Trade Insights

Trade insight example

Bidvest Group Ltd

1 September 2014 

The group reported its FY ending 30 June 2014 results, delivering satisfactory trading results for the year in a challenging economic environment but missing many analysts’ expectations. Bidvest Namibia recorded a decline in trading profit as the lower fishing performance negated the improved results of the commercial businesses. Bidvest South Africa delivered improved trading results in most divisions, assisted by the acquisitions of Home of Living Brands Limited (HoLB) and Mvelaserve Limited.

• Turnover R183,6 billion +19,7%
• Trading profit R8,9 billion +16,6%
• Headline Earnings Per Share (HEPS) 1733,9 cents +11,1%

Basic earnings per share (EPS) fell by 4,2% to 1462,0 cents, impacted significantly by capital items, the most significant of which was the R1,056 billion impairment of the investment in Adcock Ingram Holdings Limited (Adcock). Fitch Ratings affirmed the Group’s national long-term rating at AA(zaf) in January 2014. Moody’s continue to rate the Group at A1.za with a stable outlook.

Adcock

In January and February 2014, the Group acquired an additional 44,5 million shares in Adcock for a consideration of R3,9 billion, bringing its total voting interest to approximately 30,0%. The Group has accounted for Adcock as an associate with effect from March 1 2014. The performance of Adcock has been negative, below expectation and at complete variance to what was portrayed in publicly published information prior to and at the time of our investment.

Given ongoing uncertainty around the current trading performance, Bidvest has not made a decision to take a controlling stake in Adcock and its intent to increase its stake in Adcock to above 50%. - _{Source: JSE SENS}

Technical analysis

Highlight the weekly chart of Bidvest, long-term rising support line (dotted green line) where the share currently finds support. Share remains in a bullish trend trading well above its 200 day moving average. Clear flattop or ascending triangle pattern (highlighted A & B) on this weekly chart with resistance line B at 30000c. This continuation pattern is a bullish formation that usually forms during an uptrend and Investors/traders should pay close attention to volume if the upside breakout occurs, there should be an expansion of volume to confirm the breakout. Once the breakout has occurred, the price projection is found by measuring the widest distance of the pattern and applying it to the resistance breakout. - Travis Robson, Head of Premium Client Management

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