Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Of Monopolies and Yields

with 9 comments

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.

Stalexport

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

 

 

Written by amitdipsite

August 31, 2017 at 4:32 am

Posted in Uncategorized

9 Responses

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  1. Hi. How do you buy these European stocks. I mean i do have Interactive Broker US and NSE account

    Rakesh Sharma

    August 31, 2017 at 12:51 pm

  2. Hi Amit,

    Do you track Sankhya Infotech, if yes does it looks like a good company to own in long term.

    Regards,

    Shailesh

    Shailesh

    August 31, 2017 at 4:39 pm

  3. If Foreigners [retail investor] cannot buy [India] how do you manage to Own?

    Sachin Katariya

    September 1, 2017 at 11:26 am

  4. Does CDSL in India can be considered as a duopoly? Can it be considered for long term.

    Kumar

    September 2, 2017 at 9:58 pm

    • Yes indeed its a duopoly. Listing price will determine. But growth will be less than 10% CAGR, in Revenues and profits.

      amitdipsite

      September 4, 2017 at 12:33 am

  5. Hi,
    Which broker do you use for European, American and now even for Nepal stocks. Also, any clue on how to invest in HK through a broker. Would be very helpful if you could share those insights.

    Bhavik Mehta

    September 8, 2017 at 5:57 am


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