Bidfish: Bidvest Nam wants outNegotiating disposal of interest Bidvest Namibia's share price on the NSX has dropped by N$2.43 or 23.6% a piece since the end of October 2016. It has been blood on the floor across the board which vindicates our 'sell' stance. - Alfred Kamupingene, Research chief: NEB Jo-Maré Duddy
Bidvest Namibia has entered into negotiations to get rid of its 100% interest in Bidvest Namibia Fisheries Holdings (Bidfish), the company said in a cautionary announcement on the Namibian Stock Exchange (NSX).
The proposed transaction will exclude “certain assets”, the locally listed group said on Wednesday. Bidfish has been in stormy waters since 2013. In its latest financial results, Bidvest Namibia said its fishing division was still plagued by severe negative external market factors, environmental conditions and a shortage of own quota allocations. Additional levies, an unfavourable exchange rate and market prices pilled more pressure on Bidfish in the past financial year. In the 12 months ended June 2017, Bidfish reported a meagre trading profit of about N$39.9 million – a plunge of nearly N$157.6 million or 79.8% compared to the 2016 book-year. From 2013 to 2016, Bidfish's trading profit decreased by about 22% on average every year. Eloise du Plessis, head of research at PSG Namibia, yesterday said quota levies which increased by N$91 per ton to N$475 per ton, observer fees and the introduction of an export levy of 1.5% by the government - effective from 1 June 2017 - place continuous pressure on profitability.
In its initial impression of Bidvest Namibia's 2017 results, IJG Securities said the group had to spend roughly N$88 million in the last financial year to purchase additional quota for Bidfish. “Additionally, the average price of fish has decreased by 7.5% in hard currency terms while exchange rate fluctuations had a 6.5% negative impact on revenue. To further complicate matters, catch rates and sizes have deteriorated year-on-year, while competition in traditional markets such as the Democratic Republic of Congo has increased following import quotas in the Nigerian market,” IJG said.
Impact Bidfish's poor performance once again impacted on Bidvest Namibia's financial results in 2017. Five of the other divisions in the group were also dragged down by the recession.
Food and distribution recorded a drop of 141.8% in trading profit year-on-year, while that of the motor division fell by 46%. The trading profit of the commercial and industrial segment decreased by 26.8% and freight and logistics were down 1.8%.
As a result, Bidvest Namibia's overall trading profit for 2017 tumbled by about N$202.4 million to N$92.5 million year-on-year. The group has reported declining trading profits for five consecutive financial years.
Basic earnings per share (EPS) were 72.5% lower at 23.9c, while headline earnings per share fell by 74% to 22.4c. Bidvest Namibia declared a dividend of 10c per share, nearly 74% less than in 2016.
Local analysts were not impressed.
“We see the challenges that haunted the group in the past to continue into the future. We change our positive recovery outlook and do not foresee any turnaround soon,” Simonis Storm (SS) said in its full analysis of the results in August.
“We still expect management to hold off any major acquisitions in the medium term and focus on improving current business operation investment returns, if not to dispose of the non-performing divisions,” SS said.
SS downgraded its rating for Bidvest Namibia from “hold” to “sell” and dropped its target price by 28% to N$5.99 per share.
In their initial analysis, IJG said the results were disappointing. Pending an in-depth review, IJG kept its target price for Bidvest Namibia at N$6.30 per share and reiterated its “sell” recommendation.
Bidvest Namibia's share price has dropped by N$2.43 or 23.6% a piece since the end of October 2016. It ended at N$7.85 per share on the local index of the NSX on Wednesday.
In their initial impressions of the group's 2017 financials, Namibia Equity Brokers (NEB) referred to the plummeting share price, saying it is “virtually the net tangible asset value per share of 737c per share”.
“It has been blood on the floor across the board which vindicates our 'sell' stance,” NEB said.
(c) 2017 | NMH Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers