Suntory Beverage and Food
I look back at what I have done investing in 2018. I was steadfast, not making more than one new investment in 2018. It is because I remained cautious with the price level of S&P 500 and DJIA as well as China's economy. Little wonder, we saw huge price adjustment in almost all stocks in early December 2018.
I am quite grateful that Whitney Tilson came to Singapore to give free preview talk. There is one interesting thing which affect all investors - inflection points. When competent investors, whether amateur or professional one, hold stock for some period of time, there will be inflection points for us whether company will improve for better/generate more profit (thereby its share price rise) or company failed to meet targets/the business plan is not successful (thereby its share price fall). It happens all the time. It is the most important thing whether you think this stock is compounder or just ordinary investment that yield you decent profit.
For that matter, I would like to reference my case of which I closed long position in Japanese company called Suntory Beverage and Food (SBF).
Buy Price, Sell Price, and Absolute Return
I bought SBF (stock code is 2587) at 3,170 yen on 3 July 2013 and sold at 5,000 yen on 27 December 2018. Taking account of dividend and transaction cost, my absolute return is 65.7%
About SBF
Suntory Group IPO its Beverage and Food division on 3 July 2013. It chose not to include its alcohol products into that division. Singaporeans is very familiar with its product namely Brand's Essence of Chicken. It has strong market share in Japan's drink market and tend to sponsor some Japanese dramas.
After IPO, it has acquired two international-recognized brands, Ribena and Lucozade from GSK. In few years later, it also acquired vending machine unit from Japan Tobacco Inc.
It has strong business relationship with Pepsi as it has two JV relationships in Vietnam and Thailand.
Why did I invest in this Stock?
I believe that its earning power is growing through its overseas expansion plan and increasing overseas sales. If this is correct, I saw this as a compounder as if Suntory increase the drink consumption sales just like Coca Cola in 1980s-1990s.
My Observation during my Holding Period
I took ANA flight to visit USA which means that I would have to do stopover in Tokyo. On my return trip from USA, I had the opportunity to try its coffee product under BOSS brand. It was truly bitter drink at the time I am not ready for non-sugar coffee.
I did Japan tour for 1 month in 2016. I tried Suntory Green Dakara (isotonic drink) when my long distance bus did a stopover at rest stop near expressway in Kobe. I loved that drink so much that I want to buy again. I rate it better than 100plus drink in Singapore. I also tried Suntory mineral water drink and found it reasonable (as in it does not taste weird to my taste bud).
I did 2nd Japan tour in 2017. I learnt more about sales points of Suntory Green Dakara. I am disappointed that it is not sold widely as much as Suntory mineral water and Suntory alcohol drinks.
I am pleased that Suntory introduced CC lemon soft drink to Singapore market. I like the taste.
Why did I Sell?
However, as I held it for 5 years plus, its share price has not risen beyond circa 5,500 yen. If I compare it with BRK-B that has risen from USD96 (my purchase price) 23 Jan 2013 to USD202 plus now, I realise that it is not compounder type. Suntory has difficulty to improve the sales of Ribena and Lucozade. Its targets are not fully made each time I read their presentation and quarterly financial result.
I wonder how much synergy vending machine acquisition can bring to Suntory. I doubt things can improve so much domestically for given Japanese demographics and buying habits. However, if this company has that alcohol products, I believe its share price can rise a lot over time.
I have no doubt that it has a place in dividend portfolio. But dividend collection is not my first priority - it is capital gain.
Conclusion
I thought 5 years plus is a long time for me to judge whether it is a compounder type or not. As a result, I choose to close long position in SBF and re-allocate sales proceed to new stock pick next year.
I am quite grateful that Whitney Tilson came to Singapore to give free preview talk. There is one interesting thing which affect all investors - inflection points. When competent investors, whether amateur or professional one, hold stock for some period of time, there will be inflection points for us whether company will improve for better/generate more profit (thereby its share price rise) or company failed to meet targets/the business plan is not successful (thereby its share price fall). It happens all the time. It is the most important thing whether you think this stock is compounder or just ordinary investment that yield you decent profit.
For that matter, I would like to reference my case of which I closed long position in Japanese company called Suntory Beverage and Food (SBF).
Buy Price, Sell Price, and Absolute Return
I bought SBF (stock code is 2587) at 3,170 yen on 3 July 2013 and sold at 5,000 yen on 27 December 2018. Taking account of dividend and transaction cost, my absolute return is 65.7%
About SBF
Suntory Group IPO its Beverage and Food division on 3 July 2013. It chose not to include its alcohol products into that division. Singaporeans is very familiar with its product namely Brand's Essence of Chicken. It has strong market share in Japan's drink market and tend to sponsor some Japanese dramas.
After IPO, it has acquired two international-recognized brands, Ribena and Lucozade from GSK. In few years later, it also acquired vending machine unit from Japan Tobacco Inc.
It has strong business relationship with Pepsi as it has two JV relationships in Vietnam and Thailand.
Why did I invest in this Stock?
I believe that its earning power is growing through its overseas expansion plan and increasing overseas sales. If this is correct, I saw this as a compounder as if Suntory increase the drink consumption sales just like Coca Cola in 1980s-1990s.
My Observation during my Holding Period
I took ANA flight to visit USA which means that I would have to do stopover in Tokyo. On my return trip from USA, I had the opportunity to try its coffee product under BOSS brand. It was truly bitter drink at the time I am not ready for non-sugar coffee.
I did Japan tour for 1 month in 2016. I tried Suntory Green Dakara (isotonic drink) when my long distance bus did a stopover at rest stop near expressway in Kobe. I loved that drink so much that I want to buy again. I rate it better than 100plus drink in Singapore. I also tried Suntory mineral water drink and found it reasonable (as in it does not taste weird to my taste bud).
I did 2nd Japan tour in 2017. I learnt more about sales points of Suntory Green Dakara. I am disappointed that it is not sold widely as much as Suntory mineral water and Suntory alcohol drinks.
I am pleased that Suntory introduced CC lemon soft drink to Singapore market. I like the taste.
Why did I Sell?
However, as I held it for 5 years plus, its share price has not risen beyond circa 5,500 yen. If I compare it with BRK-B that has risen from USD96 (my purchase price) 23 Jan 2013 to USD202 plus now, I realise that it is not compounder type. Suntory has difficulty to improve the sales of Ribena and Lucozade. Its targets are not fully made each time I read their presentation and quarterly financial result.
I wonder how much synergy vending machine acquisition can bring to Suntory. I doubt things can improve so much domestically for given Japanese demographics and buying habits. However, if this company has that alcohol products, I believe its share price can rise a lot over time.
I have no doubt that it has a place in dividend portfolio. But dividend collection is not my first priority - it is capital gain.
Conclusion
I thought 5 years plus is a long time for me to judge whether it is a compounder type or not. As a result, I choose to close long position in SBF and re-allocate sales proceed to new stock pick next year.
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