In today’s briefing:
- Toridoll (3397): Restaurant Chain on a Lege
- Ginebra San Miguel (GSMI PM): Gleanings From The Last 12 Years of Annual Reports and Q1 2024 Bonanza
- Shareholder Returns Will Increase over June AGM, but Will Companies Hold up with Sluggish ROE?
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Toridoll (3397): Restaurant Chain on a Lege
- Macro trends for restaurant chains are all negative: Food prices rising faster than restaurant unit prices, part-time wages rising faster than full-time.
- Toridoll’s same store sales resuming long-term underperformance trend that was broken only briefly during the pandemic.
- Stock trades at 3x the market average PBR, despite merely average RoE. Technical support has broken down.
Ginebra San Miguel (GSMI PM): Gleanings From The Last 12 Years of Annual Reports and Q1 2024 Bonanza
- Ginebra San Miguel (GSMI PM) is a monopoly in the gin business in the Philippines with a 97% marketshare trading at 7x PE FY24 ( 10-Yr Revenue CAGR 15% YoY).
- After its Q1 results, it has 32% of the market cap in net cash and investments, a dividend yield of>7%, and a 5/10 Yr average ROCE of 37%/22%.
- We summarize what we learned from the annual report released on April 15th. We saw a long-term trend of increasing prices, consistent margin growth, balance sheet improvement, etc.
Shareholder Returns Will Increase over June AGM, but Will Companies Hold up with Sluggish ROE?
- In addition to too much cash on hand to begin with, ROE is expected to continue to grow at a sluggish pace, as shareholder returns are less than profit growth.
- Given that we expect more companies to have stock price, P/B, and ROE on the agenda for the June AGM, more companies are expected to announce increases in shareholder returns.
- However, ROE is unlikely to increase significantly. Shareholder returns are certainly too small, but a more serious problem is the inability to find growth investment opportunities.