CUERVO.MX - Becle

[Jurgis]

Tequila producer and distributor.

https://www.cuervo.com.mx/ir/

 

I'm starting a thread, since I talked with Spekulatius about this one. And he periodically mentions it in other places.

 

I took a cursory look so far at the company and financials.

 

Positives: pretty good sales growth, though mostly before IPO. Last couple of years flat. I think Spekulatius said that was due to agave shortages and/or price going up. Possible tailwinds with more worldwide tequila consumption.

 

Negatives: Even in the good years (2016-2017) FCF was ~1B-2.5Bpeso. Market cap is 121Bpeso (~6.xB US$). So valuation is really high even if I take peak FCF / current market cap.

 

Questionables: They bought some non-tequila assets. Not sure if this is good investing or diworsefication/empire building. There may or may not be reported breakdown of their non-tequila ops numbers.

 

I'm gonna pass on this again. Sorry, Spek.  8)

 

[Spekulatius]

Now Juris let the genie out of the bottle.

 

FWIW, there are 3 writeups of Becle in VIC. I think the one written on 4/12/2018 is probably the best one:

https://www.valueinvestorsclub.com/idea/Becle_S.A.B._de_C.V._/7840919531

 

The stock isn’t cheap, but the family who owns most of the shares are good operators/ brand builders.The acquisition of non Tequila assets was Bushmills (Irish  whiskey) which has done well since acquired and is a strong category.

 

It’s not cheap by any means, but I believe it has good growth prospects for a long time and lower valued than peers.