Cosco Capital (COSCO PM) Q3 2018 Results Review

Quality-Value Investing

Marc Melendez, CFA

Emerging Market Small and Mid Cap Equities

Reperio Capital

Reperio Capital Research was founded in 2013 with the goal of better serving the investment community with in-depth, high quality, value oriented research.

Reperio means to discover in latin. Using value investing principles, we aim to discover a minimum of 12 investment opportunities per year within the Emerging Markets Small and Mid Cap universe.

We take a business owners perspective with a long term investment horizon. We conduct bottom up, fundamental research. We focus on downside risks and require a significant margin of safety in any investment to prevent the permanent loss of capital. All factors differentiating our research from the short term, trading focus of traditional research providers.

Equity Bottom-Up

<p>Cosco Capital is a retail holding company in the Philippines trading at 0.77 times book value and 4.4 times 2017 EBITDA despite owning 51.0% of Puregold, the second largest food retailer in the Philippines. Puregold generated a five-year average return on invested capital of 26.1% and should grow at a high single digit rate for the foreseeable future. Cosco is valued at a 23.4% discount to the market value of its ownership in Puregold. The base case valuation of Cosco’s other subsidiaries equals 68.4% of its current market cap. The base case upside to a sum of the parts valuation is 146.5%. </p>

Cosco Capital is a retail holding company in the Philippines trading at 0.77 times book value and 4.4 times 2017 EBITDA despite owning 51.0% of Puregold, the second largest food retailer in the Philippines. Puregold generated a five-year average return on invested capital of 26.1% and should grow at a high single digit rate for the foreseeable future. Cosco is valued at a 23.4% discount to the market value of its ownership in Puregold. The base case valuation of Cosco’s other subsidiaries equals 68.4% of its current market cap. The base case upside to a sum of the parts valuation is 146.5%. 

Cosco Capital- A High Quality, Growing Retail Holding Company at 4.4 Times EBITDA & 0.77 Times Book