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App Economy Insights
$HIMS Hims & Hers Q4 FY24:
• Subs +45% Y/Y to 2.2M.
• Rev. +95% to $481M ($11M beat).
• Adj. EBITDA margin 11% (+3pp Y/Y).
• GAAP EPS $0.11 (in-line).
• FY24 Rev. ex. GLP-1 +43% to $1.2B.
FY25 Outlook
• Rev.~$2.35B ($725M from GLP-1).
• Adj. EBITDA margin 12%-13%. https://t.co/j5m1H4dk5r
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$HIMS Hims & Hers Q4 FY24:
• Subs +45% Y/Y to 2.2M.
• Rev. +95% to $481M ($11M beat).
• Adj. EBITDA margin 11% (+3pp Y/Y).
• GAAP EPS $0.11 (in-line).
• FY24 Rev. ex. GLP-1 +43% to $1.2B.
FY25 Outlook
• Rev.~$2.35B ($725M from GLP-1).
• Adj. EBITDA margin 12%-13%. https://t.co/j5m1H4dk5r
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Stock Analysis Compilation
Artisan International Value Strategy on Koninklijke Philips $PHIA NA
Thesis: Koninklijke Philips is a healthcare conglomerate with a €23 billion market cap and €7 billion in debt, experiencing a 20% share price increase in 2024 due to resolved legal liabilities, with substantial business in personal health and medical devices, and potential for significant growth if new management enhances profitability.
(Extract from their Q4 letter)
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Artisan International Value Strategy on Koninklijke Philips $PHIA NA
Thesis: Koninklijke Philips is a healthcare conglomerate with a €23 billion market cap and €7 billion in debt, experiencing a 20% share price increase in 2024 due to resolved legal liabilities, with substantial business in personal health and medical devices, and potential for significant growth if new management enhances profitability.
(Extract from their Q4 letter)
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Alvin
I am extra excited for the Xiaomi 15 Series mainly because of the 15 Ultra and its new camera system.
I hope they have made some big improvements in the processing algorithm this time.
Dual telephoto solution >>> https://t.co/Wi2y4MlB7Y
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I am extra excited for the Xiaomi 15 Series mainly because of the 15 Ultra and its new camera system.
I hope they have made some big improvements in the processing algorithm this time.
Dual telephoto solution >>> https://t.co/Wi2y4MlB7Y
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Offshore
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Alvin
RT @ShishirShelke1: Which processor does your current smartphone have? 👀
Mine: Snapdragon 8 Elite 🐉 https://t.co/i3niU9Ba1m
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RT @ShishirShelke1: Which processor does your current smartphone have? 👀
Mine: Snapdragon 8 Elite 🐉 https://t.co/i3niU9Ba1m
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Hidden Value Gems
Don’t forget about second-level thinking:
“Since Donald Trump landed in the White House, the benchmark Stoxx Europe 600 index has gained 5.7% compared with S&P 500, which has given back gains and is down 0.2% in the period.”
And I cannot agree more:
“We believe there is currently an extremely attractive opportunity to buy great businesses that trade on non-US exchanges . . . Companies with similar products, end markets, and growth prospects, can trade at vastly different valuations,” he said referring to lower European earnings multiples.
via @FT
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Don’t forget about second-level thinking:
“Since Donald Trump landed in the White House, the benchmark Stoxx Europe 600 index has gained 5.7% compared with S&P 500, which has given back gains and is down 0.2% in the period.”
And I cannot agree more:
“We believe there is currently an extremely attractive opportunity to buy great businesses that trade on non-US exchanges . . . Companies with similar products, end markets, and growth prospects, can trade at vastly different valuations,” he said referring to lower European earnings multiples.
via @FT
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: 2 months ago I stated:
“I consider $MELI a strong buy closer to $1,700💵 (~9% below today’s price) where I can reasonably expect ~14% CAGR while assuming a 36x end multiple, ensuring some margin of safety”
Since reaching my $1,700 target $MELI shares have rallied +33%✅
As I suggested in the post attached below👇🏽
“$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $1856💵 are buying it for a fair price, with little margin of safety — however, these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return
I consider $MELI a strong buy closer to $1,700💵 (~9% below today’s price) where I can reasonably expect ~14% CAGR while assuming a 36x end multiple, ensuring some margin of safety”
____
While a rapid appreciation in share price can be gratifying, it's often counterintuitive for long-term investors
Ideally, I prefer to see these high-quality businesses trade at attractive valuations for an extended period, allowing for the accumulation of shares at a more favorable price
This enables us to build a larger position in a company we believe in, ultimately increasing our potential for long-term returns
A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 49.60x
•1-Year Mean: 48.36x
As you can see, $MELI appears to be trading near fair value
Going forward, investors can receive roughly the same in earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $6.67B
•Long-Term Debt: $3.04B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 20x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.2%
•2023: 25.3%
•LTM: 20.1%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•LTM: 42.6%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $1.44B
•2023: $14.47B
•CAGR: 58.64%
FREE CASH FLOW✅
•2018: $133.35M
•2023: $4.63B
•CAGR: 203.29%
NORMALIZED EPS✅
•2018: ($0.82)
•2023: $22.84
SHARE BUYBACKS❌
•2013 Shares Outstanding: 44.53M
•LTM Shares Outstanding: 51.28M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.5%
•LTM Operating Margins: 11.4%
•LTM Net Income Margins: 7.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive roughly the same in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 24.80% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be more than the (24.80%) required growth rate:
2024E: $33.59 (47.1% YoY) *FY Dec
2025E: $45.76 (36.2% YoY)
2026E: $62.50 (36.6% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2026 with $62.50 in EPS & see its CAGR potential assuming different multiples
40x P/E: $2500💵 … ~15.5% CAGR
38x P/E: $2375💵 … ~12.7% CAGR
36x P/E: $2250💵 … ~9.7% CAGR
34x P/E: $2125💵 … ~6.7% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >38x earnings (a multiple justified by its growth rate & moat)
$MELI boasts an ex[...]
RT @DimitryNakhla: 2 months ago I stated:
“I consider $MELI a strong buy closer to $1,700💵 (~9% below today’s price) where I can reasonably expect ~14% CAGR while assuming a 36x end multiple, ensuring some margin of safety”
Since reaching my $1,700 target $MELI shares have rallied +33%✅
As I suggested in the post attached below👇🏽
“$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $1856💵 are buying it for a fair price, with little margin of safety — however, these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return
I consider $MELI a strong buy closer to $1,700💵 (~9% below today’s price) where I can reasonably expect ~14% CAGR while assuming a 36x end multiple, ensuring some margin of safety”
____
While a rapid appreciation in share price can be gratifying, it's often counterintuitive for long-term investors
Ideally, I prefer to see these high-quality businesses trade at attractive valuations for an extended period, allowing for the accumulation of shares at a more favorable price
This enables us to build a larger position in a company we believe in, ultimately increasing our potential for long-term returns
A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 49.60x
•1-Year Mean: 48.36x
As you can see, $MELI appears to be trading near fair value
Going forward, investors can receive roughly the same in earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $6.67B
•Long-Term Debt: $3.04B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 20x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.2%
•2023: 25.3%
•LTM: 20.1%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•LTM: 42.6%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $1.44B
•2023: $14.47B
•CAGR: 58.64%
FREE CASH FLOW✅
•2018: $133.35M
•2023: $4.63B
•CAGR: 203.29%
NORMALIZED EPS✅
•2018: ($0.82)
•2023: $22.84
SHARE BUYBACKS❌
•2013 Shares Outstanding: 44.53M
•LTM Shares Outstanding: 51.28M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.5%
•LTM Operating Margins: 11.4%
•LTM Net Income Margins: 7.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive roughly the same in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 24.80% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be more than the (24.80%) required growth rate:
2024E: $33.59 (47.1% YoY) *FY Dec
2025E: $45.76 (36.2% YoY)
2026E: $62.50 (36.6% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2026 with $62.50 in EPS & see its CAGR potential assuming different multiples
40x P/E: $2500💵 … ~15.5% CAGR
38x P/E: $2375💵 … ~12.7% CAGR
36x P/E: $2250💵 … ~9.7% CAGR
34x P/E: $2125💵 … ~6.7% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >38x earnings (a multiple justified by its growth rate & moat)
$MELI boasts an ex[...]