Our opinion on the current state of BEL

8. Nov. 2023

Bell (BEL) is a manufacturer and distributor of heavy equipment, earth-moving equipment to the mining construction, agriculture, and waste management industries. As such, it has been directly impacted by the slow-down in construction since 2008 and collapse of the mining industry. Bell's articulated dump trucks are exported world-wide from South Africa and Germany. Bell also has dealerships for a number of other global manufacturers, giving it a product range of over 120 products. Roughly 60% of its business comes from outside South Africa. The company employs 3200 people of whom 88,6% are in South Africa. The CEO of Bell, Gary Bell has indicated to Business Day that the company would consider delisting with 1A Bell making an offer to minorities (but he did not disclose at what price). Some of those minority shareholders are now saying that the board has a fiduciary duty to put the company up for sale to the highest bidder. On 18th February 2021, the company announced that a deal had been struck for 1A Bell to buy a further 31,4% of Bell giving it a 70% stake at R10 per share - a 13% discount to the share price. In its results for the six months to 30th June 2023 the company reported revenue up 42% and headline earnings per share (HEPS) up 63%. The company said, "Operating conditions were challenging, with ongoing supply chain issues and staff shortages in Germany constraining growth and our ability to fully capitalise on market demand. The high global inflation and input cost increases experienced throughout 2022 continued to have an impact on margins and the financial results in the first half of 2023. In addition, the Rand weakened sharply against major currencies between the December 2022 year end and the end of June 2023". In a trading statement for the year to 31st December 2023 the company estimates that HEPS will increase by at least 57%. The share trades over R500 000 worth of shares on average each day, making it suitable for a private investor. There was an on-balance-volume (OBV) buy signal on 7th September 2023 at 1752c per share. Since then the share has moved up to 2305c on the strength of its latest trading statement.