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Portfolio changes – Dairy Farm & Ramirent

Ramirent out

I continue to rotate my portfolio away from cyclical companies to safer quality havens. Ramirent has been riding the cyclical construction boom in the Nordics. I believe we are seeing the very last legs of that. Especially in Sweden construction could very soon come to a halt with daily articles commenting on the property market. This is something I have analyzed closely myself and I have seen the signs for quite some time. So I’m a bit disappointed that I didn’t manage to exit Ramirent when the stock was trading at least one EUR higher, but here we are. I kept this holding since I started the blog, to avoid the risk of follow this cyclical company all the way down again, it’s time to sell. So as of today’s close I sell my full holding in Ramirent.

Dairy Farm

I actually started to research this investment thanks to a comment I got from on of you readers. The question was if I have looked at Jardine Matheson Group. My answer at the time is that its a very complex conglomerate to research, because it contains so many different types of exposure. One of the core holdings of the Jardine Group is called Dairy Farm and as many of Jardine’s holdings it is separately listed. It’s name might lead you to the wrong conclusions, it’s not a milk company of any kind, but a diversified company of Asian retail stores, mainly focused on food. It might come as a surprise for some people living in Asia that this company is the owner of so many famous retail stores for the Asian region. Dairy Farm operates supermarkets, hypermarkets, convenience stores, health and beauty stores and home furnishings stores under all these well-known brands:

DairyFarm_companies

I have been trying the last few weeks to enter this stock at a more attractive level, but failed to find/time any weakness. Therefore I took an initially smaller position of 4% in this company at today’s close, with the possibility to add in-case I see any short-term share weakness. This is not a cheap stock, but a quality company that I intend to hold for the very long term. It has good exposure to the growing middle-class in Asia. A full analysis will follow at a later date.

12 thoughts on “Portfolio changes – Dairy Farm & Ramirent

  1. Hey, thanks for answer my comment this way :). I am also a bit scared off by the complexity of Jardine, but it interesting that you see value in one of the holdings. A quite interesting play i am invested is Metro, which also has some exposure in Asia. They look to cheap in my eyes. There is a good write up on this case at value and opportunity blog.
    A small swedish stock I am currently researching is the swedish Nilorngruppen. Looks quite interesting to me, if they can come back to some of the former growth.

    1. @ebdem. I briefly look at Nilorngruppen after your comment. But I don’t really see much of a slow down ? Has this manifested in 2017 ? cheers

      1. Yes. There is a good excel sheet in the investor relations portal. It shows growth going down to 3,2% in q3 (the worst quarter). The number of employees is rising instead. But maybe this is just a timing issue.

        1. thanks for your quick reply, Really interesting company. It looks to me that seasonality plays a big part in q3 (yoy it’s still up slightly).

          1. Yes. it is deeply seasonal. On a yearly level it is still growing 3,2%. But not around 15% or 20% as did some time ago. But I think even with 5% growth it looks attractivly priced.

    2. A bit embarrassing to say now, but I bought Nilorngruppen on the IPO at 50 SEK. I sold it at a loss on 43.5 SEK, rather quickly after it rallied.

      Starting to analyzing my trading more, I’m quick to take losses, which saves me sometimes, but sometime I’m just too quick to give up, thinking I misunderstood the case and miss out on the big rally I was hoping for. I was mentioned some other cases I had lately here on the blog, with Zhengtong Auto being the worst..

      1. Hm… I did the same thing with BYD. Feels also painful.
        What is your opinion on Nilorn now and what was your opinion back then?

        1. The 1 metric I was watching closely was gross margin (afraid of decline), which actually came in strong, combined with CEO hinting strong Q4, and very negative stock price reaction. IMO interesting here. On the negative side; overly optimistic previous growth guidance + insider selling on top. Still, look reasonable, maybe take a bet that Q4 delivers?

        2. Back then it looked fairly cheap. I hadn’t done a very deep DD, people started to talk about that with e-commerce taking over the need for labels in stores would go down. When the stock underperformed I took my stop/loss without really forming a strong opinion. Obviously that was wrong. The stock rallied when some famous bloggers picked up the stock as a undervalued company.

          1. I think it is really interesting right now. It might be an interesting point to enter the stock – also for the long term. The risk too lose money is limited, if the make it to grow with 5%.
            I think the growth of online is a driver for the labels and Nilorn. Brands are selling in every direction and the main street retailers are interested in labels. Also the selling process online profits from labels, cause you are differentation and building a brand.
            Who is writing about Nilorn?

          2. I think it’s a valid point. I do think there is less demand for labels in the e-commerce market. I think labels are really import in brick and mortar businesses to differentiate yourself as brand between other brands in the store shelves. I do not see such a strong case for e-commerce. What do you guys think ?

          3. Anker is a pure online brand. They sell cables, adapters and ofter stuff on Amazon. I think their success is also explainable, because they have a good branding and labeling. They combine design and quality.
            As a brand you are producing for different setups: the store, the outlet, the online store. Customers also do shopping offline and online. I think there is still a worth and need in branding. Also to bring customers to stores.

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