product range, its buying and sales approach. Businesses in the different regions retain their local brand, tone of voice, look and feel specific to local culture.
Just like a truly great dish, a dynamic and successful foodservice partnership requires the right ingredients. As a leading distributor to the foodservice industry, Bidfood has come to understand this particular recipe intimately. It involves maintaining a balance between leading edge innovation and a consistent, reliable delivery of “the classics”. We offer a wide selection of local and internationally sourced products that have been tailored to suit all customer types – large and small. We believe that the key ingredients Bidfood brings together create a robust and forward looking framework for us to deliver the reliability, support and inspiration our customers have come to expect.
Bidcorp is a broadline foodservice group with a geographic reach encompassing over 34 countries on five continents. Bidcorp, operating as Bidfood in most geographies, has adopted a decentralised model of management which encourages the entrepreneurial spirit contained in each of its businesses. Each business is directly responsible for its product range, its buying and sales approach. Businesses in the different regions retain their local brand, tone of voice, look and feel specific to local culture.
Just like a truly great dish, a dynamic and successful foodservice partnership requires the right ingredients. As a leading distributor to the foodservice industry, Bidfood has come to understand this particular recipe intimately. It involves maintaining a balance between leading edge innovation and a consistent, reliable delivery of “the classics”. We offer a wide selection of local and internationally sourced products that have been tailored to suit all customer types – large and small. We believe that the key ingredients Bidfood brings together create a robust and forward looking framework for us to deliver the reliability, support and inspiration our customers have come to expect.
SENS in which Bidcorp announces JP Morgan Chase owns a large stake
In compliance with Section 122(3) (b) of the Companies Act, 2008 (Act 71 of 2008), as amended
(“Companies Act”) and paragraph 3.83(b) of the Listings Requirements of the JSE Limited (“JSE”),
shareholders are advised that Bidcorp has received notification in terms of section 122(1) of the
Companies Act that J P Morgan Chase & Co (“JP Morgan”) has acquired a beneficial interest in the
securities of the company, such that their entire beneficial interest amounts to 10,31% of the total
number of securities in issue.
As required in terms of section 122(3) (a) of the Companies Act, Bidcorp has filed the required notice
with the Takeover Regulation Panel (“TRP”).
Date: July 1 2019 Johannesburg
Sponsor: The Standard Bank of South Africa Limited
Date: July 1 2019 Johannesburg
Sponsor: The Standard Bank of South Africa Limited
Financial results overview
Results highlights as stated by Bidcorp
- Continuing Headline earnings per share (HEPS): R7 (up 9.2% from from R6.41 in prior period)
- Constant currency, Headline earnings per share (HEPS): +7,1%
- Continuing trading profit: R3.3 billion (up 6.5% from R3.0 billion in the prior period)
- Cash generated by continuing operations before working capital changes: R3.9 billion (up 14,8% from R3.4 billion in the prior period)
- Interim dividend declared R3.10 (up 10,7% from the prior period)
- Segment trading profit % growth:
Strong trading profit growth in the more developed markets. Seems to be really struggling in the emerging markets.
Now for the numbers we are interested in:
- Continuing Headline earnings per share (HEPS): R7 (up 9.2% from from R6.41 in prior period)
- Constant currency, Headline earnings per share (HEPS): +7,1%
- Continuing trading profit: R3.3 billion (up 6.5% from R3.0 billion in the prior period)
- Cash generated by continuing operations before working capital changes: R3.9 billion (up 14,8% from R3.4 billion in the prior period)
- Interim dividend declared R3.10 (up 10,7% from the prior period)
- Segment trading profit % growth:
- Australasia: +4,7%
- United Kingdom: +17,9%
- Europe: +19,9%
- Emerging Markets: -13,6%
Strong trading profit growth in the more developed markets. Seems to be really struggling in the emerging markets.
Now for the numbers we are interested in:
- Revenue: R66.4 billion (up 9.1% from R60.87 billion in the prior year)
- Cost of revenue: R50.9 billion (up 8.4% from R46.9 billion in the prior year)
- Profit for the year: R2.34 billion (up 8.6% from R2.16 billion in the prior year)
- Net profit margin: 3.6%
- Diluted earnings per share: R6.98 (up 9.3% from R6.39 a share in the prior year)
- PE ratio 20.7
- Dividend for the interim period: R3.10 (up 10.7% from R2.80 a share in the prior year)
- Dividend yield: 2.14%
- Cash generated from operations: R2.46 billion
- Cash generated from operations per share: R7.36 a share
- Cash on balance sheet: R5.84 billion (up 15.6% from R5.05 billion in the prior year)
- Cash on balance sheet per share: R17.48 a share (or 6.05% of the company's current share price)
Bidcorp (BID) share price performance
The screenshot of Bidcorp share price performance taken from Sharenet below shows that BID has been moving gradually higher but has not exactly shot the lights out for their shareholders.
- Last Week: -5.98%
- Month to Date (MTD) : 0%
- Year to Date (YTD): 15.85%
- 1 year move: 11.5%
- 3 year move: 11.23%
Bidcorp (BID) share valuation as at 20 Feb 2019
So what are Bidcorp shares worth, based on their revenues, net profits, dividend yield and their cash generation capabilities and the markets and geographies they operate in? Based on Bidcorp's financial results, and their future prospects we value the company's shares at R303.81 (at the top end of our valuation model). So trading at R289 (as at 20 February 2019) it is relatively close to our top en valuation is believe long term investors currently holding it should continue to do so, and those looking to get in should look to get in at a about 15% below our top end valuation of R303, so look to get in at around R270 levels if possible