Bidvest Namibia has acquired a once-off profit made on the sale of a fishing vessel of N$71.2 million, calculated as the difference between Earnings per Share (EPS) and Headline Earning per Share (HEPS).
Bidvest has Basic EPS for financial year 2015 which will come equating to earnings of N$290 million Simonis Storms Securities summed up saying that in essence, EPS for the year will be up by between 17% and 19%, while HEPS will be down between 10% and 12%.
Profit was made on the sale of a fishing vessel accounting for the difference between EPS and HEPS, while a significantly lower quota allocation lead to the generally poor performance of the group for the year.
“Our forecasts for the full year were wide of the mark in that we were not aggressive enough in paring back allocated quota for the year. Our adjusted valuation of the existing businesses (excluding the Novel Ford acquisition due to lack of financial data) is now 703c and we maintain our SELL rating,” James Cumming, Head of Research at Simonis Storms Securities, said.
He added that Headline EPS expected to be around 103.23cps, down 11% for the year, adding that they previously expected HEPS to drop by only 1%. “We don’t expect things to get easier for Bidfish. From the reports in the press, it appears that the government has taken a decision to support the state owned fishing enterprises and other new entrants at the expense of the current incumbents within the fishing sector,” Cumming said.
Cumming viewed that Bidfish will find it difficult to convince the Minister to maintain its quota allocation at current levels, let alone increase it.
“Two newsworthy events have happened over the past month which we expect will impact Bidfish’s ability to contribute meaningfully to the group’s future growth. The Atlantic Pacific Fishing factory had a ground breaking ceremony earlier this week, a N$250mn joint venture that is 51% owned by Namibian long-term horse mackerel rights holders and the remaining 49% is owned by Brandberg Namibia Investment Company (Pty) Ltd, which falls under China,” he said.
He further described the goals of Fishery Group Ltd, a subsidiary of Pacific Andes International Holdings Ltd based in Hong Kong, adding the factory will process and package horse mackerel for both local and export markets and has the full support of the Minister of Fisheries.
Cumming said that the Minister of Fisheries announced his satisfaction with the recent performance of the government owned National Fishing Corporation of Namibia (Fishcor) and felt that, despite the criticism at the time, he made the right decision to allocate 10,000 tons of horse mackerel quota to the company in 2014.
“Bidvest will have to rely more on its non-fishing businesses in order to maintain profit, the acquisition of Novel Ford goes some way to achieving this but we are not convinced this will totally supplement the profits forgone in Bidfish. We can also expect more aggressive acquisition activity from Bidvest too,” he said, adding that dividends will most likely remain unchanged for the next few years due to tough business conditions.