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Cash-generative wholesaler’s annual profits to smash estimates following forecast-beating second half
Thursday 02 Dec 2021 Author: James Crux


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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