Great piece! Worried that I won't be able to buy as another commenter stated that it is unavailable via IBKR. I think a 6% WACC is extremely low in this interest rate environment - I typically model using 9-11% to be conservative.
I think WACC is something that can be discussed for hours without coming to a final conclusion. I have a consistent approach to determining WACC in my DCF models and it works very well for me. For Kri-Kri, the beta is very low, that's the main reason why it's so low.
That's an amazing deep dive. This is my first time reading about the stock and I am impressed by its ability to pass prices to consumer without losing market share. It impressively increased the top line in the last 4 quarters, yet trading at very reasonable price. I will definitely keep an eye on it as a possible addition to my portfolio!
One problem though: It looks like it only trades on the Athens exchange which Interactive Brokers does not appear to have access to which kind of limits outside investors... I did link to this piece in my links post for today though: Emerging Market Links + The Week Ahead (May 13, 2024) https://emergingmarketskeptic.substack.com/p/emerging-markets-week-may-13-2024
Thanks for the writing! Interesting company. Were there unusually large capex 2024 because fcf margin is really low the moment? Do you consider esrnings high quality, the are usually about double compared to free cashflow. Cashflow based do you consider it cheap? Thanks a lot
In 2023, Kri Kri had solid earnings, but free cash flow was weaker mainly due to a combination of elevated capex and working capital buildup. Capex in 2023 was somewhat above historical average because of capacity expansion projects, and this trend continued into early 2024.
Regarding earnings quality: while earnings were about twice free cash flow in 2023, this seems largely driven by timing effects (capex and working capital investments), not aggressive accounting. Cash conversion should normalize as growth investments slow.
On valuation: based on depressed 2023/2024 free cash flows, Kri Kri doesn’t look very cheap. However, adjusting for normalized capex and working capital, the stock seems attractively valued relative to its growth profile.
Great piece! Worried that I won't be able to buy as another commenter stated that it is unavailable via IBKR. I think a 6% WACC is extremely low in this interest rate environment - I typically model using 9-11% to be conservative.
I think WACC is something that can be discussed for hours without coming to a final conclusion. I have a consistent approach to determining WACC in my DCF models and it works very well for me. For Kri-Kri, the beta is very low, that's the main reason why it's so low.
That's an amazing deep dive. This is my first time reading about the stock and I am impressed by its ability to pass prices to consumer without losing market share. It impressively increased the top line in the last 4 quarters, yet trading at very reasonable price. I will definitely keep an eye on it as a possible addition to my portfolio!
Thank you so much! I was also really impressed when I found this great company!
One problem though: It looks like it only trades on the Athens exchange which Interactive Brokers does not appear to have access to which kind of limits outside investors... I did link to this piece in my links post for today though: Emerging Market Links + The Week Ahead (May 13, 2024) https://emergingmarketskeptic.substack.com/p/emerging-markets-week-may-13-2024
It’s so unfortunate, I am also using Interactive Brokers as my primary broker and I wonder how can I buy that stock..
I can buy it in Germany with Trade Republic and also Consorsbank. Do you have another option?
Thanks for linking to this analysis in your article! Really appreciate it.
Thanks for the writing! Interesting company. Were there unusually large capex 2024 because fcf margin is really low the moment? Do you consider esrnings high quality, the are usually about double compared to free cashflow. Cashflow based do you consider it cheap? Thanks a lot
Thanks for your comment!
In 2023, Kri Kri had solid earnings, but free cash flow was weaker mainly due to a combination of elevated capex and working capital buildup. Capex in 2023 was somewhat above historical average because of capacity expansion projects, and this trend continued into early 2024.
Regarding earnings quality: while earnings were about twice free cash flow in 2023, this seems largely driven by timing effects (capex and working capital investments), not aggressive accounting. Cash conversion should normalize as growth investments slow.
On valuation: based on depressed 2023/2024 free cash flows, Kri Kri doesn’t look very cheap. However, adjusting for normalized capex and working capital, the stock seems attractively valued relative to its growth profile.
Thanks again for the good questions!