Simbisa Brands will continue investing in the Dial-a-Delivery business across all its markets leveraging on a refreshed DAD app
SIMBISA Brands is poised to maintain its growth trajectory on the back of continued customer count recovery coupled with the Dial-a-Delivery (DAD) business across all its markets, a research company has said.
IH Securities, in its equity research report on the company, said considering that Simbisa’s business is highly sensitive to lockdown restrictions, the group’s performance has been highly resilient.
“The group continues to pursue its growth strategy hinged on improved deliveries, technology development, and continued growth in footprint and brand development,” reads part of the report.
During the company’s 2021 financial year, Simbisa’s customer count increased by 6 percent compared to the same period prior year owing to increased delivery sales contribution, promotional activities, value offerings and new store rollouts. Food delivery volumes increased by 43 percent year on year owing to the Group’s elevated focus on this
sales channel which reduces the impact of the pandemic and aligns the business with evolving customer behaviour.
“Average spend for the Group also registered an uptick on the back of increased sales through delivery channels, which attract a higher basket value,”
IH noted that although the first two months of 1Q22 were characterized by hard Covid-19 lockdown in its major market, the remainder of the financial year is likely to see a more permissive trading environment.“As such, we expect a recovery on customer counts, from a low base, on the back of improved trading hours as well as new store openings,” the research company said.
According to Simbisa, the group’s focus remains on growing the footprint with 92 new stores in the pipeline during the 2022 financial year at an estimated investment cost of USD$19 million.
“We also anticipate the group will continue investing in the Dial-a-Delivery (“DAD”) business across all its markets leveraging on a refreshed DAD app, customized techenabled logistics management, call center platforms and expanded delivery zones.
“Consequently, the Group is expected to continue reaping off the benefits of economies of scale as average overhead costs decline due to the current expansion strategy being undertaken by the business.”
IH Securities noted that the Group’s financial results were resilient despite a challenging operating environment characterized by restrictions on seating capacity, reduced operating hours and overall depressed economic activity.
Resultantly, in historical terms, revenue for the Group went up 449,97 percent from $3,1 billion to $17,07 billion in FY21 as the Group continued to implement cost-saving measures in response to the aforementioned operating environment challenges.
IH said Simbisa’s revenue is forecast to increase by 128 percent in FY22 to $38,9 billion up from $17,07 billion recorded in FY21.
EBITDA is expected to grow 135 percent from $2,4 billion to $5,7 billion over the same period. “We believe the cost containment measures adopted during the Covid-19 pandemic can be sustained moving forward,” IH said.
As such, it added, “we expect EBITDA margin to increase to 15 percent in FY22 from 14,4 percent in FY21 driven by expected higher turnover from anticipated customer count recovery.”- The Herald
