Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Near Monopolies

with 9 comments


First
——–

East African Breweries Ltd is an exceptionally impressive company. Listed in Kenya on Nairobi Stock Exchange, open to all investors world over, with majority holding by DIAGEO, sells at 5 times sales, 4 Billion USD market cap. 800 Million USD revenues, 33 times earnings.

ROE of 100%.

That is how stocks should trade, even in country like Kenya with every circumstance against the grain, blue chip like this are 4-5 times revenues, just like other emerging markets. Nothing special about BRIC. Whats super cheap is Gillette Pakistan at 13 times earnings or Unilever Nepal, or GSK Bangladesh 1.5 times sales and also the unrealised potential.

https://www.eabl.com



http://en.wikipedia.org/wiki/East_African_Breweries


Most of top tier in India is 4-8 times sales. Pendulum swung too far in cases like GSK Pharma India at 8 times sales with nothing to show on growth report card. I am too intoxicated to buy GSK Pharma, because perhaps I was not born in Japan and not used to 0% rate of interest. So, stocks for them need to trade at 1% dividend yield, useful to know how they think ! At the other extreme the world is either undecided or trying to imitate and pull trigger only after five other funds have bought. Second one fits that description.


Second
——-
Pressman Corporation is the best conglomerate of Malawi, need to investigate more.

The business interests are wide ranging with dominant position in each business, Carlsberg Beer, Coca-cola franchise, Bank, Fisheries, Energy, Telecom, Real Estate, Trading and much more. This company is ditto as Tata Sons or Steamships Trading Company PNG.

Quality of Management and Annual report is outstanding. Company contributes to 10% of GDP of Malawi with 300 Million in Revenues and 25 Million USD profits. Available at only 2 times earnings. Since the conglomerate is a Bank as well Debt/Equity ratio does not compare with FMCG companies. In India, Nigeria, or New Zealand I am certain this would trade at 45 times earnings.

http://www.presscorp.com


Disclosure: Not invested in Press Corp or East African Breweries as yet, vested interest in rest of the stocks mentioned.

Written by amitdipsite

December 11, 2013 at 6:52 am

Posted in Uncategorized

9 Responses

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  1. Interesting book on Advertising and habit. 2nd chapter presents how organisations can play with your emotions and habits to make a hole in your wallet. Like P&G did by hiring PhD behavioral to make a failure brand Febreeze into 1 Billion USD brand.

    http://www.amazon.com/The-Power-Habit-What-Business-ebook/dp/B0055PGUYU

    Amit Arora

    December 12, 2013 at 6:03 am

  2. Hi Amit,

    Please let me know your comment on Britannia for investment. Since Varun Berry joined, things are improving.

    Amit

    December 12, 2013 at 5:55 pm

  3. hi Amit,

    Also look at Standard Bank Malawi. The dividend yield is apparently a whopping 13%. Available at less than 10 PE and YTD stock returns 300%.

    Laddoo

    December 13, 2013 at 3:28 pm

  4. Thanks for bringing it to notice. Standard Bank estd. 1862, as a global group is very large organization, 3 times the size of HDFC Bank in terms of assets and earnings.

    Awesome ! 300% returns, in USD terms though there has been significant depreciation of Malawi Kwacha

    http://en.wikipedia.org/wiki/Standard_Bank

    Assessing loan book in a Bank is essential for Banks which may require checking book through economic cycles.

    These countries still have current account deficit and I prefer to stick to essential commodities which people need, want and can't live without like soaps, toothpaste, detergent, razors etc. These type of companies are unlikely to ever go bankrupt under any circumstance.

    When someone in the US or other developed market comments, “you can't predict a 100 bagger before it has happened”, requires rethink. Disparity and disequilibrium is way too large and potential of people is waiting to spring to productivity given the right circumstances. People in Europe or America are living 100 times better than in Malawi, this is unlikely to be the case in 20-30 years.

    Amit Arora

    December 13, 2013 at 9:39 pm

  5. Signs of desperation are evident by Western Fund managers and Companies alike, willing to buy their companies at 8 times sales. I had no idea when I mentioned GSK Pharma as an example extreme end of valuation with negligible growth is supposedly cherished by the Parent.

    GSK Pharma is a loser globally in terms of returns. 47$ share price 10 years back, 51$ today. India looks headed in same direction in another 5-7 years.

    Amit Arora

    December 16, 2013 at 5:35 am

  6. Hi Amit,

    thanks for your comments. I think you're doing an insightful job. I am almost through my entire paperwork to get started in Bangladesh. I was also looking at kenya and wrote to two banks but didnt get any feedback. Would you be able to provide some guidance on who to approach in Kenya. Really keen on getting some slice of the pie in this country as well. I am an Indian national and resident.

    Thanks!

    Laddoo

    December 16, 2013 at 6:48 am

  7. Please contact them,

    http://www.sbgsecurities.co.ke/standimg/Kenya/sgbsecurities/aboutUs/index.html

    It is part of Standard Bank that you found.

    Thanks

    Amit Arora

    December 16, 2013 at 7:46 am

  8. Hi,

    How can a resident Indian invest in Bangladesh? What is the required paperwork?

    Who are the Indian brokers facilitating this, if any?

    Thanks

    Anurag

    December 17, 2013 at 12:50 pm


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