Bolloré Africa Logistics CI: Transport

THE COMPANY: Bolloré Africa Logistics CI (BAL), formerly SDV-SAGA Group, is among the major players in the transport, handling and logistics sector. The company is known for its multi-sectoral and multi-business offers. Its mission is to control the entire supply chain, allowing the company to provide its customers with a complete service: freight forwarding, handling (stevedoring and land), distribution ( grouping and express) and contract logistics.

In April 2009, the group management decided to change the name of the company from SDV-SAGA CI to Bolloré Africa Logistics Côte d’Ivoire, a move that would help to further standardise the group’s name worldwide and consolidate its presence on the African continent. Established for over 50 years in Côte d’Ivoire, BAL currently maintains subsidiaries in Abidjan, San Pédro, Bouaké, Noé, Ferkéssédougou and Ouangolodougou, with total warehouse and storage areas in excess of 1.4m sq metres. BAL also has a 15-year concession for the container terminal at the port of Abidjan, awarded in 2004.

The company’s 2012 results show a 32.03% increase in net revenues compared to 2011. This increase is connected with the resumption of activities following the end of the post-election crisis.

Net profits were CFA8.21bn (€12.32m) in 2012 compared to CFA2.24bn (€2.24m) in 2011, thanks to higher net revenues of CFA74.19bn (€111.29m), financial profit of CFA3.96bn (€5.94m) and an exceptional profit of CFA339m (€508,500). The cost controls initiated by the management of the company also contributed to the improved results.

In the coming years, BAL should benefit from a peaceful environment and the expected economic growth of 8% for 2013 and 2014. The current capacity of the container terminal at Vridi is expected to double, and therefore increase the activity of the company thanks to various projects. Future projects include the creation of new housing areas and the development of a second container terminal in deep water, which will allow the port to receive 8000-container vessels. The establishment of a major industrial and commercial area covering 500 ha and the promotion of the two ports of the country ( Abidjan and San Pédro) for export markets are also expected to help expand the flow of traffic.

The logistics sector is highly competitive. and BAL is strongly challenged in the maritime transit, handling and air transit segments by DELMAS, GETMA, Movis and Société Ivoirienne de Manutention et de Transit. This competition is very present and aggressive, especially when it comes to pricing.

In any case, BAL should maintain its leadership position thanks to the growing hegemony of its parent company, Bolloré Group, on the port of Abidjan. In fact, having already secured the concession for the first container terminal, Bolloré Group has also won the concession for the second terminal. BAL should take full advantage of this situation to leverage its maritime and handling activities.

With a price-to-earnings ratio of 13.26x, the stock currently trades below the sector average of 15.59x. This shows how the stock is undervalued and its growth potential. We also look at BAL as a yield stock with regular dividend payments. The historical average dividend payout ratio is 128.74% over the past 10 years, and the company should be able to maintain its generous dividend policy given its cash flow and the very low debt on its balance sheet.

THE DEVELOPMENT STRATEGY: BAL takes full advantage of the investment strategy of Bolloré Group which, through its investment plans for 2004-09 and 2009-13, has already invested CFA70bn (€105m) to allow the Abidjan port to become one of the most productive in West Africa. These investments have boosted the import traffic, from 55,000 to 150,000 twenty-foot equivalent units (TEUs), and have increased exports by 53%, from 98,000 to 150,000 TEU. A further CFA300bn (€450m) is being invested to raise total capacity to 1.5m TEUs per year.