What is next for Santova?

Santova Investor presentation highlighs

I attended the Santova Investor presentation this morning, here are some of the highlights.

4 key differentiators remain:

• Culture & people
• Business Risk (strategic diversification, multiple streams of revenue, spread if clients, quality client base with limited exposure to bad debts.
• Global clients (end to end supply chain management, globalisation)
• Cloud technologies that are scalable.

Some key KPIs

• Revenue up 40%
• Headline earnings per share up 169%
• Return on Equity up 25%

Profit by geography:

Africa: 20%

Asia pacific 16%

UK 22%

Europe 42%

Other Notes
 

• Smaller businesses with less working capital, wont be able to keep up with demand, which allows opportunity for Santova to capitalise on new opportunities.
• Santova is in 10 countries.
• Invested heaviliy in automation & integration to scale operations the past year

• Significant amount of new clients in SA, Netherlands & UK. Management expects further net expansion from these new clients this year as volumes increase.

Concerns

• Ukraine Russia war (Santova does benefit from supply chain issuess)
• Inflation pressures
• Quality labour shortage, as more people want to work from home and other factors.
   

Africa

• The groups strong cash reserves provided enough working capital to meet requirements of abnormally high freight rates
   
• Sanvtova recipient of competitor fallout

- Growth runs expected to continure

Europe 

• new orders recorded all time highs)

Asia Pacific

• Fastest growing region in world.
• Santova will focus more in this region.

Industry:

• Exciting industry
• Industry growth expected at 5.7% over the next 5 years
• TAM expected at 13bil dollar by 2027.
• New ecommerce portal opportuntiies- early days (fits in with santova express)

Going Forward

• Santova will continue strategy of diversification: Georgraphies, currency, service offerings, multiple industries and clients spread.
• Santova will focus on strong margins, cash flow & profitability.
• Likely to continue buy backs if cash flow allows

Closing remarks

• Debtor book is improving
• Strong demand for services
• Global diversification strategy seems to be working very well

Personal opinion

Personally, I own Santova and Im buying more. Why?

Because they are executing really well, all KPIs are going in the right direction, strong demand for services, industry will continue to grow, debtors book is decreasing, attractive valuation even after incredible run and cash flow is looking good.

 (Not financial advice, this is my personal opinion and what I am doing with my own money.)