Thanks for your thoughts. I understand the quality margins, b/s, and returns this company generates. But why when it returns to pre covid levels of tourists, say in ‘24 and has eps of say 750, so trading 11.5x, should it trade for a much higher multiple than a growth rate likely to be not much higher than 11/12x?
First, I do not believe in PE as a valuation metric. Cash flow related metrics that also account for EV are much more telling of the actual economic value being accrued to shareholders. I believe that it is more than fair the company trades *at least* in-line with its global peers for two reasons: it has the best economics of any beer company in the world at the moment (~90% ROIC), it has the most dominant position of any single beer company in the world (though this comes at the cost of diversification)
Thanks. The capex approximates the depreciation, so the fcf yield to equity holders is the earnings yield. I havent spoken to the company, are they going to optimize the cash heavy balance sheet? one more q if u dont mind, whats their div policy on payout ratio? thank you.
The FCF is actually stronger than earnings because the company operates with negative NWC. That said, the CapEx should come down as the company finishes upgrading their manufacturing capacity. Though they may return some of the cash once this is complete, by having a strong cash position the company is able return 100% of its earnings (as previously discussed) through dividends and still weather any downturns - the company prioritizes resilience over trying to optimize the balance sheet (and yet still achieves exceptional returns on its investments)
No problem. Happy to help. I’ve looked into ThaiBev very briefly, but the risk of it losing its regulated monopoly status seems legitimate. Michael Fritzell of Asian Century Stocks (linked above) is better informed to opine
Thanks for your thoughts. I understand the quality margins, b/s, and returns this company generates. But why when it returns to pre covid levels of tourists, say in ‘24 and has eps of say 750, so trading 11.5x, should it trade for a much higher multiple than a growth rate likely to be not much higher than 11/12x?
First, I do not believe in PE as a valuation metric. Cash flow related metrics that also account for EV are much more telling of the actual economic value being accrued to shareholders. I believe that it is more than fair the company trades *at least* in-line with its global peers for two reasons: it has the best economics of any beer company in the world at the moment (~90% ROIC), it has the most dominant position of any single beer company in the world (though this comes at the cost of diversification)
Thanks. The capex approximates the depreciation, so the fcf yield to equity holders is the earnings yield. I havent spoken to the company, are they going to optimize the cash heavy balance sheet? one more q if u dont mind, whats their div policy on payout ratio? thank you.
The FCF is actually stronger than earnings because the company operates with negative NWC. That said, the CapEx should come down as the company finishes upgrading their manufacturing capacity. Though they may return some of the cash once this is complete, by having a strong cash position the company is able return 100% of its earnings (as previously discussed) through dividends and still weather any downturns - the company prioritizes resilience over trying to optimize the balance sheet (and yet still achieves exceptional returns on its investments)
Thanks for the info. Have u looked at thaibev btw?
No problem. Happy to help. I’ve looked into ThaiBev very briefly, but the risk of it losing its regulated monopoly status seems legitimate. Michael Fritzell of Asian Century Stocks (linked above) is better informed to opine