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magazineWholesaler Kitwave delivers overlooked upgrade
KITWAVE (KITW:AIM) 146p
Loss to date: 2.3%
Original entry point: Buy at 149.5p, 21 October 2021
Our ‘buy’ call on deal-hungry food and drink wholesaler Kitwave (KITW:AIM) is 2.3% in loss, yet we remain upbeat about the company’s organic and acquisitive growth prospects in a fragmented market.
Kitwave’s positive trading update for the year to October 2021 got missed as markets tumbled on ‘Red Friday’ (26 Nov). That’s a shame, since the delivered wholesale business said annual pre-tax profit will be ‘significantly ahead’ of cautiously-pitched expectations following forecast-beating second half sales in the wake of the easing of Covid restrictions.
While many rivals have been impacted by the HGV driver shortage, Kitwave’s own in-house established fleet of delivery vehicles and drivers has enabled its operations to continue as normal. Strong relationships with suppliers has ensured supply chain issues have been ‘kept to a minimum’, with Kitwave making substitute products available and maintaining high customer service levels.
Steered by CEO Paul Young, Kitwave doesn’t foresee cost inflation adversely affecting profitability either. ‘This is not a new phenomenon and one with which the group has dealt with successfully on many occasions in its 35-year history’, assured the cash-generative company.
SHARES SAYS: Kitwave is emerging from the pandemic as a stronger business. Keep buying.
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