Offshore
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โ Capital Employed
Listen to the @alluvialcapital Q3 2024 investor letter๐ง
The letter discusses... ๐
Fund performance
Two new holdings
Current holdings updates
Portfolio Themes
https://t.co/4KoNtGKiKc
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Listen to the @alluvialcapital Q3 2024 investor letter๐ง
The letter discusses... ๐
Fund performance
Two new holdings
Current holdings updates
Portfolio Themes
https://t.co/4KoNtGKiKc
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Offshore
Photo
โ Stock Analysis Compilation
Guinness GI on Haitian International $1882 HK
Thesis: As the global leader in injection molding machines, Haitian is primed to benefit from government incentives, consumer goods upgrades, and reshoring trends.
(Extract from their Q3 letter) https://t.co/UDHsjDlGds
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Guinness GI on Haitian International $1882 HK
Thesis: As the global leader in injection molding machines, Haitian is primed to benefit from government incentives, consumer goods upgrades, and reshoring trends.
(Extract from their Q3 letter) https://t.co/UDHsjDlGds
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Offshore
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โ Librarian Capital
Japan Tobacco 24Q3 Tobacco results (31-Oct)
Q3 volume +2.4%, o/w Combustibles +2.1%
Core revenue +8.1% ex-FX
Adj. EBIT +3.7% ex-FX, +0.4% in ยฅ
Q1-3 volume +2.2%, o/w Combustibles +1.8%
Core revenue +7.5% ex-FX
Adj. EBIT +4.7% ex-FX, +3.4% in ยฅ
EM-driven
cc: $MO $IMB $PM $BATS https://t.co/ux9QncNZDF
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Japan Tobacco 24Q3 Tobacco results (31-Oct)
Q3 volume +2.4%, o/w Combustibles +2.1%
Core revenue +8.1% ex-FX
Adj. EBIT +3.7% ex-FX, +0.4% in ยฅ
Q1-3 volume +2.2%, o/w Combustibles +1.8%
Core revenue +7.5% ex-FX
Adj. EBIT +4.7% ex-FX, +3.4% in ยฅ
EM-driven
cc: $MO $IMB $PM $BATS https://t.co/ux9QncNZDF
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Offshore
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โ Stock Analysis Compilation
Ennismore on Deutsche Wohnen SE $DWNI GR
Thesis: With stable rental income, strong market position in Berlin, and the potential for a favorable takeover by Vonovia, Deutsche Wohnen offers attractive value for patient investors.
(Extract from their Q3 letter) https://t.co/oRpsOjy2Sr
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Ennismore on Deutsche Wohnen SE $DWNI GR
Thesis: With stable rental income, strong market position in Berlin, and the potential for a favorable takeover by Vonovia, Deutsche Wohnen offers attractive value for patient investors.
(Extract from their Q3 letter) https://t.co/oRpsOjy2Sr
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Offshore
Video
โ Librarian Capital
RT @AccountableGOP: NEW AD: Trumpโs professional references agree: Trump is unfit for the job. https://t.co/rDEizLkOd5
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RT @AccountableGOP: NEW AD: Trumpโs professional references agree: Trump is unfit for the job. https://t.co/rDEizLkOd5
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Offshore
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โ Librarian Capital
British American Tobacco upcoming Velo Plus is from an acquisition
Because pouches need to have PMTA submitted pre May-22 to remain in US market
Altria is trying to redesign NJOY to avoid Juul patent
But each change needs new application
FDA = barrier to entry
$BATS $MO $PM https://t.co/GdXLZgvP2D
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British American Tobacco upcoming Velo Plus is from an acquisition
Because pouches need to have PMTA submitted pre May-22 to remain in US market
Altria is trying to redesign NJOY to avoid Juul patent
But each change needs new application
FDA = barrier to entry
$BATS $MO $PM https://t.co/GdXLZgvP2D
tweet
Offshore
Video
โ Librarian Capital
RT @Liz_Cheney: This is how dictators destroy free nations. They threaten those who speak against them with death. We cannot entrust our country and our freedom to a petty, vindictive, cruel, unstable man who wants to be a tyrant. #Womenwillnotbesilenced #VoteKamala
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RT @Liz_Cheney: This is how dictators destroy free nations. They threaten those who speak against them with death. We cannot entrust our country and our freedom to a petty, vindictive, cruel, unstable man who wants to be a tyrant. #Womenwillnotbesilenced #VoteKamala
Trump on Liz Cheney: "Let's put her with a rifle standing there with 9 barrels shooting at her. Let's see how she feels about it. You know, when the guns are trained on her face." https://t.co/Mtx1fbLtwE tweet
Offshore
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โ Dimitry Nakhla | Babylon Capitalยฎ
A sober valuation analysis on $IDXX ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 34.64x
โข10-Year Mean: 49.42x
โขNTM FCF Yield: 2.83%
โข10-Year Mean: 1.95%
As you can see, $IDXX appears to be trading below fair value
Going forward, investors can receive ~42% MORE in earnings per share & ~45% MORE FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $IDXX is a high-quality business
BALANCE SHEETโ
โขCash & Short-Term Inv: $308.64M
โขLong-Term Debt: $524.76M
$IDXX has a strong balance sheet, reflected by its 25x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 44.0%
โข2020: 42.1%
โข2021: 53.9%
โข2022: 43.1%
โข2023: 42.9%
โขLTM: 44.6%
RETURN ON EQUITYโ
โข2019: 507.5%
โข2020: 143.6%
โข2021: 112.6%
โข2022: 104.6%
โข2023: 80.7%
โขLTM: 59.4%
$IDXX has excellent return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $1.38B
โข2023: $3.66B
โขCAGR: 10.24%
FREE CASH FLOWโ
โข2012: $168.38M
โข2022: $792.60M
โขCAGR: 16.75%
NORMALIZED EPSโ
โข2013: $1.79
โข2023: $10.06
โขCAGR: 18.84%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 107.97M
โขLTM Shares Outstanding: 83.59M
By reducing its shares outstanding ~22.5%, $IDXX increased its EPS by ~29.0% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 60.7%
โขLTM Operating Margins: 28.9%
โขLTM Net Income Margins: 22.5%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive about ~42% MORE in EPS & ~45% MORE FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $IDXX has to grow earnings at a 17.32% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2025 EPS growth over the next few years to be less than the (17.32%) required growth rate:
2024E: $10.69 (6.2% YoY) *FY Dec
2025E: $12.19 (14.1% YoY)
2026E: $13.88 (13.8% YoY)
$IDXX has a great track record of meeting analyst estimates ~2 years out, so letโs assume $IDXX ends 2026 with $13.88 in EPS & see its CAGR potential assuming different multiples
38x P/E: $527.44๐ต โฆ ~12.7% CAGR
36x P/E: $499.68๐ต โฆ ~9.9% CAGR
34x P/E: $471.92๐ต โฆ ~7.1% CAGR
32x P/E: $444.16๐ต โฆ ~4.1% CAGR
As you can see, even weโd have to assume a >36 P/E just for $IDXX to compound at an attractive rate, an assumption that leaves us with little margin of safety & still the risk of more multiple compression offsetting the benefits of earnings growth
However, you can see $IDXX historically bottoms near these levels and has traded for 30x twice in the past 10-years (both instances in 2015 when the company did not have the scale it has today
Today, at $407๐ต $IDXX is starting to peaks my interest (perhaps worth a nibble)
I consider $IDXX a strong buy at closer to $365๐ต (~10% lower from todayโs price) which gets $IDXX near 31x earnings, a level of very strong fundamental support and a level thatโs justified by its growth rate & quality
At $365๐ต, given todayโs estimates, I can reasonably assume ~11% CAGR at a 33x multiple
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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A sober valuation analysis on $IDXX ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 34.64x
โข10-Year Mean: 49.42x
โขNTM FCF Yield: 2.83%
โข10-Year Mean: 1.95%
As you can see, $IDXX appears to be trading below fair value
Going forward, investors can receive ~42% MORE in earnings per share & ~45% MORE FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $IDXX is a high-quality business
BALANCE SHEETโ
โขCash & Short-Term Inv: $308.64M
โขLong-Term Debt: $524.76M
$IDXX has a strong balance sheet, reflected by its 25x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 44.0%
โข2020: 42.1%
โข2021: 53.9%
โข2022: 43.1%
โข2023: 42.9%
โขLTM: 44.6%
RETURN ON EQUITYโ
โข2019: 507.5%
โข2020: 143.6%
โข2021: 112.6%
โข2022: 104.6%
โข2023: 80.7%
โขLTM: 59.4%
$IDXX has excellent return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $1.38B
โข2023: $3.66B
โขCAGR: 10.24%
FREE CASH FLOWโ
โข2012: $168.38M
โข2022: $792.60M
โขCAGR: 16.75%
NORMALIZED EPSโ
โข2013: $1.79
โข2023: $10.06
โขCAGR: 18.84%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 107.97M
โขLTM Shares Outstanding: 83.59M
By reducing its shares outstanding ~22.5%, $IDXX increased its EPS by ~29.0% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 60.7%
โขLTM Operating Margins: 28.9%
โขLTM Net Income Margins: 22.5%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive about ~42% MORE in EPS & ~45% MORE FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $IDXX has to grow earnings at a 17.32% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2025 EPS growth over the next few years to be less than the (17.32%) required growth rate:
2024E: $10.69 (6.2% YoY) *FY Dec
2025E: $12.19 (14.1% YoY)
2026E: $13.88 (13.8% YoY)
$IDXX has a great track record of meeting analyst estimates ~2 years out, so letโs assume $IDXX ends 2026 with $13.88 in EPS & see its CAGR potential assuming different multiples
38x P/E: $527.44๐ต โฆ ~12.7% CAGR
36x P/E: $499.68๐ต โฆ ~9.9% CAGR
34x P/E: $471.92๐ต โฆ ~7.1% CAGR
32x P/E: $444.16๐ต โฆ ~4.1% CAGR
As you can see, even weโd have to assume a >36 P/E just for $IDXX to compound at an attractive rate, an assumption that leaves us with little margin of safety & still the risk of more multiple compression offsetting the benefits of earnings growth
However, you can see $IDXX historically bottoms near these levels and has traded for 30x twice in the past 10-years (both instances in 2015 when the company did not have the scale it has today
Today, at $407๐ต $IDXX is starting to peaks my interest (perhaps worth a nibble)
I consider $IDXX a strong buy at closer to $365๐ต (~10% lower from todayโs price) which gets $IDXX near 31x earnings, a level of very strong fundamental support and a level thatโs justified by its growth rate & quality
At $365๐ต, given todayโs estimates, I can reasonably assume ~11% CAGR at a 33x multiple
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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