I make no apologies about returning to follow-up my previous profiles on this group.
That is because to me it just screams value.
AGM Tomorrow
And tomorrow sees the Wincanton (LON:WIN) logistics group holding its AGM to approve last year’s accounts.
Without doubt the company will be making a positive AGM Trading Statement, which when analysed will show just how undervalued the company’s shares are currently.
The Business
Wincanton, which was set up nearly 100 years ago, is all about supply chain solutions for British business.
Operating from over 170 sites across the country, the group is responsible for some 8,500 vehicles, has 16.1m sq.ft of warehousing space, and it boasts around 20,300 employees, 5,380 of whom are drivers.
For many of the UK’s best-known companies, its business-critical services take in high volume efulfilment, storage handling and distribution, fleet and transport management, two-person home delivery, the operation of retailer ‘dark store’, and finally network optimisation.
Its Key Sectors
The £446m market capitalised group’s last trading year, to end March 2022, saw it generating a revenue of £1.42bn.
The company’s four main segments are:
Efulfilment, which represented £223.2m (15.7%) of group sales, focussing upon the growing omnichannel eCommerce sector, its value-added services took in grocery home delivery and offering customer fulfilment centres.
General Merchandise, £396.4m of sales (27.9%), where the group centred upon meeting the needs of its major multichannel customers in the non-food retail sector and for manufacturers and distributors.
Grocery and Consumer, £517.6m revenues (36.4%), for the food focused sector the group creates a logical connection in one of the most critical supply chains, serving the grocery and consumer packaged goods sectors.
Public and Industrial, £284.2m sales (20.0%), the group provides services for its customers in the government and public sector, infrastructure, defence, construction and energy sectors. It also covers healthcare, building materials, fuels and gases and bulk foods.
Its Customers
Amongst countless others, its customers include Nestle, Morrisons, Co-Op, Sainsburys, Weetabix, Muller, Asda, The White Company, Air Products, Lucozade Ribena Suntory, BP, British Sugar, Heinz, Dairy Crest, Waitrose, Texaco, Coca-Cola, Neals Yard, Britvic and Booths.
The Equity
There are some 124.54m shares in issue.
The larger holders include Columbia Threadneedle Investments (15.89%), Aberforth Partners (10.00%), Schroder Investment Management (5.69%), JP Morgan Asset Management (5.31%), Polar Capital (4.46%), Unicorn Asset Management (3.60%), Tellworth Investments (3.48%), and Welcome Trust (2.88%).
Brokers Views
Analyst Gerald Khoo at Liberum Capital is looking for the current year to end March 2023 to increase its sales revenues to £1.49bn, generating adjusted pre-tax profits of £62.6m (£58.1m), with earnings of 40.9p (40.8p) covering a 13.2p (12.0p) dividend per share.
For the coming year he sees £1.57bn sales, £69.8m profits, 42.2p earnings and a 14.5p per share dividend.
Liberum Capital currently has a ‘buy’ out on the shares, with a price objective of 535p.
My View
This group obviously suffered with the pandemic but is now back on its growth track.
It is an important cog in the supply chain sector, so necessary as the UK continues to get back to normal, despite higher prices.
I look forward to seeing the AGM Trading Statement tomorrow and then to take in any changes in broker analysis and expectations.
Whatever happens, I remain convinced that Wincanton’s shares represent excellent value at the current 357.5p, trading on a mere 8.7 times current year earnings and yielding a safe 3.7%.
I stick firmly to my early May prediction, which offers a near 40% upside.
(Profile 07.05.19 @ 247p set a Target Price of 350p*)
(Profile 06.05.22 @ 412p set a Target Price of 500p)
(Asterisks * denote that Target Prices have been achieved since Profile publication)