Bidvest Namibia CEO Sebulon Inotila Kankondi. (Photo Credit: Bidvest Namibia)

Lower horse mackerel quota affects Bidvest´s profits

Bidvest Namibia group is facing business issues derived from 10 per cent and 11 per cent decline in earnings for the year to 30 June this year, a result associated mainly to the reduction in the horse mackerel quota allocation to its fishing company Namsov.

This is the reason why Bidvest continues its legal fight with government through Namsov, which is suing the Ministry of Fisheries and Marine Resources for a bigger horse mackerel quota than it got last year.

Given these issues, a group of market analysts recommended institutional shareholders such as the Government Institutions Pension Fund (GIPF), which owns 11 per cent shareholding in Bidvest in the form of government civil servants' pension funds that it could be a good idea to sell the Bidvest stock.

"Dividends are most likely to remain unchanged for the next few years due to tough business conditions. We don't expect things to get easier for Bidfish," pointed out James Cumming, the Head of Research at Simonis Storm Securities.

Local media sources recalled that last year the Fisheries Ministry slashed the quota to Namsov and Bidvest's other fishing venture partners, saying that quotas needed to be redistributed fairly among all participants in the fishing sector, without giving preference to one specific company.

"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 current incumbents in the fishing sector. Our view is that Bidfish will find it difficult to convince the minister to maintain its quota allocation at current levels, let alone increase it," said Cumming.

"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," Cumming added.

Meanwhile, these analysts expect that Bidvest's earnings to be up NAD 290 million (USD 22.5 million), but this is purely because of a profit that the firm got from selling off one of its fishing vessels.
 

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Address:	Bidvest House 18 Crescent Drive Melrose Arch, Melrose
City:	Johannesburg
State/ZIP:	(2196)
Country:	South Africa
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