CA Sales

Extract from Portfolio Manager Commentaries – Sept 2022

CA Sales offers route-to-market services (across BNLS countries) to blue-chip brand owners of FMCG (fast-moving consumer   goods) products. This includes distribution, warehousing and merchandising. The business was unbundled out of PSG Group as part of PSG’s delisting from the JSE. CA Sales is a relatively small and unknown company, and it is our belief that many PSG shareholders who received CA Sales shares were sellers. As such, the share price has come under undue pressure in its first month as a listed company, which we think has been a good opportunity to acquire shares. We think it’s a decent quality business for the following reasons:

• It has grown earnings per share by a compound annual growth rate of around 15% for the past seven years;
• It has generated good cash flows in this time;
• Its returns on equity are reasonable at about 15%; and
• It has good prospects to continue delivering strong growth.

At the current share price, it trades on between a 6 and 7 times forward multiple.