Unilever Live Discussion

Hydrogen_Economy 07 Jan 2019

World Trends and Growth Areas Hi Rob I agree India makes sense as a long term investment given the growth potential. Actually despite some currency issues concerns earlier this year India has outperformed most markets and some pundits reckon it is not cheap, but for a long term investment not an issue. Plenty of risks as with all EMs but also also some solid companies and capability in tech/software etc. I think it is hard to get much Indian market exposure via UK Cos. Funds, ETFs or ITs give more direct access. I hold ULVR but more because of broader EM exposure than India. Haven’t looked at STAN, I’m a bit wary of Banks especially in current environment. I rate First State Indian Subcontinent III fund, some of the sub-funds have fairly high fees so care needed. Ishares do a couple of ETFs matching Nifty 50 or MSCI index but I feel it’s worth going with an active manager with a solid track record in a market like India. Aberdeen and others offer Indian ITs for those who don’t like funds. Actually over 3-5 years First State performance compares well with Fundsmith, a pretty good benchmark (one of my a core holdings). Good luck H2

robertjohnlee 07 Jan 2019

World Trends and Growth Areas Hi everyone, I’m new to this forum and relatively new to investing so apologies if any of my posts come off naive or seem overly simplistic. I’ve recently become fascinated in Value Investing after reading some works by Benjamin Graham and Warren Buffett, I’m only investing for the long term and seeking out areas of growth within the world that I think will provide fantastic returns well into the foreseeable future and potentially for my children (I’m 25 at the moment with 2 kids). The most obvious trends I’ve seen within the world are population growth (Water/Property/Consumables), Asian development (more specifically digitization of India), the aging population of the UK (Pharma) and researching into BioTech (still haven’t done much research on this yet though). I wanted to discuss India in this post though as I only know of a few companies (listed on the London Stock Exchange) that are actively invested and present in India, if you know of any more I’d more than welcome suggestions. Standard Chartered is my first pick, India is going digital and LSE:STAN is increasing it’s lending in India, growing the amount of branches they have and making digital a priority in 2019. I believe as the 1.3 billion strong population, with more than 2/3 of the economy within the 15-64 age range, begin the rise out of poverty in the next 11 years (as projected by the World Bank for India to end extreme poverty by 2030) we will see a huge benefit for banks/companies like Standard Chartered and Hindustan Lever/Unilever. “The international body had projected 7.4% and 7.8% growth for 2018 and 2019, respectively” “The goods and services tax created a unified national market for the first time by lowering internal barriers to trade—effectively establishing a free trade agreement for a market of over 1.3 billion people.” “India has a young and growing youth population, and about two-thirds of the total population is of working age (between 15 and 64).” “About 44 Indians come out of extreme poverty every minute, one of the fastest rates of poverty reduction in the world.” Would love to hear some more thoughts about this topic and thoughts on any other areas of growth you can see on the horizon. Any critical feedback would also be welcome as I only really have one point of view and that would be my own. Thanks for reading, Rob

NewBill1703 01 Jan 2019

3600? Gamesinvestor1: Yes - the currency reversion is more than likely, and the impact of pricing pressure must have an effect, especially with the weakening of emerging market currencies and the debt strain the strengthened $ has on foreign loans. Indeed - and these are only some of many potential negatives nipping at the ULVR heels. Not all of them will necessarily come to pass, and there could be positive surprises along the way… but the point is this. When both valuations and expectations are high - as they still are for ULVR, and for DGE and RB, for example, but not so many others - then the risks and uncertainties (which are always many, for any equity investment) tend to agglomerate to the downside. Conversely, there are stocks - a great many currently, whole chunks of the market really, in the UK at least - where the converse persists. You have P/Es of 10x, or even less (7-8x is currently not uncommon), perhaps dividend yields of 7-8%, FCF yields of 10% and sometimes much more… sure, most of these stocks have their issues to contend with, whether cyclical, structural or merely external, but the balance of risk is very much to the upside. Pretty substantially, in many cases, if things turn out at least somewhat better than the doomsters fear. Of course, ULVR may see £42 or £43 again before it sees £32-33… But as a long term buy-and-hold disciple, I’d much rather stay sitting on stocks with limited downside (on any reasonable scenario) but perhaps 15, 20, 25% upside - maybe much more - as conditions change, rather than the reverse. I know that however much I may back myself to get out (or in) ahead of the market as and when sentiment turns, I probably won’t pull this off… most of us won’t.

Gamesinvestor1 01 Jan 2019

3600? Yes - the currency reversion is more than likely, and the impact of pricing pressure must have an effect, especially with the weakening of emerging market currencies and the debt strain the strengthened $ has on foreign loans.

NewBill1703 01 Jan 2019

3600? Gamesinvestor1: Any takers on ULVR drifting back down to 3600 level, now that the move has failed, the CEO has announced retirement and the bid looks to be somewhat off the table for a year now? Yes, of course Games. At a time when huge sections of the market - particularly in the UK, but also selectively elsewhere - are trading at historic low valuations, and with expectations similarly low expectations, you have situations (few enough, but mostly very familiar) like ULVR where the polar opposite is true. Easy enough to understand why - investors hiding in global defensive “safe havens” in a febrile climate of fear and risk aversion. But nonetheless, history tells us that, while you may do very well in these stocks at such times, for the true long term investors you should be looking to sell these rather than buy at times like these. At around 20.5x prospective earnings, the valuation has been higher but is still a good 10% above the long-term mean - a mean to which it has always reverted in the past. On top of that, for UK holders - the very holders so keen to retain it as a full UK stock - there is the additional downside from any kind of reasonable reversion of the GBP/EUR rate, perhaps 10% or 15%, perhaps even more. So it’s not hard to see your £36 - without any moderation in current earnings expectations, which themselves may be challenged by slowing global growth. At the very least - even at £32-33 the stock would not screen cheap at all in either relative or absolute terms, given what you can buy elsewhere (almost anywhere elsewhere). I don’t see it turning around overnight, of course… but then, true investors think in quarters and years, and 2019 alone will be another long year in the markets, Games!

Gamesinvestor1 31 Dec 2018

3600? Any takers on ULVR drifting back down to 3600 level, now that the move has failed, the CEO has announced retirement and the bid looks to be somewhat off the table for a year now? On a P/E of over 20, isn’t it a tad stretched at 4100? Games

Hydrogen_Economy 28 Nov 2018

FT report ULVR in exclusive talks for Indian Nutrition business inc Horicks Seems ULVR have outflanked Nestle in the Horlicks bid, Nestle team probably caught napping after trying the product. ULVR with a strong Indian business always seemed a good fit for this. I hold GSK and ULVR, more GSK, pretty comfortable if this is the outcome. Hopefully ULVR will be able to demonstrate some good business driven decision making and execution to put the HQ Brexit Bre-entry debacle behind it. [link]

Uncle_Doug 31 Oct 2018

Going Dutch Shares in French cosmetics giant L’Oreal are performing particularly well, soaring 6.8% on strong sales (Q3) and SP up by same amount. Good for ULVR going forward.

J_Westlock 15 Oct 2018

Going Dutch Gamesinvestor1: Nor would it be - look around the world, there are trading borders all across it and they manage it. The thing has been raised as a blocker by the EU who will do anything to rubbish the option of leaving for fear of the long term domino effect and the UK becoming successful as a trading nation. Well Games… there aren’t that many borders with such a history as between Ireland and NI. It actually was mentioned during the 2016 campaign and it was always dismissed in a similar easy fashion like you just did. Solving it is going to bitterly upset one side or another and the only thing all sides appear agreed on is that there won’t be a return to a hard border with the spectre of violence that may bring back. The EU is quite rightly representing Ireland as an EU state and also it’s Golden Egg, the Single Market. If ever there were groups of people trying to fit square pegs in round holes… this is it.

Gamesinvestor1 15 Oct 2018

Going Dutch Doug, Not strong at all, everything I have typed is fact - let me know if anything is not. On your points ““The N Ireland situation was hardly discussed “” Nor would it be - look around the world, there are trading borders all across it and they manage it. The thing has been raised as a blocker by the EU who will do anything to rubbish the option of leaving for fear of the long term domino effect and the Uk becoming successful as a trading nation. “” we were told there would be loadsa money for the NHS”” - There is but remember we haven’t left yet, so the annual spend to the EU is ongoing until we get off our perch and leave. £39Bn is already being promised for what? “and how easy it would be to get an EU trade deal” the only reason it’s difficult is because the remain contingent in the cabinet have taken over the process and seem to think they can negotiate. You can’t negotiate with the EU, they don’t want to. The only thing that gets them to respond is if you have something to negotiate with (remember you aren’t negotiating until you have something to negotiate with - basic sales training if you’ve been put through one in your company(s).). Teresa May’s idea of negotiating is to agree to everything that’s offered by the EU and get nothing in return - she’s a liability to the UK, surely you can see that Doug. A smart individul would have taken control of the situation and Not allowed a framework document to be controlled by the EU Write to the EU and let them know we are leaving and we well control all aspects of a soveriegn nation (law, borders, trade, human rights, fisheries, farming). Any trade disvcussions are not contingent on interfering with anything in 2. If you want meetings they would not be endless delays and long summit’s you state in writing what you want and then you decide if there is a basis for discussion or not - and the responses are not months apart. The leave date should have been shortened and no breaches allowed of this time limit. Don’t play to the fiddlers tune. The reasons there is difficulty is the wrong people are damaging Brexit, purposefully. All is not different, it’s just that we have wasted 2 years plus of the UK’s opportunity to drive world trade as a srong nation. Farage and Bojo have nothing to answer for to anybody - Farage lead the cause to leave the EU and was passionate about it. His party was responsible for ensuring Cameron offered the option to call a vote on the EU and on a democratic basis. Why should that not be the case? Having another vote is the same tired old tactic the EU use. They either replace the PM with an EU official or force another vote until they get the answer you want. That’s not democracy my friend, it’s coercian and the fringe countries of the USSR suffered decades to escape from it. I don’t think people realise the danger of the EU becoming a completely autonomous autocratic state - that’s the goal. Do you want the Euro? Do yu want to be part of an EU Superstate? Look at the youth unemployment in Greece, Italy, Portugal, Spain. Even the founding Father of the EU stated that the single currency could not survive long term without full fiscal integration as well as a political union. I’m sorry Doug, the Germans will never agree to that and it’s a German dominated EU project – so in essence the Euro was dead from the get go. Do you honestly regret the UK not signing up to the Euro? Two Chancellors, and a Governor of the Bank of England all decry this broken project and they were party to it’s workings during some of the most testing economic periods the UK has ever lived through - Lawson, Lamont and King if you are wondering. No - nothing will convince me that the UK can not do what it needs to do on a world scale equally and more effectively than supporting the massive cost and loss of control to the unaccountable EU. Games - best get back to Unilever I suppose because nothing is going to change it here.

Uncle_Doug 15 Oct 2018

Going Dutch Gamesinvestor1: Tory party has already damaged itself beyond repair with the actions to subvert democracy Games, Bit strong. What actions are these? As I see it a lot more information has come out since the referendum that we weren’t told about. The N Ireland situation was hardly discussed and we were told there would be loadsa money for the NHS and how easy it would be to get an EU trade deal as they’d be begging for us to do a deal. Ha ha. All seems a bit different now and we’ve spent 2+ years of government time and God knows how much tax money on what exactly? Farage, BoJo, etc. have a lot to answer for IMHO. Best to go back to the people to see if they really want to vote for whatever deal is forthcoming.

Gamesinvestor1 15 Oct 2018

Going Dutch J - I don’t think they ever will. Hostile takeovers are not on the table for WB, so unless there is a change in management at ULVR or the price was so ridiculously high, they’d be embarrassed not to offer it to the shareholders. Games

J_Westlock 15 Oct 2018

Going Dutch When’s the best time for Kraft to come back?

frog_in_a_tree 15 Oct 2018

Going Dutch Hello Games…I can see that you are a supporter of the minority view in the party represented by BJ and JRM. No point in further discussion. John Major was right. Frog

Gamesinvestor1 15 Oct 2018

Going Dutch frog_in_a_tree: given that current opinion polling shows a clear lead of around 6% for Remain ““given that current opinion polling shows a clear lead of around 6% for Remain”” Funny - they said this before the 2016 referendum and despite the scare tactics remain lost. But some can’t accept that and want to change the situation even though it will put the UK in a massively compromised position. Better to leave and get on with it. The EU will come to the negotiating table in a better frame of mind once we have left and they aren’t receiving large chunks of the UK’s tax money. The Tory party has already damaged itself beyond repair with the actions to subvert democracy and Teresa May is at the helm orchestrating it, she’s damaged goods. There is no argument to say that people didn’t know what they were voting for it was crystal clear and was written on the £9M worth of leaflets stuffed through every door in the country. All the leading politicians are on record, in writing and on prime time television having stated very very clearly that leaving the EU meant leaving the sing;e market and the customs union and taking full control of laws and borders – anyone who disputes that is bending the truth to the extreme. There is also no argument to say the Brexiteers don’t have a plan - the remain contingent in parliament have sidelined them, you know this is the case. Any other argument beggars belief. Games