Ilyich

Phosagro. Better late than never..

Mobruk is being accused of illegally dumping waste some time ago and now getting a PLN50mln contract to clean it up. We read the articles mentioned in the VIC comment and watched the YT video(see Twitter link). There wasn't anything that explicitly implicates the Co. They also have been investigated on this case already in the past and have been found clean. The video from 2011 attached. Nothing explicitely about Mobruk or their subsidiary Raf-Ekologia (that's being accused of the dumping) in there. Unless those shipping labels point to some leads. Who knows..

Here is someone on SA who thinks the management has to change. This is from 2017. https://seekingalpha.com/article/4059061-hershey-and-delfi-ltd-comparison

Pulled a small trigger on Delfi, SGX: P34

Hi @ANP301191, Thanks for your response! re: Cons 1. I think there are very few emerging markets with low currency risk. I am already invested in markets with uncertain currency risk such as Russia and China. Also, if Pabrai is not afraid of currency risk when a good business is cheap, then I can see myself getting over it. 2. Do they break down the new product sales in the annual report or you have some specific market visibility into these new products and can identify how they are performing? Latest Mondelez earnings were encouraging for the Asian snacking market. 3. I like your point about them staying put in Indonesia. Its better to be a big fish in a small pond than an average fish in a big pond. My concern was saturation of the Indonesian market with all these various types of snacks but I am going to trust the management's experience to position these products. Don't have much to add on 4 and 5. Regarding the price of cocoa/milk, Cocoa and milk prices seem to be around avg. Am I looking at the correct ones? https://tradingeconomics.com/commodity/cocoa https://tradingeconomics.com/commodity/milk Sugar price seems to be near 6-7yr avg but rising. Nuts are another input but hard to track due to their variety. https://tradingeconomics.com/commodity/sugar They say they buy their inputs with forward contracts, which I understand means they buy a large amount when the prices are low/avg so they can buy less when the prices are higher. However, this may not be possible with milk since its perishable. I'm gonna have to trust the management on this. responding to your comments on the pros: Not much to add on #1, thanks for your thoughts! For #2, I read in the 2020 report that they recalculated the financials but I didn't understand exactly what the issue was and what changed. Do you happen to have some more details and new vs old numbers? I agree with your final thoughts regarding this being a potential takeover but I am trying to leave that aside and just understand/value the existing business. If a buyout comes along then it will be free upside. There are other big players in the market that MNCs could decide to takeover for whatever reason (thus overlooking Delfi), such as Mayora or the company that's dominating in the Philippines (I don't know the name, is it Mayora?). I think my next step is investigating those two companies. Could you elaborate how you ran DCF with 20% discount and ended up with S$0.79/share? In my DCF I assumed 2021 $30mil owner's cash flow ($40mil less maint. capex of $10mil) with 6% growth for the next 10yrs and only ended up with 11% discount rate for the current price. I did open a small position today so I can keep a close watch on this and understand it better as business evolves. Also, recent quarter's Mondelez earnings were encouraging for Asia. Hope that makes sense, welcome all questions and feedback. All the best!

Hi @ANP301191, I have been digging into the co after the VIC writeups and I just want to sum up my concerns and positives [Edit]: One item which is in neither category is that they are helping distribute competitor products. I suppose the positive revenue balances out the negative impact on the market share. I understand that this part of the business is declining which is a good thing. Can someone confirm this? Cons: I think currency risk, pricing power risks and modern trade expansion risks were covered. My other concern is that we are projecting only 2 years (2018/19) of their growth strategy into the future. Another concern is that their 2 partnerships only expand their portfolio within Indonesia. Would like to see them enter Japan or South Korea based on the existing partnerships. Perhaps this is already being done and I am missing the point. Another concern timeframe for consumer normalization since vaccinations are terrible in Indonesia. 2.5% fully vaccinated. 1.8% partially vaccinated according to CNN. Another one is that they have to keep advertising to promote the products -> competition is fierce. Pros: sales normalize to pre-covid levels through 2022. Combine that with lower capex and we have good cash flows, good chunk of which will be dividends. The assumption "capex will be lower" is taken from their 2020 annual report and based on the fact that a major investment of $110mil was completed in 2019. "Looking ahead to FY2021, the Group remains steadfast in its discipline on our capital expenditure and will spend only where necessary. Our current installed capacities are sufficient to meet expected market demands in the foreseeable future.”" Another positive is that cost of goods sold has decreased by ~$100mil in the past 5 years compared to the 5 yrs prior. I haven't found an explicit reason for this but I am assuming it is due to their modernizations 2014-2019 and cutback of the SKUs. btw there is also another write-up with details to complement the VIC ones: https://www.asiancenturystocks.com/p/deep-dive-2012-7-delfi-ltd Welcome all constructive criticism. Cheers!

I read both writeups on VIC and Asian Century Stocks. Haven't opened a position but its compelling. I asked people smarter than me to have a look into it and I hope they will. The pricing power and more comp are really my only concerns but if the total market keeps growing, which seems to be the global consensus on chocolate in Asia, then there will be more for everyone. Attaching a snapshot from VIC message board talking about Mondelez's recent statements about cocoa, Asia and acquisitions.

FLOW Traders - a forward PE of 6x and a dividend yield of "a lot". Its normally a hedge position but its performing more like a deep value stock that one would long.

Sorry, "throwing capacity" was a poor choice of words. What I meant by that was to use the waste removal/disposal equipment and infrastructure that operates within Germany to help Poland clean up the illegal dumps. That just describes the idea and I don't have anything to describe the economics/politics or the legal framework of it. After a quick google search, it turns out the situation is the exact opposite... Poland is a net importer of EU+UK waste, a lot of it through illegal channels by(intentional and illegal) improper labelling of recycling waste. Polish gov't is trying to crack down on the illegal part of it but they are not closing the import gates. https://www.dw.com/en/polands-growing-problem-with-illegal-european-waste/a-55957224 https://www.dw.com/en/poland-wont-take-uk-garbage-any-more/a-49725035 - The title seems to be misleading. I was expecting to see a Polish law banning garbage imports from the UK but there is no such thing. I need to re-read Jeremy's article again for it to stick better, most of these points are mentioned there already.

Hi, my first post here ? Thanks to @shamelesscloner for pointing me in this direction through his YT channel. I loved the writeup and the detailed deep dives into all the aspects of the business model. Regarding risks, we had a short discussion on twitter ( https://twitter.com/OCY61844218/status/1375824805883211776 ) with another user who pointed out that countries with larger removal/processing capacity will likely have to lend a helping hand(i.e. Germany). As he points out, and I haven't been able to verify this on German ministry websites, Germany has a removal/processing capacity of 1Mton/yr. If they throw their entire capacity then Poland's cleanup would take 4.5yrs given the 4.5Mtons of the illegal garbage estimates. MAke it 3.5-4yrs with Poland's own capacity. This could and should happen for the good of the people and the environment but it can't can't happen with Germany's full capacity for the following reasons. 1. Germany can't throw their entire capacity to Poland since that would mean to stop processing their own garbage. 2. Other Eastern EU countries bordering Germany are in a similar situation as Poland, Germany would need to help them too. 3. As Jeremy points out in his response on twitter, garbage regulations are country specific and it will take time for the bureaucracy to turn its wheels for help to arrive. 4. Distances also matter in garbage transportation. I think most of it is done by trucks, but could be done by rail too. This does not preclude Germany throwing some capacity to help out. I don't know how much that could be, perhaps 25% because I think more than that is unreasonable. If its 25%, then the timeline of completing the removal/processing quadruples. Also keep in mind that the business won't be sitting still during that time. Other than this, more risks are highlighted in the prospectus Jeremy posted on twitter. Some more work to do - I would like to investigate the locations of Germany's processing plants. I think only plants close to Poland's southern border would be able to take on some of the capacity. Wonder how many there are and their processing capacity. All the best P.S. My first edit deleted part of my post which I had to rewrite (in case you get a notification with the old text).