Imperial Logistics

11 May 2020 By PDSNET

Imperial (IPL) is a large international logistics company with 27 000 employees operating in 32 countries mainly in Africa and Europe. In is involved in transport, warehousing and international freight management. It is the largest logistics supplier in South Africa. The company is involved in five key areas - automotive, chemicals, consumer, healthcare and industrial.

The company recently split off and separately listed Motus (MTH) on the JSE in an effort to release shareholder value and focus more on its core businesses. It has also sold off its European shipping business for a net R3,6bn which has given it the cash that it needs to pursue its main objective which is to expand into Africa.

The company has not been greatly impacted by the COVID19 pandemic because its services are considered to be essential in most of the countries where it operates.

The company gets about 75% of its income from South Africa and the balance from the rest of Africa. It has identified the rest of Africa as a key opportunity and is intent on increasing that side of its business. Outside of those countries like Nigeria which supply oil, Africa has not been hugely impacted by COVID19 and should recover relatively quickly especially once a vaccine is developed.

Like most shares on the JSE, Imperial took a hit in March and April 2020 as a result of lockdowns especially here in South Africa. Consider the chart:

Imperial Logistics (IPL) December 2019 to May 2020 - Chart by ShareFriend Pro

Here you can see the downward trend caused by the pandemic which was followed by a double bottom and a clear upside breakout. We regard this share as extremely well-managed and a company that has not been greatly impacted by the pandemic. It should recover quickly because it has plenty of cash to take advantage of cheap acquisitions in the wake of the crisis. It also has a growing rand hedge component as its business expands in Africa.

The share is trading on a dividend yield of 5,2% which will makes it attractive to institutions once COVID19 is substantially behind us. We see this as a good opportunity for private investors.  


DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.



Share this article:

PDSNET ARTICLES

The Anatomy of the Bear

As the bear market unfolds on Wall Street you either hold shares or you are sitting in cash. For those who are holding shares, as we have said consistently, you need to watch your stop-loss levels very closely because you are operating in a market where the odds are decidedly against you.

For those in cash, your position is

Bear Trend

We never regarded the COVID-19 fall of the S&P500 in March 2020 as a bear trend. In our view it was always a technical aberration caused by the “black swan” event of the pandemic. It caused a temporary downward spike which lasted from February to August 2020, but it was never a true bear market.

Then on Monday

Uncharted Territory

The world has entered a turbulent time, the outcome of which will largely determine the future order of things. There are six great areas of uncertainty which the private investor should formulate a coherent opinion on:

 

  • The war in Ukraine is in reality the remnants of the cold war, a low-level conflict

Triple bottoms

Investors should be riveted to the progress of the S&P500 index these days. As we said in our article three weeks ago, the S&P is teetering on the edge of a bear trend. Following that article, the index climbed back up and then on the US Memorial Day weekend it encountered significant

Basic Fundamentals

Public, listed companies are required to report back to their shareholders on a regular basis. They must produce audited financial statements after the first six months of their financial year (interims) and then again at the end of the financial year (finals). Listed companies must produce these statements within 3 months of the end of their

Teetering on the Edge

Last Friday, the S&P500 actually dipped into bear market territory during the trading day. It went as low as 3811.28 before staging a remarkable recovery in afternoon trade to close at 3901.36. This resulted in Friday’s candle becoming what is known as a “hammer” – a candle with a very short body and a long downward

Bitcoin versus Gold

Cryptocurrencies cannot really be considered an investment because they have no fundamentals. Their value is derived exclusively from the belief of the people who invest in them. When belief in Bitcoin is strong the price rises and when it is weak, the price falls.

Bitcoin cannot be regarded as a “safe haven” asset

Uncertainty

Most investors would probably agree that there is a considerable amount of uncertainty in equity markets at the moment. From a fundamental perspective, that uncertainty has come about because of:

  1. The force with which the central banks of the world (especially the US Fed) will “stamp on the brakes” to reduce

Powells Punch

In November last year we wrote the following about the U.S. economy in the Confidential Report:

…what if the Fed is wrong about inflation and it persists at the current high levels or even increases? September was the 5th month where inflation was above 5%. If they are wrong, then they will need to raise interest

Lewis

Nineteen months ago on 2nd of September 2020 in the Confidential Report, we recommended buying Lewis shares when they were trading for just 1668c. The share has now moved up to 4670c – a gain of 180%. Amazingly, it remains excellent value today despite this substantial rise in its price.

The company has 817 stores with 84%