By:
Andy O’Neill, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• Carlsberg S/A ADR. (NYSE:CABGY) brews beer in the standard,
premium, craft, and non-alcoholic varieties across Europe and Asia.
• The company has a large
growth opportunity in Vietnam and the rest of Southeast Asia.
• Starting in 2020, the
company will see financial results on their AI partnership with Microsoft.
• CABGY has a growing
market for non-alcoholic beer sales.
• The company is continuing
to push their excellent 2019 upwards for great success.
Key points:
Carlsberg
is continuing to push to obtain an additional 45% stake in Hanoi Alcohol Beer,
the third largest brewing company in Vietnam. They are looking to take advantage
of the opportunity presented to them by the Vietnamese government, which is
trying to sell most of their stake in the brewing company in a statewide push
to privatize their assets.
The company also has a
strong partnership with Microsoft, where they are trying to determine the
flavor of a beer using artificial intelligence, before the beer is even brewed.
This will have a strong impact on their bottom line as it will have large cost
savings for them going into 2020. As this partnership becomes financially
relevant, there are large gains to be made.
The world has a changing
palate, and currently one of the larger trends in beverages is non-alcoholic
beer. People are trying to spend their nights consuming fewer calories and
being able to drive home at night. Carlsberg is poised to capitalize on that
ability with their different assortments of non-alcoholic beer, which are leading
the market in most of their markets.
CABGY has had a strong
year of growth so far, and they are poised to continue this excellence. After a
poor last five years, management has turned this company around and towards
greener pastures. Continuing to grow will be very likely for this company.
What
has the stock done lately?
Since the stock was
pitched in the beginning of November of 2019, it has done quite well. It has
rebounded almost back to its 52 week high, and is continuing back upwards.
Past
Year Performance:
CABGY has increased 36% in value over the
past year, but the stock is still a good value play, coming in much lower than
the competition for EV/EBITDA: the company has almost a 30% discount compared to
their peers in this regard.
Source:
FactSet
My
Takeaway
This is a great company
that has just recently been added to the portfolio. It has already started to
perform well for us over only a month and a half. Continuing to monitor the
growth of this company is important, and finding the right time to sell and
book a win will be as well. However, the company still has a lot of room to
grow.
Source:
FactSet
