Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Wholesaler 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.