Saturday, July 5, 2014

Cargills Ceylon & CiC Holdings - Sri Lanka

As you saw in the previous post Moat how every investor in Sri Lanka made 16X in just a decade by investing in index (unless he was foolish enough to short). Hand picking (more like weeding out a couple) of selected companies out of index would further bolster returns.

Below are a couple of pure -blooded companies that I am giving a skip to, on account of somewhat higher leverage/debt, rapid build up of assets recently and restructuring. The market share of these companies is somewhat similar to what would be in India if we combine three groups plus more, Godrej + Dabur + Emami, and some more. Roughly accounting for 5-7% of Sri Lanka's GDP.


First  - http://cargillsceylon.com

Year of Establishment - 1844
Market Cap 1500 Crores INR / 250 Million USD
P/E ~20
Businesses - more than 20, in more than half of them where company has more than 70% market share. 

Retail - http://cargillsceylon.com/OurBusinesses/CargillsRetail.aspx (more than three retail chains, market leader in the country)
FMCG, FOOD, Dairy  - http://cargillsceylon.com/OurBusinesses/CQF.aspx where KFC franchise acquired in 2010 is growing by 40% and TGIF acquired this year ( More than 10 businesses)
Agri - http://cargillsceylon.com/OurBusinesses/AgriBusiness.aspx


Annual Reports - http://cargillsceylon.com/InvestorRelations/CorporateReports.aspx



Second - http://www.cic.lk

Year of establishment ~1960
Market Cap 200 Crores INR / 35 Million USD
P/E ~25
Businesses - more than 35, again company is leader in  half of them and needs to prune to increase profitability

Company represents the two biggest market leaders in the world. Biggest Paint company of the World ( Market Cap 20 Billion USD - AKZO NOBEL), Biggest Personal Care company ( Market Cap 300 Billion USD - JOHNSONS & JOHNSONS). For a context Unilever globally is around 120 Billion USD.

It is really ironical that I give a miss to above two world class companies; but continue to latch on to C grade stocks from India like Gulshan Polyols, Wim Plast where I did make 3X and 20X returns but uncertain about their future Awesome-ness and Majesty. In a future post I may write about what is worth buying in Sri Lanka with a 20X potential in a decade.
 


Friday, July 4, 2014

Moat

A moat is a deep, broad ditch, either dry or filled with water, that surrounds a castle, other building or town, historically to provide it with a preliminary line of defence. In some places moats evolved into more extensive water defences, including natural or artificial lakes, dams and sluices. Source : http://en.wikipedia.org/wiki/Moat


What is considerably colossal than a Moat ? Ocean











From experience, everything in New Zealand is nearly twice as expensive as in United States. All companies are leaders in their niche, at a heavy cost to consumers BUT at a great boon to investors and business owners.

What I found after one week of research in Sri Lanka is that 50% of listed companies are investment worthy. People much more refined and humble than in India and Bangladesh. Besides, a small country is easier to turn around. In India's glorious period of 2003 - 2014 Sensex ascented by eight times from 3200 - 25,000, while Sri Lanka despite in civil strife about 17 times from 400 - 6400





Competition is far forbearing to overlook. In my opinion the Colombo Stock Exchange Index itself should do better than any other Asian country's leading stocks.