May 15, 2019 / 11:01 AM / 4 months ago

UPDATE 2-South Africa's Long4Life beats sales estimates, shares jump

* Sales at 3.6 bln rand

* Launching beauty range: Sorbet SK-N

* Still looking for deals (Adds analyst comment, cash capacity for deals)

By Nqobile Dludla

JOHANNESBURG, May 15 (Reuters) - South African investment firm Long4Life on Wednesday posted forecast-beating annual sales, boosted by drinks and beauty treatments demand in the summer months, sending its shares up nearly 5%.

Long4Life, which invests in the leisure and lifestyle sectors and which reported its first twelve-month period results since listing in 2017, said sales stood at 3.6 billion rand, topping the average analyst estimate of 3.3 billion rand, according to Refinitiv I/B/E/S.

Total volumes for the drinks division rose by 19% and revenue increased by 28%, it said, while the personal care and wellness division posted revenue growth of 19%.

“In this sort of market, you don’t see these sort of figures. He (Joffe) certainly seems to have a good niche in the (beverage) market,” Cratos Asset Management Portfolio Manager, Ron Klipin said.

Due to its seasonality, sport and recreation retail stores did well over the holiday and Christmas periods.

At 1337 GMT, shares in Long4Life were 3.2% firmer.

Klipin said for a small capitalisation stock, the market is paying attention to Long4Life because “you’ve got a guy who is an entrepreneur, thinks outside the box and is very disciplined in terms of capital allocation.”

“So my money is on Brian Joffe and his ability to operate successfully in this market.”

Long4Life did not declare a full-year dividend as it paid shareholders in the period via a share buyback of 159.6 million rand ($11.23 million) and added that it had no formal dividend policy at this stage.

“It’s very difficult to make a forecast in the dividend if we don’t really know what the investment profile is going to look like in the period ahead,” Chief Executive Officer, Brian Joffe said while presenting the results.

Hoping to boost its range of beauty products under its Sorbet business, the company will launch Sorbet SK-N, a high-end skin and aesthetic treatment brand, with the first store set to open this month in Johannesburg.

“With the changing demographics of people’s ages, more and more people are looking to improve their wellbeing,” Joffe said.

Since listing, investors had expected the company to go on an aggressive buying spree, betting on Joffe, who founded the conglomerate Bidvest Group in 1988.

But available deals have not met the group’s valuation criteria.

“The group has reviewed several investment opportunities in the past year, however, sellers’ expectations and asset valuations have not reflected the difficult economic climate and in many instances have not met the group’s valuation criteria,” it said.

Nonetheless, it remains optimistic on investment opportunities materialising in the forthcoming year, it added.

Cash acquisition capacity is about 2 billion rand, by introducing gearing, Chief Financial Officer Mireille Levenstein said at the presentation.

$1 = 14.2317 rand Reporting by Nqobile Dludla; editing by Jason Neely and Louise Heavens

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