CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

<ul>
<li>Relatively strong analyst recommendation, low long-term price volatility vs. the market, and low downside risk relative to its sector</li>
<li>Recent restructuring of food and beverage business (FB PM) to form a food and beverage conglomerate with market leadership in each segment</li>
<li>Expansion plan of SMC Global Power to add 965MW to its existing power generation portfolio of 3,063MW could boost earnings contribution of its energy segment</li>
<li>SMC has shown a good trend in net profit margin and has broad exposure to Philippine consumers</li>
<li>Risks: Commodity price risk</li>
</ul>


Relatively strong analyst recommendation, low long-term price volatility vs. the market, and low downside risk relative to its sector
Recent restructuring of food and beverage business (FB PM) to form a food and beverage conglomerate with market leadership in each segment
Expansion plan of SMC Global Power to add 965MW to its existing power generation portfolio of 3,063MW could boost earnings contribution of its energy segment
SMC has shown a good trend in net profit margin and has broad exposure to Philippine consumers
Risks: Commodity price risk


SMC (SMC PM): Broad Exposure to Philippine Consumers

<ul><li>Relatively strong analyst recommendation, sales on an upcycle trend, and low volatility in sales relative to its sector</li><li>Recent restructuring of food and beverage business (FB PM) to form a food and beverage conglomerate with market leadership in each segment</li><li>Expansion plan of SMC Global Power to add 965MW to its existing power generation portfolio of 3,063MW could boost earnings contribution of its energy segment</li><li>SMC has shown a good trend in net profit margin and has broad exposure to Philippine consumers</li><li>Risks: Commodity price risk</li></ul>* Consensus Estimates

Relatively strong analyst recommendation, sales on an upcycle trend, and low volatility in sales relative to its sectorRecent restructuring of food and beverage business (FB PM) to form a food and beverage conglomerate with market leadership in each segmentExpansion plan of SMC Global Power to add 965MW to its existing power generation portfolio of 3,063MW could boost earnings contribution of its energy segmentSMC has shown a good trend in net profit margin and has broad exposure to Philippine consumersRisks: Commodity price risk* Consensus Estimates

SMC: Good Momentum in Philippine Conglomerate

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

Export has reached a historical high of 25% of total sales on a much-improved product mix that results in a higher gross margin. With some very sticky customers through their higher margin customized product, <a href="https://www.smartkarma.com/entities/19563" target="_blank" data-smartkarma-citation="entities:19563:1">D&amp;L Industries Inc (DNL PM)</a> presents a stable business for the investors while it is also actively pursuing alternative opportunities to grow their top line semi inorganically; with Ventura Foods (supplier to A&amp;W) and Bungee.  The drop in share price of 15% in August 2017 presents a buying opportunity to own DNL especially when the share price has steadily climbed up as a sign that investors are buying into the weakened share price. As more revenues will come from customized and specialty products, margins are expected to expand while CapEx and cost are expected to remain under control - thanks to the founding family that provides the transport and storage facility that enables the listed company to keep an asset-light policy.

Export has reached a historical high of 25% of total sales on a much-improved product mix that results in a higher gross margin. With some very sticky customers through their higher margin customized product, D&amp;L Industries Inc (DNL PM) presents a stable business for the investors while it is also actively pursuing alternative opportunities to grow their top line semi inorganically; with Ventura Foods (supplier to A&amp;W) and Bungee.  The drop in share price of 15% in August 2017 presents a buying opportunity to own DNL especially when the share price has steadily climbed up as a sign that investors are buying into the weakened share price. As more revenues will come from customized and specialty products, margins are expected to expand while CapEx and cost are expected to remain under control - thanks to the founding family that provides the transport and storage facility that enables the listed company to keep an asset-light policy. 

DNL: Sticky Customers, Improved Product Mix, Growing Top Line with Increasing Margin

Making sense of the Global Market, Euromonitor International Ltd.

Yu Mitsuhashi

Making sense of the Global Market

Euromonitor International Ltd.

We are a global market research company focused on industries, countries, economies and consumers worldwide. Our cross-country comparable research helps your organisation identify opportunities and develop growth strategies in countries and regions across the globe. With offices around the world, 1,200 analysts in 100 countries and market research on every key trend and driver, we give you powerful access to the real story behind consumer change.

Thematic (Sector/Industry)

<ul><li>Beer is expected to register a positive total volume performance over the forecast period, although at a slower pace than in 2016. </li></ul><ul><li>The expected positive economic conditions in Vietnam will boost consumers’ disposable incomes, and they are likely to increasingly seek to trade up to foreign brands or premium lager for its perceived better quality. </li></ul><ul><li>Domestic premium lager is expected to see the strongest total volume CAGR over the forecast period. </li></ul><ul><li>The average unit price of beer is expected to increase over the forecast period, alongside the rises in the Special Consumption Tax in 2017 and 2018. Consumers trading up to premium lager will further boost the unit price of beer.</li></ul><ul><li>Tuborg, launched in 2016 by Carlsberg Vietnam Trading, is expected to perform well over the early forecast period. </li></ul><ul><li>Similarly, Sapporo BlueCap Premium Beer is expected to perform well over the forecast period. </li></ul><ul><li>Off-trade volume growth is projected to be slightly stronger than on-trade volume growth in the forecast period. </li></ul>

Beer is expected to register a positive total volume performance over the forecast period, although at a slower pace than in 2016. The expected positive economic conditions in Vietnam will boost consumers’ disposable incomes, and they are likely to increasingly seek to trade up to foreign brands or premium lager for its perceived better quality. Domestic premium lager is expected to see the strongest total volume CAGR over the forecast period. The average unit price of beer is expected to increase over the forecast period, alongside the rises in the Special Consumption Tax in 2017 and 2018. Consumers trading up to premium lager will further boost the unit price of beer.Tuborg, launched in 2016 by Carlsberg Vietnam Trading, is expected to perform well over the early forecast period. Similarly, Sapporo BlueCap Premium Beer is expected to perform well over the forecast period. Off-trade volume growth is projected to be slightly stronger than on-trade volume growth in the forecast period. 

Sector Briefing: Beer in Vietnam (Prospects) - Part 3

<ul><li>Beer increases by 8% in total volume terms in 2016, to reach 3,636 million litres</li></ul><ul><li>Consumers increasingly turn to branded beer for its quality and taste</li></ul><ul><li>Domestic mid-priced lager records the strongest total volume growth of 11% in 2016</li></ul><ul><li>The average unit price of beer increases in both the on-trade and off-trade channels in 2016</li></ul><ul><li>Saigon Alcohol Beer &amp; Beverages Corp (Sabeco) leads beer with a 41% total volume share in 2016</li></ul><ul><li>Beer is expected to increase by a total volume CAGR of 6% in the forecast period, to reach 4,750 million litres in 2021</li></ul>

Beer increases by 8% in total volume terms in 2016, to reach 3,636 million litresConsumers increasingly turn to branded beer for its quality and tasteDomestic mid-priced lager records the strongest total volume growth of 11% in 2016The average unit price of beer increases in both the on-trade and off-trade channels in 2016Saigon Alcohol Beer &amp; Beverages Corp (Sabeco) leads beer with a 41% total volume share in 2016Beer is expected to increase by a total volume CAGR of 6% in the forecast period, to reach 4,750 million litres in 2021

Sector Briefing: Beer in Vietnam (Trends) - Part 1

Philippines

JG Summit Holdings Inc. operates in the consumer foods, agro-industrial and commodity food products, and textiles industries. The Company also invests in real estate, manages hotel, and provides apartment management services. In addition, JG also provides banking and financial services, and invests in telecommunications, petrochemicals, and air transportation businesses.

Aboitiz Equity Ventures Inc., through its subsidiaries, distributes and generates power, provides financial services, manufactures food, and provides inter-island transportation services.

GT Capital Holdings Inc. is an investment holding company. The Company, through its subsidiaries, provides banking, automotive, property development, infrastructure, utilities, and insurance services.

DMCI Holdings Inc., through its subsidiaries, provides general construction and infrastructure construction. DMCI also develops real estate and mines coal. In addition, DMCI manufactures cement and other products.

Alliance Global Group, Inc. is a holding company with interests in food and beverage, real estate development, and fast food restaurant businesses.  The Company distills brandy, manufactures glass containers, distributes wines and snacks, develops planned mixed-use communities, and either operates or sub-franchises hamburger restaurants.

Top Frontier Investment Holdings, Inc. produces, processes, and markets beverage, food, and packaging products in the Philippines and internationally. It offers alcoholic and non-alcoholic beverages. The company also engages in feeds production; poultry and livestock farming; processing and selling of poultry and meat products; processing and marketing of refrigerated and canned meat products; manufacturing and marketing of flour products, premixes and flour-based products, dairy-based products, breadfill, desserts, and cooking oil; and importation and marketing of coffee and coffee-related products. In addition, it produces and markets packaging products, such as glass containers, glass molds, PET bottles and preforms, PET recycling, plastic closures, corrugated cartons, woven polypropylene, kraft sacks and paperboard, pallets, flexible packaging, plastic crates, plastic floorings, plastic films, plastic trays, plastic pails and tubs, metal closures and two-piece aluminum cans, woven products, industrial laminates, and radiant barriers. Further, the company is involved in crate and plastic pallet leasing, PET bottle filling graphics design, packaging research and testing, packaging development and consultation, and contract packaging and trading. Additionally, it engages in power generation, distribution, and trading; coal mining; refining and marketing petroleum products; and construction and development of various infrastructure projects, such as airports, roads, highways, toll roads, freeways, skyways, flyovers, viaducts, and interchanges. The company also offers domestic and international telecommunications services; and banking services. In addition, it is involved in exploration, development, and commercial utilization of nickel, cobalt, chrome, iron, gold, and other mineral deposits; and commercial property development, sale and lease of real properties, and provision of corporate real estate services. The company is based in Makati City, the Philippines.

A. Soriano Corporation, through its subsidiaries, provides temporary health-care staffing services in the United States and the Philippines. It offers nurse/physical therapist staffing, and other healthcare and allied services. The company also provides hotel and resort accommodation, relaxation and entertainment, and other services; construction and sale of villas; air transportation, hangarage, real estate holding and management, and recruitment services; and online community management. In addition, it is involved in manufacturing, importing, exporting, buying, and selling building wires, power cables, aluminum wires and cables, copper rods, automotive wires, and other energy-related goods. The company was founded in 1930 and is based in Makati City, the Philippines.

Keepers Holdings Inc. operates as a holding company. The Company, through its subsidiaries, engages in the distribution of liquor such as wine, spirits, and other beverages. Keepers Holdings serves customers in Philippine.

APC Group, Incorporated operates in general services, mining and exploration and operates as a holding company.

PAL Holdings, Inc., through its subsidiaries, engages in the air transportation of passengers and cargo in the Philippines and internationally. As of December 31, 2014, its route network covered 32 points in the Philippines and 35 international destinations. The company was formerly known as Baguio Gold Holdings Corporation and changed its name to PAL Holdings, Inc. in January 2007. The company was incorporated in 1930 and is based in Makati, the Philippines. PAL Holdings, Inc. is a subsidiary of Trustmark Holdings Corporation.

Seibu Holdings Inc. offers diversified operation. The Company through its subsidiary companies operates transportation, construction, hotel, leisure facilities, and real estate business. Seibu Holdings provides group enterprises strategy planning, operation management, asset management and supply, and business promotions.

Beijing Enterprises Holdings Ltd. is a diversified company.  The Company brews beer; distributes natural gas through pipelines; invests in, designs, constructs and operates water supply and wastewater treatment plants; operates toll roads; disposes of hazardous waste; and offers electronic payment systems.

NWS Holdings Limited operates businesses under three main divisions: Service, Infrastructure, and Ports. Its Service division comprises facilities, contracting, transport, financial, and environmental. The Infrastructure portfolio includes roads and bridges, energy, and water treatment and waste management. Its port division includes container handling, logistics, and warehousing.

Apar Industries Ltd. manufactures aluminum conductors for power transmission. The Company also manufactures polymers, synthetic rubbers, latexes, transformer oils, pharmaceutical oils and other specialty oils.

Sime Darby Berhad is an investment holding company. The Group's principal activities include plantations, property development, heavy equipment and motor vehicle distribution, and energy and utilities.

Daetwyler Holding AG manufactures rubber components and sealing solutions for the automotive, pharmaceutical and civil engineering industries. The company also distributes electronic, automation, engineering and IT components and accessories.

Alfa, S.A.B. de C.V. through subsidiaries, operates petrochemical, food processing, automotive and telecommunication businesses. The Company produces refrigerated food products, high-tech engine aluminum heads and blocks for gasoline and diesel.

Yazicilar Holding AS is the holding company for the Yazici family's interest in Anadolu Holding, a diversified group with interests in beverage, automotive, financial services and writing instrument companies.

The Bidvest Group Limited is the holding company for a group of companies operating in a range of sectors. Subsidiaries manufacture and distribute food and allied products to the catering industry, as well as packaging, stapling, fastening and adhesive tapes, office products, cosmetics, toiletries and skin care products. Bidvest also provides laundering services.

Turkiye Sise ve Cam Fabrikalari AS (Sisecam)  manufactures glass.  The Company produces flat glass, bottles, household glassware, glass wire, chromium chemicals, glass fibre, and glass reinforced plastics.  Sisecam also offers packaging materials and machinery, composites and marketing, chemicals, trade, insurance and brokerage services.

San Miguel Corporation operates food, beverage, packaging, power, fuel and oil, infrastructure and telecommunications businesses.  The Company produces beverages, poultry, animal feed, meat, 
flour, dairy products, and glass and plastic packaging; generates electricity; refines and markets petroleum products; builds infrastructure; and provides telecommunications services.

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San Miguel (SMC PM)

SMC (SMC PM): Broad Exposure to Philippine Consumers

Relatively strong analyst recommendation, low long-term price volatility vs. the market, and low downside risk relative to its sector Recent...

A. Stotz Investment Research

SMC: Good Momentum in Philippine Conglomerate

Relatively strong analyst recommendation, sales on an upcycle trend, and low volatility in sales relative to its sector Recent restructuring of...

A. Stotz Investment Research

DNL: Sticky Customers, Improved Product Mix, Growing Top Line with Increasing Margin

Export has reached a historical high of 25% of total sales on a much-improved product mix that results in a higher gross margin. With some very...

Henry Soediarko

Sector Briefing: Beer in Vietnam (Prospects) - Part 3

Beer is expected to register a positive total volume performance over the forecast period, although at a slower pace than in 2016. The expected...

Euromonitor International Ltd.

Sector Briefing: Beer in Vietnam (Trends) - Part 1

Beer increases by 8% in total volume terms in 2016, to reach 3,636 million litresConsumers increasingly turn to branded beer for its quality and...

Euromonitor International Ltd.

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