|
Value Logistics (VLE) will be the stock in focus: (Price at time of writing: R3.50 as 7 April 2016)
|
Related Topics |
Background and overview of Value Logistics (VLE)
Value Group Limited (“the Group”) and its subsidiaries provide a comprehensive range of tailored logistical solutions throughout southern Africa. The operating divisions specialise in providing a diversified range of supply chain services, which encompass distribution, transport, clearing and forwarding, warehousing, container and fleet management and forklift and commercial vehicle rental and leasing.
Scroll over or click on the funnel chart to get more details of VLEs latest financial results
Financial review:
VLE managed to squeeze out a net profit margin of just over 1.5%. Essentially for every R100 coming in in revenue, they make R1.50. This is an extremely low profit margin. They do state in their results for the 6 months ended 31 August 2015 that they are implementing various cost cutting initiatives. This should help in cutting operating expenses and boosting their profit margins a bit.
The graphic below shows the contribution of some of VLE's operating divisions to their revenues and profit before taxes.
As can be seen from the pie charts above their general distribution division is the main source of revenue and currently the only profit making division in the group. As the other two division both showed losses that totaled closed to R20million. 45.2c per share in cash generated from operations and earnings/profit per share came in at 10.1c a share for the 6months ended. Implying same growth for the 2nd 6months VLE will have earnings per share of 20.2c per share (placing them on a price/earnings ratio of 17). This is relatively high (especially considering the low net profit margins). Cash generation however is good.
Their interest bearing debt is sitting at close to R270million (or R1.45 a share). So they do have a pretty heavy debt burden. Especially considering their earnings per share. Is their debt the anker thats holding down this ship from sailing? We are always concerned when a company pays dividends when they have substantial debt to pay off.
Value is operating in a very competitive sector cramped with competition from the likes of GrindRod, SuperGroup, Onelogix etc to name but a few. The question is whether their shares offer investors better long term value than the others? Valuation for Value Logistics below.
Their interest bearing debt is sitting at close to R270million (or R1.45 a share). So they do have a pretty heavy debt burden. Especially considering their earnings per share. Is their debt the anker thats holding down this ship from sailing? We are always concerned when a company pays dividends when they have substantial debt to pay off.
Value is operating in a very competitive sector cramped with competition from the likes of GrindRod, SuperGroup, Onelogix etc to name but a few. The question is whether their shares offer investors better long term value than the others? Valuation for Value Logistics below.
Valuation
Based on VLE's financial results, the markets they operate in and the economic environment they find themselves in, we value VLE at between R3.05 and R3.12 a share. We therefore feel that VLE is overvalued and we would not recommend buying at the current price. We would suggest waiting for their next set of financial results in order to determine whether their cost cutting measures put in place is starting to bear fruit. Rather look into buying Grindrod (GND) or SuperGroup (SPG)
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
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