A little good news this morning from another portfolio holding - SABMiller (Nasdaq: SBMRY; LSE: SAB).
SABMiller reported that third quarter volumes increased 3%. That's about double the consensus expectation (+1.6%) and a decent result. SABMiller also reported that net organic sales increased about 6% for the same period. So, assuming that the company did okay on its margins (which isn't always the case), it was a pretty solid third quarter.
Looking at the numbers in a little more depth...
-Asia and Africa were both up 12% (in volume). That's great growth and a validation of SABMiller's emerging markets strategy, but the base to those numbers is low and the price points are still low.
- LatAm down 1%. A little disappointing, but SABMiller has always been challenged in this region. Hopefully Heinken will do a bit better, as my stake in FEMSA (NYSE: FMX) gives me a rooting interest there. More likely, though, Anheuser-Busch InBev (NYSE: BUD) is still doing pretty well...
- South Africa up 3% - good to see the company doing alright in its core market.
- Europe flat. I'd call that a surprisingly strong result given all of the negative chatter about Europe.
- U.S. down 2.5%. Still a tough market, and one that I don't think SABMiller likes all that much. I'm keeping my fingers crossed that SABMiller is smart enough not to double-down and acquire Molson Coors (NYSE: TAP) or any other U.S. asset. SABMiller did very well through this recession by focusing on emerging markets, and they'd be very wise to continue investing accordingly. I just wish there was a way they could increase their ownership in the beer JV they have in China w/ China Resources Enterprises (0291.HK).
As for the stock, SABMiller is another high-quality name in my portfolio that is depressing close to my fair value target. I'd really rather not sell, but it's foolish to ignore other great companies with cheaper stocks.
So, for now, HOLD SABMiller, but I'm looking to slowly shuffle towards the exit.
Disclosure: I own shares of SABMilller and FEMSA
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