Analysis of ABF 2018

Company: ABF

ISIN GB0006731235 | WKN 920876 

Business: A British conglomerate with agriculture, agricultural products as well as retail. Currently they have five business segments: Sugar, Agriculture, Retail, Grocery and Ingredients. To find out more about their grocery brands then please click here and to find out about their businesses in general then please click here.

Active: Europe, Africa, USA and Australia. Heaviest in the UK and Ireland.

P/E: 17.04

Here you can find the previous analysis of ABF 2017. 

The P/E of ABF is still very high but starts to be more reasonable at 17 and the P&B is down at 2.5 which is on the same line as for the P/E however Graham would still not go for the company.

The earnings to sales have improved significantly and are now up at 8% and the ROE is up at 14.5%. The book to debt ratio is good up at a ratio of 1.9.

Th yearly revenue growth rate has increased slightly and is up at 2.9% which gives us a motivated P/E of around 12 to 14 which means that ABF is still slightly overvalued by the market today however is has been a long time since they was this close to a more proper valuation.

The dividends are still silly with only 1.6% which happily correspond to less that 30% of their profits so there is room for improvement.

Conclusion: Graham always said no to this investment and he still does. I realise that I should have taken the money and walked away when they were traded over 50 € per share but since it is impossible to turn back time I just have to suck it up. To be fair ABF start to look like a better investment today than what it ever was however a large part of the profit came from successful sale of business which means that it is not a consistent growth earnings increase and we might expect a decrease during 2018 in earnings if not in revenue. I will not invest more into ABF but I will remain as a shareholder with the long term target of making an IPO of Primark at some point in time.

If this analysis is outdated then you can request a new one.

ABF annual report 2017

The report from ABF, that was published some time ago, was very good. What I very much liked to see was that Primark keeps growing and on top of this their Sugar business unit have managed to improve their profits. It is still not up at their peak days but it was a very good improvement that they could show us shareholders.

For the report in full please go here and for the previous report from ABF please visit ABF annual report 2016 and to find out more regarding ABF please click on analysis of ABF 2017.

When we look into the table below then we see that they managed to increase their revenue from 13.4 bn GBP to 15.4 bn GBP which is excellent. The costs also increased and the biggest reason for an excellent profit increase (from 0.8 bn GBP to 1.2 bn GBP) comes from that they made a good sale of one of their businesses.

The reason why I say that sugar has recovered slightly is due to that they increased their profits from 35 mn GBP to 223 million GBP. Ingredients also did very well with an increase from 93 million GBP to 125 million GBP. Primark had a excellent revenue increase from 5.9 bn GBP to 7.1 bn GBP however the profit increase was only around 40 million which is very clearly showing how the retail business is getting squeezed from all direction.

Conclusion: I am still waiting for Primark to be released from the rest. With a recovering sugar business the chance is getting bigger however with such a low profit increase then the chance of that decreases once again. I will of course remain as a shareholder and will continue to regret that I did not sell them when they were up at over 50 € per share.

Stock bought March 2018: BASF

I, in my opinion, once again took advantage of the drop in share price of many excellent companies and therefore decided to push in some more money into BASF. Oil prices have increased lately which means that the oil and gas part of BASF should be doing pretty ok and their decision to step more into the consumer market has really taken off. For a long time BASF has been about volumes, volumes, volumes but since the last two years they have stepped into the consumer market that is more risky, yes, but it also provides much higher margins. If you go out into a store and pick up a pair of light weight Adidas sneakers then the sole comes from BASF polymers and from their in-house development. Since they own it that means they can join hands with every other sneaker company in the world. Well done BASF!

At the moment they are trading at a P/E of around 12.5 and yes that is with high earnings still, in my book, it is worth it. I am in this for the long run with my initial investment made 3.5 years ago in BASF.

Before this I had 47 shares with a price of 64.11 € per share including fees. I now bought 33 more shares at a price of 82.18 € which totals 2721.94 € including fees.

I therefore now own 80 shares in BASF with the total price per share of 71.68 € including fees and the entire investment is up at 5734 €.

To find out more regarding BASF then please click here.

If you want to see my current Stock Portfolio then click on the link but the portfolio will not be fully updated until the end of the month.

Summary of February 2018

February was again a highly interesting month in terms of the stock market. Share prices dropped and there are opportunities for buying high quality companies cheap at this moment. I have, not by own experience but instead learnt by listening to others and thinking about it, realised that I will never be able to time the market movement and are therefore not even attempting to sell any shares during drops such as this one. It is instead a good moment for buying more shares. Due to the bonus that I received in January I had a bit of firepower and I ended up buying two falling knives that, of course, have continued to fall but it is of little concern to me.

I decided to increase my monthly savings in the company pension scheme and from now on I will save around 1k GBP per month into index funds. These investments are not accounted for here but it also means that I will be able to save slightly less privately especially now since I alone are carrying all the costs once again as I did in the beginning of this UK adventure. I think that I will be able to save around 1.5k per month outside of the company pension scheme which is still higher than the 1k € per month that I have in my plan but 500 € less than what I would like to invest per month.

Work is going very well but I must start to focus on sending out applications. It will take time to find a new job and I have made a vertical career step so it is time for another horizontal move. The mixed emotions of this having the potential to make me hit financial jackpot due to stock options are preventing me from fully devoting my time to find something new as well as my teams being such excellent and wonderful people to work with every day. It is hard, very hard to make that very final decision and I am very clearly not yet there.

For the previous summary please visit Summary of January 2018 and here you can see my stock portfolio as it is.

The total invested value is now up at: 109,855 €. During the month of February I decided to pick up more of the falling dagger H&M as well as ETF Oil which was not a falling dagger but very quickly became one.

The value of the portfolio is today: 113,333 € and spread out I now have around 5,652 € in cash on the different accounts. I have a realised gain of 2,857 € and the combined realised and unrealised gain is now at: 3,478 € (3%) which is not good at all but the entire market has dropped so not much to do about it unless one attempts to time the market movements which I do not.

DAX dropped down a little during the month to 11,914 points which means that the it decreased by -6.8% which is worse than my portfolios drop of "only" -6.2%.

Conclusion: It is probably a good moment to go shopping and I hope that the investments that I made in February will turn out to be ok over time. Both, very large, investments that I made in February continued down after I had bought them which no one will be surprised about. My portfolio decreased slightly less than DAX, which is good, but it is a marathon and not a sprint as we all know. 

Dividend from DBAG, Intel and ETF Russia: February 2018

For my 100 shares in DBAG I received 140 € in dividends. From this was taken 35 € in taxes and I was left with 105 € in cash on my broker account.

To find out more about DBAG then please click here.

For my 100 shares in Intel I received 33.15 € in dividends. From this was taken 4.98 € in taxes and I was left with 28.17 € in cash on my broker account.

To find out more about Intel then please click here.

For my 270 parts in ETF Russia I received 64.88 € in dividends. No taxes were paid and all of it was paid into my broker account as cash.

To find out more about ETF Russia then please click here.

To see my total dividend flow then please visit the Stock Dividends page that has now been updated.