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

Greatview Aseptic Packaging / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/greatview-aseptic-packaging" target="_blank" data-smartkarma-citation="entities:10802:1" rel="noopener">Greatview Aseptic Packaging (468 HK)</a> Greatview Aseptic is the second-largest roll-fed aseptic packaging supplier in China and the third-largest globally. It has become an established second-source supplier to Tetra Pak in China. It has expanded internationally with the same value proposition. International markets are growing at a faster pace than the Chinese market, but, the gross margin in international markets (18%) is much lower than the Chinese market (30%) with similar operating expenses and investment requirements meaning operating margin should fall with the growing importance of international markets.</p><p>The company is growing and optically cheap at 11 times operating profit with a 6.7% dividend yield. With the growing importance of international markets and the lower gross margin in international markets, profitability will suffer. Under the base case, Greatview is fairly valued at HKD4.00.</p>

Greatview Aseptic Packaging (468 HK) Greatview Aseptic is the second-largest roll-fed aseptic packaging supplier in China and the third-largest globally. It has become an established second-source supplier to Tetra Pak in China. It has expanded internationally with the same value proposition. International markets are growing at a faster pace than the Chinese market, but, the gross margin in international markets (18%) is much lower than the Chinese market (30%) with similar operating expenses and investment requirements meaning operating margin should fall with the growing importance of international markets.The company is growing and optically cheap at 11 times operating profit with a 6.7% dividend yield. With the growing importance of international markets and the lower gross margin in international markets, profitability will suffer. Under the base case, Greatview is fairly valued at HKD4.00.

Greatview Aspetic- Good Growth Outlook but Falling Margins = Fairly Valued.