Imperial Logistics – Further earnings adjustments
Key message: We make further adjustments to our forecasts as a gradual easing of lockdown restrictions occurs. The sale of the European shipping business should give the balance sheet some strength.
Bidvest – Further adjustments to earnings
Key message: We update our forecasts as we progress into a gradual unwind of lockdown restrictions. Bidvest has a relatively defensive portfolio of businesses but may not escape a loss in 2H FY20.
Bidcorp – Adjusting after Sysco Result
Key message: The impact of a sudden decline in volumes on operating margins was illustrated recently by peer foodservice company Sysco. We adjust our Bidcorp numbers based on the Sysco experience.
Motus Holdings – Rental Fleets and Residual Risk
Key message: The Motus business model does rely heavily on used car profits. In an environment of rapidly declining residual values, this business model may be tested.
Bidcorp – Sysco 3Q FY20 Results
https://chronux.co.za/wp-content/uploads/2020/05/BID-0520-Sysco.pdf
Bidvest – PHS In, Eqstra Out
Key message: The PHS deal has been completed, but Bidvest appear to have walked away from the Eqstra deal. The right deal has been consummated, in our opinion.
Corona Chronicles – Charts to Watch
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Auto Anemometer: New Vehicle Sales – April 2020
Key message: Vehicle sales collapse in April with dealers closed for the entire month. Level 4 allows only for emergency automobile repairs and component sales, with car sales allowed only under “specific directions”.
Imperial Logistics – Sale of European Shipping Business
Key message: Looks like a good price for an asset earmarked for sale – 11.5 times FY19 EV/EBIT multiple or 12 times 1H FY20 annualised P/E. Question is – can the R3.4bn cash proceeds be well spent (given management is on the lookout for an IFM acquisition).
Afrimat – Initiation
Key message: Afrimat is exposed to the construction, industrial and commodity markets. With iron ore contributing approx. half of operating profit, earnings sensitivity is now weighted towards iron ore and exchange rate levels. An entrepreneurial management team promises growth by acquisition.