Value Investing

Vladimir Dimitrov, CFA

Equity Bottom-Up

<ul>
<li>Keurig Dr Pepper has undeniable competitive advantages in the face of its strong brand portfolio and distribution network.</li>
<li>Contrary to certain beliefs, the company is fairly valued on a short-term basis, but the business positioning is improving.</li>
<li>To get the full picture of KDP's valuation and business fundamentals, it's crucial to adjust for inconsistencies brought by the current accounting standards.</li>
</ul>


Keurig Dr Pepper has undeniable competitive advantages in the face of its strong brand portfolio and distribution network.
Contrary to certain beliefs, the company is fairly valued on a short-term basis, but the business positioning is improving.
To get the full picture of KDP's valuation and business fundamentals, it's crucial to adjust for inconsistencies brought by the current accounting standards.


Keurig Dr Pepper: Not What It Looks Like On The Surface

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

Keurig Dr Pepper  / Equity Capital Markets

<ul><li>Keurig Dr Pepper delivered yet another all-around beat backed by a strong in-market performance with a big boost from beverage concentrates and the Latin America beverage segment.</li><li>The company witnessed a strong growth in categories such as carbonated soft drinks, premium unflavored water, enhanced flavored water, apple juice, apple sauce, and coconut water.</li><li>Its growth numbers were in green across all key brands including Dr Pepper, Sunkist, A&W, 7UP, CORE Hydration, Evian, Bai, Motts apple juice and apple sauce, Polar, and Vita Coco.</li></ul>

Keurig Dr Pepper delivered yet another all-around beat backed by a strong in-market performance with a big boost from beverage concentrates and the Latin America beverage segment.The company witnessed a strong growth in categories such as carbonated soft drinks, premium unflavored water, enhanced flavored water, apple juice, apple sauce, and coconut water.Its growth numbers were in green across all key brands including Dr Pepper, Sunkist, A&W, 7UP, CORE Hydration, Evian, Bai, Motts apple juice and apple sauce, Polar, and Vita Coco.

Keurig Dr Pepper - Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<a href="https://www.smartkarma.com/entities/28065" target="_blank" data-smartkarma-citation="entities:28065:1">Beyond Meat Inc (BYND US)</a> is a plant-based meat alternatives producer based out of the US. The company sells its products through retail stores and restaurants. The retail segment accounts for around 70% of sales while the restaurant segment accounts for the remaining 30%. Their products include both frozen (ready-to-heat) and fresh products marketed as either Beyond Burger (which accounts for 71% of revenue), Beyond Sausage, Beyond Beef Crumbles or Beyond Chicken Strips.  As of FY2018, the fresh food platform accounts for about 70% of sales in the retail segment and 85% of sales in the restaurant and foodservice segment.
Beyond Meat mainly operates in the US, however, they also distribute their products internationally using distributors in Australia, Canada, Chile, China, Germany, Hong Kong, Ireland, Israel, New Zealand, South Korea, Taiwan, and the United Kingdom.
The Company had its IPO recently at $25.00 per share. On the first trading day, Beyond Meat share price closed at $65.75 and the price has rallied up to $89.35 per share by 17th May 2019 to return more than 250% on the IPO price.

Beyond Meat Inc (BYND US) is a plant-based meat alternatives producer based out of the US. The company sells its products through retail stores and restaurants. The retail segment accounts for around 70% of sales while the restaurant segment accounts for the remaining 30%. Their products include both frozen (ready-to-heat) and fresh products marketed as either Beyond Burger (which accounts for 71% of revenue), Beyond Sausage, Beyond Beef Crumbles or Beyond Chicken Strips.  As of FY2018, the fresh food platform accounts for about 70% of sales in the retail segment and 85% of sales in the restaurant and foodservice segment.
Beyond Meat mainly operates in the US, however, they also distribute their products internationally using distributors in Australia, Canada, Chile, China, Germany, Hong Kong, Ireland, Israel, New Zealand, South Korea, Taiwan, and the United Kingdom.
The Company had its IPO recently at $25.00 per share. On the first trading day, Beyond Meat share price closed at $65.75 and the price has rallied up to $89.35 per share by 17th May 2019 to return more than 250% on the IPO price.

In our previous insight on Luckin Coffee IPO, <a href="https://www.smartkarma.com/insights/spilling-the-coffee-rapid-expansion-without-much-due-diligence-could-end-in-disaster" target="_blank">Spilling the Coffee: Rapid Expansion Without Much Due Diligence Could End in Disaster</a>, our analysis was more based on high level factors such as industry trends, success or failure of Luckin Coffee’s business model and the competition. With this insight, we focus more on the ground level factors of Luckin Coffee and try to forecast its revenue and operating profit under different scenarios. We will also look at Luckin’s capex requirement for the expansion plan and available financial resources to meet capex and operating cash requirements. Furthermore, in this insight, we will also look at Luckin’s same store level performance and its future growth prospects post this rapid expansion phase.<ul>
<li>Rapid Revenue Growth through Increased Volume and Pricing</li>
<li>Cost Reductions Not Enough to Generate Positive Margins Over the Next 3 Years</li>
<li>Growth to Halt Post Rapid Store Openings Phase</li>
<li>Luckin May Get Enough Money to Reach the Target Store Openings, But They May Not Have Enough to Keep Them Running for Long</li>
<li>Lock-Up Expires in 180 Days from the Release of the Prospectus: Initial Investors May Decide to Cash In</li>
<li>Valuation</li>
</ul>

In our previous insight on Luckin Coffee IPO, Spilling the Coffee: Rapid Expansion Without Much Due Diligence Could End in Disaster, our analysis was more based on high level factors such as industry trends, success or failure of Luckin Coffee’s business model and the competition. With this insight, we focus more on the ground level factors of Luckin Coffee and try to forecast its revenue and operating profit under different scenarios. We will also look at Luckin’s capex requirement for the expansion plan and available financial resources to meet capex and operating cash requirements. Furthermore, in this insight, we will also look at Luckin’s same store level performance and its future growth prospects post this rapid expansion phase.
Rapid Revenue Growth through Increased Volume and Pricing
Cost Reductions Not Enough to Generate Positive Margins Over the Next 3 Years
Growth to Halt Post Rapid Store Openings Phase
Luckin May Get Enough Money to Reach the Target Store Openings, But They May Not Have Enough to Keep Them Running for Long
Lock-Up Expires in 180 Days from the Release of the Prospectus: Initial Investors May Decide to Cash In
Valuation


Luckin Coffee: Top Line Growth May Not Be Enough to Generate Positive Operating Margins

United States

Keurig Dr Pepper Inc. manufactures and distributes non-alcoholic beverages. The Company offers soft drinks, juices, teas, mixers, water, and other beverages. Keurig Dr Pepper serves customers in the United States, Canada, and Mexico.

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Keurig Dr Pepper (KDP US)

Keurig Dr Pepper: Not What It Looks Like On The Surface

Keurig Dr Pepper has undeniable competitive advantages in the face of its strong brand portfolio and distribution network. Contrary to certain...

Vladimir Dimitrov, CFA

Keurig Dr Pepper - Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation

Keurig Dr Pepper delivered yet another all-around beat backed by a strong in-market performance with a big boost from beverage concentrates and...

Baptista Research

Beyond Meat: Still Some Meat Left

Beyond Meat Inc (BYND US) is a plant-based meat alternatives producer based out of the US. The company sells its products through retail stores and...

Oshadhi Kumarasiri

Luckin Coffee: Top Line Growth May Not Be Enough to Generate Positive Operating Margins

In our previous insight on Luckin Coffee IPO, Spilling the Coffee: Rapid Expansion Without Much Due Diligence Could End in Disaster, our analysis...

Oshadhi Kumarasiri

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