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

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>After accounting for the Liquigaz, the market values <a href="https://www.smartkarma.com/entities/10665" target="_blank" data-smartkarma-citation="entities:10665:1">Cosco Capital (COSCO PM)</a> at an EV/EBITDA of 4.3 times, a price to book of 0.77 times, and a cash dividend yield of 2.8%. The company’s market cap trades at a 17% discount to the market value of its 51% ownership of <a href="https://www.smartkarma.com/entities/13890" target="_blank" data-smartkarma-citation="entities:13890:1">Puregold Price Club (PGOLD PM)</a> meaning the company’s other subsidiaries and net cash are free. Under the base case, Cosco’s other subsidiaries and estimated net cash after the Liquigaz account for 63.3% of its current market cap. Under the base case, Cosco Capital offers 131% upside. Management is trying to eliminate the company’s discount to its fair value by buying back shares. In Q3 2018, the company repurchased 1.2% of the shares outstanding.</p>

After accounting for the Liquigaz, the market values Cosco Capital (COSCO PM) at an EV/EBITDA of 4.3 times, a price to book of 0.77 times, and a cash dividend yield of 2.8%. The company’s market cap trades at a 17% discount to the market value of its 51% ownership of Puregold Price Club (PGOLD PM) meaning the company’s other subsidiaries and net cash are free. Under the base case, Cosco’s other subsidiaries and estimated net cash after the Liquigaz account for 63.3% of its current market cap. Under the base case, Cosco Capital offers 131% upside. Management is trying to eliminate the company’s discount to its fair value by buying back shares. In Q3 2018, the company repurchased 1.2% of the shares outstanding.

Cosco Capital (COSCO PM) Q3 2018 Results Review