Peet Serfontein & Jalpa Bhoolia
Bidcorp is a market-leading food service product distributor across several geographies including the United Kingdom, Europe, Middle East, South America, the Asia-Pacific region, and South Africa. The company's business units operate across the food and ingredient manufacturing sectors, such as catering, hospitality, leisure, baked products, poultry, meat, seafood, and processing. The strategy is to grow organically in existing regions and acquisitively in new ones. Geographic scale and a growing industry provide opportunities for revenue growth outside of just gaining market share.
Technically, a consistent uptrend presents an enticing investment opportunity (see the black trendline on the main chart). The pattern is characterised by a series of higher highs and higher lows and signals sustained buying pressure. A consistent uptrend increases investor confidence, which can provide additional support.
The upward sloping linear regression channel analysis insert visually confirms the bullish trend. The upward slope reinforces investor confidence that the share is in a steady uptrend, thus encouraging further buying activity.
The share is in the accumulation phase - the first stage following a prolonged decline. During this phase, the share price stabilises and begins to attract investors. Trading volume may increase, but it is usually more consistent and less volatile than during distribution or markdown phases.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R640, which classifies our profit target of R477 as realistic.
We suggest a low to medium capital at-risk allocation to this trade. Increase exposure for a break above R436.
Share Information
| Share Code | BID |
|---|---|
| Industry | Food And Beverage Wholesalers |
| Market Capital (USD) | 142.88 billion |
| One Year Total Return | 5.02% |
| Return Year-to-Date | 1.02% |
| Current Price (USD) | 425.99 |
| 52 Week High (USD) | 478.16 |
| 52 Week Low (USD) | 393.13 |
| Financial Year End | June |
| Several technical indicators suggest that the share price is well-positioned for upside potential. Expect moderate volatility in the price going forward. |
Consensus Expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 20.77 | 23.83 | 26.46 | 29.05 |
| Growth (%) | 14.74 | 11.02 | 9.80 | |
| Dividend Per Share (ZAR) | 9.40 | 10.80 | 12.09 | 13.39 |
| Growth (%) | 14.90 | 11.97 | 10.72 | |
| Forward PE (times) | 17.88 | 16.10 | 14.66 | |
| Forward Dividend Yield (%) | 2.54 | 2.84 | 3.14 | |
| Company fundamentals remain solid and near-term earnings growth is very attractive. | ||||
Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | BVT - Stop Loss (Continue to hold) |
CFR - BUY (Continue to hold) |
INL - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 258.00 | 2 983.50 | 120.71 |
| Current | 244.20 | 3 172.14 | 124.74 |
| Movement | -5.3% | 6.3% | 3.3% |
| The trade triggered a stop-loss, and the position was subsequently closed. |
A share that correlates with the rand remains of interest. Upside price momentum supports the trade. Remains above its 200-day simple moving average.
Our take profit target remains at R3248 with a trailing stop-loss level at R3028. Exit the trade on 30 September 2024. |
A developing rising wedge pattern remains of interest. Sudden downside price momentum is concerning. Remains above its 200-day simple moving average.
Our take profit target remains at R137 with a trailing stop-loss level at R118. Exit the trade on 29 July 2024. |
| Share Name and position | NRP - BUY (Continue to hold) |
DCP - BUY (Continue to hold) |
SHP - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 131.00 | 32.49 | 258.45 |
| Current | 135.00 | 31.96 | 250.95 |
| Movement | 3.1% | 1.6% | -2.9% |
|
An inclining channel pattern remains of interest. Fading downside price momentum is supportive. Remains above its 200-day simple moving average.
Our take profit target remains at R146 with a trailing stop-loss level at R129. Exit the trade on 9 September 2024. |
The share is in a developing symmetrical triangle pattern. Downside price momentum is a concern. Remains above its 200-day simple moving average.
Our take profit target remains at R37 with a trailing stop-loss level at R30.60. Exit the trade on 1 July 2024. |
A price that is in a developing rising wedge pattern remains of interest. Downside price momentum is concerning. Dipped below its 200-day simple moving average.
Our take profit target remains at R295 with a trailing stop-loss level at R245.30. Exit the trade on 22 July 2024. |
