{"id":273,"date":"2021-04-08T01:00:00","date_gmt":"2021-04-08T01:00:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=273"},"modified":"2021-04-08T05:45:03","modified_gmt":"2021-04-08T05:45:03","slug":"sabvest-capital-superb-capital-allocator-at-unjustified-discount","status":"publish","type":"post","link":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/?p=273","title":{"rendered":"Sabvest Capital &#8211; Initiation of Coverage &#8211; Superb Capital Allocator at Unjustified Discount"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: SBP \u2013 Market Cap: R1.6bn \u2013 Discount-to-SOTP: 64%<\/em><\/p>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Sabvest-Capital_Initiation-of-Coverage.pdf\">Sabvest Capital &#8211; Initiation of Coverage<\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Sabvest-Capital_Initiation-of-Coverage.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Group &amp; Portfolio Overview: Majority Unlisted Investments<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Sabvest Capital offers a unique entry-point into a portfolio of majority unlisted investments that have demonstrated strong growth, dedicated management teams (often co-investors) and that are carried at reasonable valuations.<\/li><li>The Group\u2019s three largest investments (all unlisted) are (1) DNI-4PL, a cash-generative last-mile telcos distribution group, (2) ITL Holdings, a global labelling &amp; technology-enabled tagging business, &amp; (3) SA Bias, an exporter of narrow textiles\/strapping from South Africa and group offering process-critical fluid handling solutions in the United Kingdom.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Investment Case: Better than the Best (Fund Manager) &amp; Cheaper<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Management has grown Group NAV (+18.6% CAGR y\/y for <em>fifteen<\/em> years, <em>excluding<\/em> dividends) faster than the best-of-the-best general equity fund managers across South Africa (even after <em>including <\/em>distributions) <em>and<\/em> management have done so at a lower cost-to-NAV than these leading unit trusts.<\/li><li>Finally, this performance is currently priced at a c.51% discount to NAV on the JSE (relative to our estimated fair discount of only c.19% and the peer-group average discount of 42% currently applied to listed HoldCo\u2019s &gt; R1bn market cap).<\/li><li>The key competitive advantages that have helped Sabvest generate this growth (permanent capital &amp; alignment of interest\/\u2018Partnership Principle\u2019) remain intact and, thus, we see no non-macro factors why the Group could not continue performing as it has done in the past.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Valuation, 12m TP &amp; Implied Return: Cheap Against All Measures<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>We have formed a view that the Group\u2019s unlisted investments are reasonably valued. Importantly, most of them have seen trading recover strongly following the impact of COVID.<\/li><li>Furthermore, updating the Group\u2019s NAV for the latest listed price, inserting post-period corporate actions and taking out our fairly-valued \u201cHoldCo discount\u201d of 19%, we arrive at defendable (post-discount) fair value for Sabvest Capital shares of 6402cps or +64% <em>higher<\/em> than the current share price.<\/li><li>Rolling this fair value forward at our Cost of Equity, we see the Group\u2019s 12m TP as 7542cps with an implied return of +93%.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Sabvest-Capital_Initiation-of-Coverage.pdf\">Sabvest Capital &#8211; Initiation of Coverage<\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Sabvest-Capital_Initiation-of-Coverage.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: SBP \u2013 Market Cap: R1.6bn \u2013 Discount-to-SOTP: 64% Group &amp; Portfolio Overview: Majority Unlisted Investments Sabvest Capital offers a unique entry-point into a portfolio of majority unlisted investments that have demonstrated strong growth, dedicated management teams (often co-investors) and that are carried at reasonable valuations. The Group\u2019s three largest investments (all unlisted) are [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[117],"tags":[14,119,121,126,13,120,122,124,123,125,118],"class_list":["post-273","post","type-post","status-publish","format-standard","hentry","category-sabvest_capital","tag-analyst-reports","tag-chris-seabrooke","tag-deep-value","tag-dni-4pl","tag-equity-research","tag-holdco","tag-investment-hold-co","tag-itl","tag-rand-hedge","tag-sa-bias","tag-sabvest"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/273","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=273"}],"version-history":[{"count":4,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/273\/revisions"}],"predecessor-version":[{"id":279,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/273\/revisions\/279"}],"wp:attachment":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=273"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=273"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=273"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}