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Tom
@tom_finance
1Anno·

New position (unfortunately with spread)

Diversified Chinese sports textile manufacturer, Fila brand should be well known. Strong growth, strong profitability, margins in line with the industry. Strongly undervalued in my opinion.

Briefly the key figures from my last strategy presentation:

Margins:

- Gross Margin 10Y AVG: 51.01% ⚠️

- Operating Margin 5Y CAGR: -2.6% ⛔️

- FCF Margin: 18.59% ✅️


Profitability:

- Debt / Ebitda: 1.62 ✅️

- ROIC 5Y AVG - WACC 5Y AVG: 21.92% ✅️

- ROA 10Y AVG: 15.93% ✅️

- ROCE 5Y AVG: 30.03% ✅️


Growth:

- Revenue 10Y CAGR: 21.53% ✅️

- EPS 5Y CAGR: 18.75% ✅️

- FCF 5Y CAGR: 32% ✅️

- Dividend 5Y CAGR: 8.55% ✅️


Part of Part 2 of the strategy:

Morningstar MOAT: Narrow 👍

Morningstar ESG: 4/5👍

GF Profitability Rank: 10/10 ✅️

FCF/Share 5Y CAGR: 24.08% ✅️


EVALUATION: (comes in detail in part 3 of my strategy presentation).

FCF Yield 4.88% > 5Y AVG 3.38% ✅️

FCF Yield > 10Y Treasury and S&P500 Earnings Yield ✅️

SMA200 Distance: -15.79% ✅️

Gurufocus Fair Value Distance -37% significantly undervalued ✅️

Morningstar Fair Value Distance -30% Significantly undervalued ✅️

Past FCF CAGR vs. future market implied cagr: difference 37.28% (own model) ✅️

21.06
202
Acquistato a 9,657 €
10
26 Commenti
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Felix@Investor_in_Jogginghose
1Anno
I also use data from the past for the peg. Basically, I have different versions. The figures for future growth come not only from analysts but also from the company itself. The great art is to predict the growth in the future as accurately as possible. Without this point, investing would be easy. Basically, I try to determine a theoretical return. If there was no growth, the stock with the lowest kgv would always be the best choice. If the growth forecast would always be confirmed, the stock with the lowest peg would always be the best choice. Unfortunately, this realization came to me quite late. But I like your approach. You are a real investor, not an investor.
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Tom@tom_finance
1Anno
@MiIliardenmehling That is, you look at various growth forecasts for the future (analysts, companies, your own, past growth) and try to form a consensus?
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Felix@Investor_in_Jogginghose
1Anno
Exactly. But other factors should also be right, of course. The better the margin and the less debt, the lower the probability that something will come up.
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Felix@Investor_in_Jogginghose
1Anno
Why don't you use a peg ratio?
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Tom@tom_finance
1Anno
@MiIliardenmehling I'll explain my part 3 in a post soon - but that's also the part that's still the fuzziest. Why do you use the PEG? Since I mainly focus on cash flow and the PEG is based on future forecasts, which I tend to include less in my selection, I did not include it for now.
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Felix@Investor_in_Jogginghose
1Anno
@Tom_quality_investor it makes shares comparable with each other. That was a game changer for me at the time.
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Tom@tom_finance
1Anno
@MiIliardenmehling Stocks in the same industry certainly, yet the usual PEG is based on analyst opinions, or did you calculate it with your own growth forecasts or past growth? Where did you get the PEG from? My "market implied fcf growth" does something similar. I compare the growth of the past years with the necessary growth to reach the S&P 500 market P/E in 5 years.
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Finanzielle-Freiheit@Finanzielle-Freiheit
6Mes
@tom_finance Are you still invested?
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Tom@tom_finance
6Mes
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Finanzielle-Freiheit@Finanzielle-Freiheit
6Mes
@tom_finance What were your reasons for exiting? The chart and the fundamentals look great at the moment
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Tom@tom_finance
6Mes
@Finanzielle-Freiheit Only that I wanted to concentrate even more. Apart from the China risk, I still find them fundamentally attractive
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Tom@tom_finance
1Anno
@Sun Thanks for your input. Had both Li Ning and Anta on the radar, both strong numbers. Simply went with Anta for the larger company with the higher ROCE.
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Tom@tom_finance
1Anno
@Sun Do you have a chins past? Can you also tell me something about CSPC Pharma and Nongfu Spring? These are with Anta/ Li Ning the only three China companies that are interesting for me.
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Tom@tom_finance
1Anno
@Sun At Anta, I like the multi-brand strategy and the successful marketing of the last Winter Olympics has further driven the high-end division. With Fila, they have an international brand that performs better than its peers and with the domestic brands they are well diversified in different sports. Then the focus is strongly on e-commerce, which is also the right way to go. According to the last annual report, the statistics show that especially young Chinese tend more and more to domestic brands and that the Covid recovery in China lasts much longer is well known. I personally think that Anta can continue to gain market share against Nike/Adidas.
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Tom@tom_finance
1Anno
@Sun Absolutely. That's why I stay out of technology stocks in China. Consumer goods will always be needed and pharma as well :-) Due to the political situation, China will not take a large share in my portfolio for the time being, but the current valuations of cspc and anta are clearly undervalued in my opinion. Nongfu is also too expensive for me at the moment but maybe there will be an opportunity to enter at some point :-)
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Tom@tom_finance
1Anno
@Sun CSPC is one of the market leaders and broadly diversified. I'm not too worried about this in the long term, despite the Chinese government ;-)
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Tom@tom_finance
1Anno
@Sun I look for companies everywhere, that many completely ignore the largest nation in the world I think is wrong with my LONG term approach
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Tom@tom_finance
1Anno
@Sun Since I use Trade Republic, I don't have much choice. But I do not buy ADRs as a matter of principle.
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