Quality businesses keep chugging along
Amongst the doom and gloom in some sectors, one business that has reported strong figures and is held by Montgomery Investment Management is Burson Group Limited (ASX: BAP). The stock has done well since its listing in early 2014.
BAP held their first AGM on Tuesday (you can read the presentation here) and gave some insight into their expectations for FY15. Notably, their first quarter went well, with same store sales up 4.7 per cent and total sales up 9.7 per cent year-on-year. Management reconfirmed their prospectus guidance of $21.9 million in net profit for FY15.
Five stores were opened over FY14 (totaling 116 by financial year’s end) and management expects to hold over 124 stores in its portfolio by the end of FY15.
All this is fine, however; it’s also notable that in order to hit their target of 175 stores by FY19, they’ll need to ramp up their rate of acquisitions. This seems feasible given their borrowing capacity, strong operating cash flow and a team of staff that can identify, establish and integrate new stores.
There are qualitative aspects of firms as well as quantitative. BAP is one of a handful of stocks on the ASX where we’ve found that management treats its shareholders as partners in the business. A rare, but truly valuable, quality.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
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Narren
:
Management would want to treat us like partners given their remuneration figures…
LUCAS
:
Ask them about how many stock turns each store is doing and then do a rolling comparison.
Paul
:
Hello Scott, I do agree with your comments. I also remember MIM getting in on the float which has proven to be a good investment so for. However I am curious as to why you continue to hold the investment when it now seems to be significantly over valued (according to Skaffold).
john.pike.1044
:
Thank you for your comments on Bursons, Scott.
Another company operating in a similar area is Supply Network Limited.
(SNL). I am happy to be a shareholder as the management in that business look after the shareholders also. They generally understate and and over deliver on results . Do you think they would be a good add on for Burson Group?