ukvalueinvestment Posted January 7, 2016 Share Posted January 7, 2016 With emerging market currencies so beaten down, and the current downward volatility, it seems to me that now is the time to buy and hold high quality EM businesses. Problem is - what are they? Are there any businesses out there with the ability to earns high returns on capital year after year, with competitive advantages like: Brands, cost advantages, high switching costs, recurring revenues etc. I'm thinking about the Coca-Colas, Moody's, Unilever's, Nestles. Companies that will be going strong in decades. I'm not interested in financials, commodity sector, anything with government involvement, anything with high dependence on technology. Can we come up with a list? Maybe these companies just don't exist outside of US and Europe? Link to comment Share on other sites More sharing options...
A_Hamilton Posted January 7, 2016 Share Posted January 7, 2016 Embraer. They compete globally, attract the brightest minds in Brazil and a weaker BRL brings down labor costs. Link to comment Share on other sites More sharing options...
marazul Posted January 7, 2016 Share Posted January 7, 2016 Ambev Link to comment Share on other sites More sharing options...
finetrader Posted January 7, 2016 Share Posted January 7, 2016 HDFC Bank -Very well run -They have been growing earnings at 30%+ for the past 10 years and more Link to comment Share on other sites More sharing options...
gym97 Posted January 7, 2016 Share Posted January 7, 2016 Asian jewelry retailers. Link to comment Share on other sites More sharing options...
rohitc99 Posted January 7, 2016 Share Posted January 7, 2016 HDFC Bank -Very well run -They have been growing earnings at 30%+ for the past 10 years and more There has been a change in the competitive scenario in india. New licenses for payment banks and small lending banks have been issued. HDFC bank may find it difficult to maintain these growth rates in the future Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted January 9, 2016 Share Posted January 9, 2016 https://www.msci.com/resources/factsheets/index_fact_sheet/msci-emerging-markets-quality-index.pdf Kind of cheating because I think it's on the NYSE but MSCI HQEM index includes Infosys, so I'd suggest SYNT. Most of their COGs are Indian labor (strong USD increases margins). Company has a reputation as the highest quality BPO company in the world. Link to comment Share on other sites More sharing options...
theasiareport Posted January 9, 2016 Share Posted January 9, 2016 UOB, OCBC - Singapore banks. Link to comment Share on other sites More sharing options...
ukvalueinvestment Posted January 9, 2016 Author Share Posted January 9, 2016 The only ones so far that fit into the criteria I described are Amber and possibly Embraer. Link to comment Share on other sites More sharing options...
JBTC Posted January 10, 2016 Share Posted January 10, 2016 The only ones so far that fit into the criteria I described are Amber and possibly Embraer. Curious - are they cheap? If there are only a handful of good companies in the emerging markets while hundreds of billion dollars are chasing them, the math doesn't seem too encouraging. Link to comment Share on other sites More sharing options...
petec Posted January 10, 2016 Share Posted January 10, 2016 Nutresa in Colombia is a well run food company with over 60% market share in key categories like cold cuts and biscuits. Very sound long term investment here. Embraer would fail at the quality hurdle for me - may be very well positioned right now due to currency but it's just not a great industry long term imho. Link to comment Share on other sites More sharing options...
Guest Grey512 Posted January 10, 2016 Share Posted January 10, 2016 Mercadolibre Link to comment Share on other sites More sharing options...
thepupil Posted January 10, 2016 Share Posted January 10, 2016 I'd look at the holdings of the Wasatch Frontier Emerging Markets Fund to start. This is not an endorsement of that fund (it has high expenses and a terrible liquidity mismatch), but it is 48% consumer staples and features types of businesses you are looking for. Also some U.S. and European Companies are dominated by EM assets: Carlsberg comes to mind (majority Russia + Southeast Asia). There are lots of country(or region) specific subsidiaries of multi-nationals out there. For example, Coca Cola Icecek in Turkey, and Coca Cola Femsa in Mexico, the brewers have tons of subsidiaries in Africa, as do other staples companies. India is full of them: Hindustan Unilver, Nestle India, etc. Lots of snack companies throughout the world too. Many of these are not accessible to the individual investor. Good luck opening accounts in Nigeria and Pakistan to buy them ;D I would also check out the holdings of GMO Emerging Markets Domestic Opportunities Fund. This is similarly themed but more EM than Frontier. There is also a EM Domestic Demand ETF, so you can look at the holdings there http://www.emergingglobaladvisors.com/pdf/holdings/EMDD%20holdings.pdf https://secure.wasatchfunds.com/Our-Funds/Portfolio-Details.aspx?fund=WAFMX Page 55 http://hosted.rightprospectus.com/Wasatch/Fund.aspx?cu=936793819&dt=AR Brewers Carlsberg Brewery Malaysia Berhad (Malaysia) Delta Corp. Ltd. (Zimbabwe) East African Breweries Ltd. (Kenya) Florida Ice & Farm Co. S.A.*** (Costa Rica) Guinness Anchor Berhad (Malaysia) Guinness Ghana Breweries Ltd.* (Ghana) Guinness Nigeria plc (Nigeria) Lion Brewery Ceylon plc (Sri Lanka) Murree Brewery Co. Ltd. (Pakistan) Namibia Breweries Ltd. (Namibia) Nigerian Breweries plc (Nigeria) Phoenix Beverages Ltd. (Mauritius) Societe de Limonaderies et Brasseries (Ivory Coast) Societe Des Brasseries du Maroc (Morocco) Tanzania Breweries Ltd. (Tanzania, United Republic of) Union de Cervecerias Peruanas Backus y Johnston S.A.A. (Peru) Packaged Foods & Meats Agthia Group PJSC (United Arab Emirates) Cadbury Nigeria plc (Nigeria) Centrale Laitiere* (Morocco) Dairibord Holdings Ltd.* *** (Zimbabwe) Delice Holding (Tunisia) Dutch Lady Milk Industries Berhad (Malaysia) Edita Food Industries-REG S GDR* (Egypt) FAN Milk Ltd. (Ghana) Grupo Herdez S.A.B. de C.V. (Mexico) Juhayna Food Industries (Egypt) Ledo dd (Croatia) National Foods Holdings (Zimbabwe) Nestlé Lanka plc (Sri Lanka) Nestlé Malaysia Berhad (Malaysia) Nestlé Nigeria plc (Nigeria) Nestlé Pakistan Ltd. (Pakistan) Olympic Industries Ltd. (Bangladesh) PT Indofood CBP Sukses Makmur Tbk (Indonesia) Rafhan Maize Products Co. Ltd. (Pakistan) Vietnam Dairy Products JSC (Vietnam) Tobacco British American Tobacco Bangladesh Co. Ltd. (Bangladesh) British American Tobacco Kenya Ltd. (Kenya) Ceylon Tobacco Co. plc (Sri Lanka) Eastern Co. (Egypt) Pakistan Tobacco Co. Ltd. (Pakistan) Household Products Colgate Palmolive Pakistan Ltd. (Pakistan) Unilever Ghana Ltd.* (Ghana) Unilever Nigeria plc (Nigeria) Pharmaceuticals Abbott Laboratories Pakistan Ltd. (Pakistan) DHG Pharmaceutical JSC (Vietnam) Egyptian International Pharmaceutical Industrial Co. (Egypt) GlaxoSmithKline Bangladesh Ltd. (Bangladesh) GlaxoSmithKline Consumer Nigeria plc (Nigeria) GlaxoSmithKline Pakistan Ltd. (Pakistan) Hikma Pharmaceuticals plc(United Kingdom) Searle Company Ltd. (The)* (Pakistan) Square Pharmaceuticals Ltd. (Bangladesh) Traphaco JSC (Vietnam) Link to comment Share on other sites More sharing options...
KJP Posted January 10, 2016 Share Posted January 10, 2016 Karelia Tobacco Link to comment Share on other sites More sharing options...
thepupil Posted January 10, 2016 Share Posted January 10, 2016 http://lt.morningstar.com/util/GetDocument.ashx?FileId=9388 http://www.arisaig-partners.com Also check out funds managed by Arisaig. Link to comment Share on other sites More sharing options...
valuefinder0525 Posted January 10, 2016 Share Posted January 10, 2016 Moutai Link to comment Share on other sites More sharing options...
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