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General Category => General Discussion => Topic started by: rukawa on December 30, 2016, 11:47:15 PM

Title: Reasonably priced growth companies in Emerging markets
Post by: rukawa on December 30, 2016, 11:47:15 PM
I am looking for reasonably priced growth companies in Emerging markets like India, Brazil etc. Wondering if anyone has a good screen they could suggest or an interesting ideas? I was thinking things like consumer brand companies or something like Thomas Cook in India. I know nothing so any suggestions are welcome.
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: kab60 on December 31, 2016, 01:40:05 AM
Videocon D2H (merging with Dishtv India, large merger spread). Pretty cheap on it's own, possibly more so together.
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: KJP on December 31, 2016, 04:11:50 AM
Texhong Textiles
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: no_free_lunch on December 31, 2016, 06:04:48 AM
Bollore is very reasonably priced with substantial operations in Africa.  They are more into infrastructure: ports, railways, telecom than traditional consumer businesses.  They also have substantial business in Europe so not a pure play on emerging markets.
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: sarganaga on December 31, 2016, 09:34:27 AM
Beijing Enterprise Holdings...  8x forward earnings, 80% book, 4.5x cash flow. Water infrastructure, Natural gas distribution, largest beer producer/market share in Beijing. mid teens 1,3,5,10 year earnings growth. Pays 2.5%+ dividend.
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: ccplz on January 01, 2017, 02:19:40 PM
Texhong Textiles

Why do you say so?

How do they compare with Shenzhou/Eclat/Hansae/Youngone in terms of valuation and growth?
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: KJP on January 01, 2017, 02:56:14 PM
Texhong Textiles

Why do you say so?

How do they compare with Shenzhou/Eclat/Hansae/Youngone in terms of valuation and growth?

I think the historical results tell the story here, once you account for the noise created by fluctuations in cotton prices.

The Red Corner blog has a series of posts (and comments thereto) about Texhong, its business model and management.  If I had to sum up the many thousands of words in those materials, it would be the following quote, which I've lifted from a comment to one of the posts on that blog:

I am suggesting that Texhong has important unit cost advantages in yarns and that it therefore enjoys important competitive advantages notwithstanding the fact that he product that it sells is a commodity.

You can look at Texhong's annual reports for 2006 and 2014 and contrast the following:

General & Administrative costs per metric tonne of yarn
Selling expense per MT of yarn (Selling expense = Selling & Distribution minus Transport)

The unit cost DECLINE in these two line items between these two years should sum to approximately 1450 yuan per MT. 1450/MT is 6% of the LT average selling price of yarn (24,000 RMB/MT). So a 4.5% operating margin in 2006 becomes, because of scale/scope economies, a 10.5% margin.

At constant asset turnover of 1.8x, Texhong's ROIC morphs from (1.8 x 4.5%) = 8% to (1.8 x 10.5%) = 19%
At debt/equity of 50%, ROE improves from 16% to 38%

Is it sustainable? Well the source is unit cost advantage. Yarn producers and yarn buyers are all price takers so global yarn prices -- and the therefore the prices at which Texhong sells its yarn -- do not go down just because Texhong improved its cost structure.

What will happen when it is selling a million MT of yarn? How wide will the gap be then between Texhong and the 98,000 other yarn manufacturers in the PRC?

****

Regarding the other companies you mentioned, are they actually comparable?  Texhong makes yarn.  Is Shenzou, for example, a yarn manufacturer, or is it further downstream (fabrics and garments)?

Title: Re: Reasonably priced growth companies in Emerging markets
Post by: Mohammed Al Alwan on January 05, 2017, 05:13:51 AM
I think Aramex listed in Dubai is an interesting growth story that is mispriced currently trading at 4.04 AED and PE 17X T12m EPS 0.24.Market Cap is 5,915M AED.
Bloomberg code is ARMX UH Equity.
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: rukawa on January 10, 2017, 06:34:43 PM
Beijing Enterprise Holdings...  8x forward earnings, 80% book, 4.5x cash flow. Water infrastructure, Natural gas distribution, largest beer producer/market share in Beijing. mid teens 1,3,5,10 year earnings growth. Pays 2.5%+ dividend.

Any insight on why it is so cheap? Is it because its an SOE. I find it weird they combined such desperate businesses together.
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: sarganaga on January 11, 2017, 09:20:49 AM
It's essentially a collection of assets that were under the control of the Beijing Municipal Government. The mishmash of businesses is not that unusual in China (ex Cheung Kong, Cofco, Chinese Resources Holdings before some of its spinoffs,Jardine  group, Shanghai Industrial, etc) . As to the cheapness, who knows for sure? I think it mostly got caught in the downturn of Chinese stocks. Some people probably didn't like that they invested ~US one billion in Russian natural gas fields.

They have monopoly like status for most of their businesses in Beijing with growth opportunities outside the area in water, natural gas distribution, and beer. It's about a 4% position for me.

Their website is user friendly and has quite a bit of info about the company, structure, future plans, etc http://www.behl.com.hk/en/global/home.php (http://www.behl.com.hk/en/global/home.php)
Title: Re: Reasonably priced growth companies in Emerging markets
Post by: Schwab711 on January 11, 2017, 09:42:43 AM
Yingde Gases Group Company Limited (SEHK:2168)

If you believe the accounting/auditor.