Of Monopolies and Yields

Monopolies or oligopolies are the best type of businesses, that is where the money is and will be. In fact if there was no money to be made in stock markets, people would not aspire to be or call themselves investors. We try to feel above the crowd and purified, almost as if, been baptised post ganges dip, by calling ourselves ‘value investors’.

Unilever Nepal

Unilever Nepal, its not monopoly but acts, walks, sings like one. I wrote about it first time in 2013, https://lifeandequities.wordpress.com/2013/12/24/20-year-investment-as-envisaged-in-2013/, and http://multibaggersindia.blogspot.com/2013/09/multi-generational-investing-idea-3.html, and have been holding it since then in personal portfolio. It can only be bought via Nepal citizen, no foreigners allowed as yet. My average price has been 12,000 Rs but I have averaged up all the way from 8,000 Rs to 35,000 Rs.

ROE: 150% (if you take out cash, yes I mean 150%, not 15%)

PAT Margin: 24% (Nowhere in the world has Unilever got that fat PAT margin, India 14%). Because this includes Royalty + Dividend payout.

Dividend Payout: 100%

Yield: When I wrote about it, it was 9%. Now its 4%.

PE: When I wrote about it, it was around 10, now its 25 PE. 2X  PE expansion possibility once FIIs get a chance to bite it, esp. those who are earning 0.5% return on their fixed income instruments. Indian entity trades at PE of 58.

 

Link to latest results:

http://www.sharesansar.com/c/announcement_unilever-nepal-limited-has-posted-net-profit-of-rs-965-20-million-and-published-its-4th-quarter-company-analysis-of-the-fiscal-year-207374.html

Growth has come down this years because of strikes / hartals and shortages.

Year	Revenues	Net Profits Crores *	# of Shares**	Earning Per Share *	* In Nepal Rs
2002		6.75	920,700	73	** Face Value 100 Nepal Rs (Hindustan Unilever owns 80%)
2003	Growth 25%	4.25	920,700	46.28	40 Rs Dividend
2004		9.31	920,700	101.38
2005		12.7	920,700	138.3
2006		18.91	920,700	205
2007		23.81	920,700	259	220+ Rs Dividend
2008	145	26.3	920,700	286	250+ Rs Dividend
2009	214	33.5	920,700	364	300+ Rs Dividend
2010	290	51	920,700	555	350+ Rs Dividend
2011	337	61	920,700	664	400+ Rs Dividend
2012	420	70.26	920,700	763	680 Rs Dividend
2013	472.47	83.13	920,700	903	760 Rs Dividend
2014			920,700	1000	860 Rs Dividend
2015			920,700	1200	990 Rs Dividend
2016		112	920,700	1218	1100 Rs Dividend
2017		96	920,700	1000	1270 Rs Dividend

Monopoly 

Toll bridges are classic monopolies. The substitute isn’t present for most people, hence the default option is to use the toll. I wrote about one such Toll bridge called Autopistas in Argentina which has been a 100 bagger in this decade.

https://lifeandequities.wordpress.com/2017/07/19/i-am-the-tollbridge-a-100-bagger/

Just found another one in stone turning exercize, (the only exercize I am getting these days is the stone turning on stocks and jogging my mind :))

Its brilliant idea at just the right market cap 300 Million USD. The company is Stalexport Autostrady (from Poland).

PE: 6 ( Yes, not 16)

Growth: 10-12%

Dividend Yield: 4%

Deep Value: Based on DCF of 60-100%

The stock has done 35% CAGR from 1 PLN to 4.5 PLN despite such cheap present valuation.

The company got concession in 1997 until 2027 to operate 61-kilometer stretch of the A4 in Poland between Katowice and Krakow. Revenues have grown 12% CAGR in the previous 10 years. Atlantia, which owns 50% of Italy’s motorways besides operating toll roads in Brazil, Chile, Poland now owns 61% of Stalexport.

https://www.autostrada-a4.com.pl/

http://www.stalexport-autostrady.pl/

Disclosure: Have vested interest in the companies mentioned. Views are personal notions and do not represent any organisation or company. Investment in stock market can (and many a times do) result in loss of principal capital.

http://www.elevendimension-funds.com