Share Code: SBP – Market Cap: R2.4bn – Dividend Yield: 0.6%

New Investment: ARB Holdings Ltd

• Masimong Electrical (49.9%-held by Sabvest & 50.1% by Masimong) has offered minority shareholders in ARB Holdings 800cps. Along with the Burke Family (62.9%-shareholding in ARB), the deal aims to take the electrical & lighting wholesaler private. The total consideration will be c.R697m, & Masimong and Sabvest have each committed R223.5m funding (Sabvest’s share is c.9.3% of its market cap & c.6.5% of published NAV).
• Irrevocable undertakings to vote in favour of the deal have been received from 69.4% of eligible shareholders, thus, we believe that this deal’s successful outcome is quite likely.
• Refer to our notes on ARB Holdings for detail on the Group.

New Investment: Apex Acquires Ascendis Medical

• Sabvest’s 44.8%-held investment, Apex Partners, has acquired a stable of Ascendis Health medical devices businesses for R550m (less c.R200m catch-up capex & up to R25m excess rental). See the full announcement here.
• Ascendis Medical’s FY 21 revenue was R983m but bottom-line expectations vary given Ascendis’ neglect of the businesses.

Trading Update: Growth in NAV Better than Expected

• Sabvest expects its FY 21 Net Asset Value (NAV) to be more than +19%y/y (>8858cps) while also hiking its dividend >80%.

Valuation*, 12m TP* & Implied Return*: Awaiting FY 21 Results

• We have left our fair value (6826cps*) & 12m TP (8000cps*) unchanged & will update these after the FY 21 results. Given the trading update, though, we expect to upgrade our views.
• While we do not expect ARB Holdings to materially change Sabvest’s NAV in the short-term, in the long-term the Group is an excellent, cash-generative & well-positioned business that is likely to contribute positively to NAV growth. Likewise with Ascendis Medical’s optionality. Perhaps, more subtly, these new investments further entrench Sabvest as a unique listed entry-point into a portfolio of unlisted companies.
• See H1:21 Results Note & our Initiation for more background.

* Under review until post-FY 21 results