Johannesburg - Diversified industrials group Bidvest is a good option for investors wanting direct exposure to the 2010 Fifa World Cup, said analysts.
The company, which reported annual results on Monday, owns a number of businesses directly exposed to South Africa's hospitality and leisure sector.
"In aggregate, they are one of the listed companies most able to benefit from the 2010 World Cup," said Andrew Kingston, senior equity analyst at Sanlam Investment Management.
"If you look at the JSE it is difficult to find companies that are so exposed," he added. "There is a bit of dilution, but it is still a good investment."
BoE Private Clients' Barbara Price-Hughes concurred. "It's probably one of the broadest beneficiaries of the World Cup," she said, adding that Bidserv had experienced depressed demand from the hospitality industry in the most recent financial period.
"These businesses are geared for higher capacity and will benefit from the upsurge in activity around the World Cup."
The units that stand to benefit most from the World Cup are housed in the Bidserv division.
It includes laundry service, which deals with most major national hotel chains in the country including Southern Sun, Holiday Inn, Protea and City Lodges, as well as Prestige Cleaning Services, which is contracted to supply portable toilets and clean stadiums.
Bidserv's Green Services is contracted to provide floral arrangements and landscaping at stadia.
Other businesses standing to benefit from the soccer tournament include Aviation Services, which manages ground handling services for the Airports Company of South Africa, and the Bidtravel division, which sells travel packages.
Bottom line
"It's difficult to project the net benefit on Bidserv's bottom line," said Lionel Jacobs, commercial director of Bidserv.
"But we are expecting to see positive effects in the 2010 and 2011 financial year."
Bidserv reported a 13.1% increase in revenue to R7.2bn for the year to end-June 2009. This compares to a 1.8% increase in revenue to R112.4bn for Bidvest Group.
Out of ten business units, Bidserv ranks fifth in contribution to group revenue.
Bidvest also owns a 5% stake in Match Hospitality AG. Fifa awarded worldwide exclusive rights to the company to manage hospitality at the 2010 Fifa World Cup and the 2014 Fifa World Cup in Brazil.
The group is expecting 480 000 to 500 000 tourists to visit South Africa during the World Cup.
Price-Hughes said World Cup benefits will last for only a month or two.
However, group CEO Brian Joffe expected the goodwill benefits from the tournament will extend far beyond next year.
"Our services business will do us well," said Joffe, addressing media and shareholders at a presentation in Johannesburg on Monday.
He added that a good experience at the World Cup would encourage more tourists to return to South Africa.
- Fin24.com