For anyone who follows me on Twitter, this writeup won’t be a surprise, as I’ve been very publicly researching this for a while. However, I do my best thinking in long form and this situation is complicated and deserving of a full write up. The companies I’m referring to are Indofood Sukses Makmur ($PIFMY) and First Pacific ($FPAFY). I have grouped them together as they both represent different ways to play the same core assets, popular noodle brand Indomie and other Indonesian staple brands. With First Pacific owning 50% of Indofood and both being run by the Indonesian Salim family the two are interlinked, however both still represent distinctly different situations with unique upsides and risks. On the surface both companies look very cheap and hold high quality, defensive assets with a long runway for growth, however are plagued with poor corporate governance, complicated business structures and geographic risk. Before I start, a quick shoutout to @ReturnsJourney on Twitter who has covered both of these in the past and whose work was useful in researching for this.
Thanks Myles, I've owned FP for 5 years and I still feel like I got new info/perspective from your article.
I continue to be nervous about PLDT and whether it is compatible with the leveraged structure, but so far so good and FP is also a small position for me.
I see FP as like an avatar for EM deep value and consequently, it should do well if the sector ever returns to favour.
Thanks Myles, I've owned FP for 5 years and I still feel like I got new info/perspective from your article.
I continue to be nervous about PLDT and whether it is compatible with the leveraged structure, but so far so good and FP is also a small position for me.
I see FP as like an avatar for EM deep value and consequently, it should do well if the sector ever returns to favour.