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Last I looked Kitwave had very little 'free float' as major iis & insiders hold over 90% of the outstanding. With just 70m in issue and a 2000 mrkt size, sp's can be distorted at times.
The "buy and build" strategy seems to be paying off in so far as shareholders won't be called on to fund expansion following the £64m placing. That's reassuring in the short term as long as Mr Young doesn't go mad buying up small independents in a rush for growth.
I'm sure a shrewd operator like Paul knows the banana skins better than me! Whatever I intend to add as soon as funds are available.
Morning all.
Thank you for that I hold and hope for bigger dividends
Since admission to AIM in May 2021 at 150p pis 'chat' has been sp****. Coinciding with covid and the lockdowns didn't help. However with the ftse at historic highs Kitwave is reaching a wider audience thanx to increasing revenues and profits.
At an undemanding 8x earnings for '23 the outlook for the company is much better. Some brokers have pencilled in a target sp of 320 on further acquisitions. I hold and look forward to c £26m profits this year.
I want to know why the big increase in price
Hi, here as a new buyer of KITW after screening for interesting undervalued shares. Bought on Monday and 8% up already so happy about that.
This is the quietest LSE board I've ever seen. Anyone out there?
SP up the day after I first became aware of this company which means other punters must read the MCLS board! I note andsoforth's comments below which make perfect sense. At the same time, is there any chance of KITW expanding dramatically by making a takeover offer for MCLS? If that happened I'd view MCLS as a Strong Buy and KITW a Strong Sell!
Having said that, I think Corner Shops can be extremely profitable with the right Management.
Thankyou, I have noticed this problem for over 12 months on various stocks. My platform does not take action and add new stocks. I am planning to open a new account next ISA year, so I ask this question quite a bit. AJ Bell, noted thanks.
Any others please?
I bought these shares on AJBell over six months ago. They were mentioned in Shares magazine(free to AJBell clients). Seem a steady safe investment.
Would like some of these shares, but they are too 'new' for my platform that I am using. So I cant buy them. Would anyone mind naming a few platforms that these can be bought through please. Id like to find another website share dealing service that adds new AIM listings to the instruments to trade ideally before they list etc.
PS, the acquisition caught my eye, but before I research I see if I can buy, so not researched but looks promising.
Your English is much better than my Romansh/German/French! I am just looking at this. A new launch, in which £17m went to the existing owners, and £64m to the company. That seems too one sided to me. Also they have less than 2% of the UK wholesale market, and mainly in the Grim North and midlands. They are looking to "buy and build" but seem to have little experience of this. Also they draw over half of their stock from just twenty suppliers and "The Group does not have formal long-term contracts in place with key suppliers." Inflation will hit them hard, and they are supplying sectors already under immense pressure. I will stand and watch for now. Good luck.
sorry for poor english, from Switzerland.
looking good for the year end results. what do you think?
Keep the faith
This good news could be lost on the markets today.
I am pleased to report strong trading in the second half of the year, not only driven by the seasonal nature of our business but also due to the easing of COVID-19 restrictions. As a result, the Group expects to report a profit before tax for the year to 31 October 2021 that is significantly ahead of expectations.
Cheers
Year end 31st OCT so should see a trading update soon.
Buy wholesaler Kitwave which is firmly in the driving seat
Extensive fleet of vehicles and in-house drivers is enabling the wholesaler to boost its competitive position
Thursday 21 Oct 2021 Author: James Crux Great Ideas
Driver shortages and supply chain logjams are dominating the news headlines and could put a dampener on Christmas this year.
Yet one growth company doing its bit to deliver the goods in these unpredictable times is Kitwave (KITW:AIM), a small cap food and drink wholesaler with its own in-house established fleet of delivery vehicles and drivers and which isn’t reliant on third party logistics providers as a result.
Shares believes this independent delivered wholesale business is undervalued considering its cash generation, capacity to capitalise on the current situation to strengthen its competitive position, a proven buy-and-build strategy and its attractions as a play on the full recovery of the leisure and hospitality sectors.
DELIVERING THE GOODS
For the uninitiated, Kitwave floated on AIM at an issue price of 150p in May 2021.
Founded in 1987, the North Shields-based concern sells and delivers everything from confectionery, soft drinks and snacks to tobacco, beers, wines, groceries and frozen and chilled food, delivering to a diverse 38,000-strong UK customer base spanning convenience stores, pubs, vending machine operators and foodservice providers.
Among Kitwave’s competitive advantages is an extensive depot network giving the group nationwide coverage. It offers next-day delivery for deliveries within 25 miles of a depot and three-day delivery slots nationwide. And the company typically carries 23 days of stock to ensure it can fulfil orders even in the event of inbound supply chain delays.
Growth to date has been achieved organically and by gobbling up smaller, family-owned businesses, yet canny CEO Paul Young insists the UK grocery and foodservice wholesale market remains ‘highly fragmented’ and presents Kitwave with ‘numerous additional growth opportunities’.
Admittedly, this is a high volume yet low margin business and there is always the risk that Kitwave buys a company that proves to be sub-par. However, Young and his team know target market companies well, which limits the potential for overpaying for acquisitions.
Canaccord Genuity recently reiterated its ‘buy’ rating and 210p target price for Kitwave, implying 40% upside at current share price levels, with analyst Mark Photiades impressed by a visit to the company’s new purpose-built Butterfield facility in Luton.
Offering over 70,000 square feet of temperature controlled bespoke frozen, chilled and ambient warehouse space to service its network of independent customers in the south, the site also provides future capacity for Kitwave’s longer-run growth ambitions.
IN THE DRIVING SEAT
Significantly, the visit also showcased Kitwave’s in-house delivery fleet which the analyst says is allowing the company to ‘benefit whils
Should see a decent trading update next as covid restrictions have lifted.
Following the recent AIM listing @150p, 9 institutions hold 72.3% and 4 directors hold 18.0% of the shares. Shareholders received £17.6m from the listing and retain £19.7m at yesterdays closing price, which is a reasonable ratio of existing shareholder cashed up profit/longer term investment at an IPO.
Institutional Shareholdings
Premier Miton Group plc: 12.00m: 17.1%
Liontrust Investment Partners LLP: 11.55m: 16.5%
Ninety One UK Ltd: 5.32m: 7.6%
Cannacord Genuity Inc: 4.77m: 6.8%
Hargreave Hale Ltd: 4.77m: 6.8%
Harwood Capital LLP: 4.27m: 6.10%
Chelverton Asset Management Ltd: 2.98m: 4.4%
Threadneedle Asset Management Ltd: 2.70m: 3.9%
BMO Asset Managers Ltd: 2.16m: 3.1%
Sub Total: 50.52m: 72.3%
Directors Shareholdings
Paul Young 10,97m 15.67%
David Brind 1,54m 2.20%
Stephen Smith 50,000 0.07%
Gerard Murray 40,000 0.06%
Sub Total: 12.60m 18.00%
AIM listings have a habit of flying under the radar, and this week’s admission to the London market for established independent wholesaler, Kitwave, is no exception. The day turned out to be a success and shares have moved up since the flotation.
IGTV’s Jeremy Naylor spoke to Paul Young, Kitwave founder and 15% stakeholding CEO, about the flotation and what next.
https://www.youtube.com/watch?v=o4q_YMNDj84
Kitwave
KITW, 159p
Kitwave (KITW; 159p), an independent delivered wholesale business, joined AIM on 24 May. The business is the brainchild of chief executive Paul Young, an accountant who bought a small cash and carry confectionery business, M&M Value, in 1987. The business grew fairly slowly until 2011 when it completed a round of private equity and Young has since put the pedal to the metal with the acquisition of 10 wholesale distributors, which has helped sales leap four-fold to £399m, making Kitwave the no. 14 in its market. At the same time, the business has become professionalised moving from being family run to having a full management team.
The shares have just joined AIM following a placing of 54.4m new shares by Canaccord Genuity at 150p, raising £64m for the company, which eliminates its debt. It also raised £17.6m on behalf of selling shareholders. At the placing price, Kitwave is valued at £105m
I think there could be great excitement about its plans for expansion. As Young explained to me, his market comprises 450,000 independents in the UK of which 80,000 are convenience stores and 370,000 are foodservice outlets (pubs, clubs, restaurants, hotels and the like). At present, Kitwave only serves around 38,000 of them, delivering a huge range of products from soft drinks and cigarettes, to chilled frozen and fresh foods and saving them the hassle of going to the cash and carry themselves. Tobacco used to be a big product line back in 2011 when it accounted for almost 52% of sales but it is now down to 7%. Alcohol is again a bit of an also-ran now.
Two new hubs opened last year, taking the total to eight. These distribute to a network of 26 local depots and allow Kitwave to deliver most of its products, if ordered by 10pm, the next day. And this is all part of the plan to strengthen Young’s business so he can target the foodservice sector with gusto, just at the time when the sector starts to enjoy a recovery in sales.
Distribution tends to be a fairly low margin area. Based on sales of approximately £399m and EBITDA of £17.5m, it has EBITDA/revenue of c.4% but this is now going to climb as the foodservice sector has a gross margin that is closer to 30% versus 15-18% for wholesale by virtue of the high level of service in the form of fast delivery times.
Growth is to come via a buy-and-build strategy. Young talks about buying at the rate of one or possibly two a year in foodservices, with a business making £1-2m on sales of £20-40m in its sights. At that rate of expansion, deals will be funded from existing cash resources without further recourse to the market. I think the shares are worth buying.
Recommended by Small Companies Sharewatch this weekend. Same outfit recommended ASOS at 28p!
No one here
Anybody there?