As a long-term investor, I subscribe to Warren Buffett’s philosophy of buying in the hope of never having to sell. However, in this age of rapidly evolving consumer behaviour and disruptive technology, it can be difficult to find companies that can last a lifetime. This being said, there are still companies out there that I believe have the potential to provide market-beating returns over a long time-frame.
Here are two such Malaysia-listed stocks.
A beer brewing giant
Although some investors might be cautious toward Carlsberg Brewery Malaysia Bhd (KLSE: 2836.KL) after its share price hit an all-time high earlier this year, the beer brewing giant’s track record of growth could still make it an attractive long-term investment.
The subsidiary of Carlsberg Group started brewing beer in Malaysia in 1969 and has grown by leaps and bounds since. Besides its namesake beer brand, Carlsberg, the Malaysia-brewer also has a range of other premium beer, craft beer, cider and stout brands from around the world. Carlsberg Brewery Malaysia currently counts Asahi, Somersby, Connors, Kronenbourg 1664 Blanc, and more, as part of its portfolio of brands.
The wide variety of brands gives Carlsberg Brewery Malaysia the perfect platform to capitalise on the growing beer-drinking culture in Malaysia and Singapore. The company’s track record speaks for itself.
Source: Carlsberg Brewery Malaysia 2018 annual report
Over the past decade from 2009 to 2018, Carlsberg Brewery Malaysia’s revenue has almost doubled, while profit has quadrupled. The consistent growth in both its top and bottom line could yet continue with beer consumption in Malaysia expected to grow over the next decade.
In 2018 alone, there was sales volume growth in all the company’s major brands. Carlsberg, Kronenbourg Blanc, Somersby, and Connors recorded sales volume growth of 12%, 40%, 24%, and 42%, respectively.
Although 2019 could see some volatility in the brewer’s business due to higher raw material and packaging prices, the long-term outlook for Carlsberg Brewery Malaysia remains healthy in my view.
Carlsberg Brewery Malaysia’s share price of RM 25.30 at the time of writing gives it a price-to-earnings multiple of 28 and a dividend yield of 3.9%. Although the P/E ratio for Carlsberg Brewery Malaysia may seem a tad expensive, the company’s runway for growth, long-term track record, and consistent dividend payouts should make it a good stock to own for the long run.
The sky’s the limit
Privatised in 1992 and listed in 1999, Malaysia Airports Holdings Berhad (KLSE: 5014.KL), or MAHB for short, provides a unique opportunity to cash in on the growing air travel market in the region. The company manages 39 airports across Malaysia and one international airport in Turkey.
From 2004 to 2018, MAHB’s revenue more than quadrupled from RM 1.0 billion to RM 4.8 billion. Earnings per share followed suit, rising from 11.4 sen to 40.3 sen over the same period. MAHB’s share price has risen in tandem with the growth of its business, providing early investors with great returns of 628% (including gains from dividends) from the start of 2004 to today. The share price surge, however, does not mean you have missed the boat entirely.
In 2018, total passenger traffic at MAHB-operated airports rose 3.9%. With international air traffic expected to rise by around 6% in 2019, MAHB, with its network of airports, should continue to grow this year. Analysts are expecting MAHB’s Malaysia passenger volume to surpass the 100 million mark this year.
In addition, the long-term growth trend of the air travel market in Malaysia is expected to be supported by strong economic growth in the country and its neighbours in the region.
At the time of writing, MAHB’s share price of RM 7.76 gives the company a reasonable price-to-earnings ratio of 19.2 and a dividend yield of 1.8%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation for Carlsberg Brewery Malaysia. Motley Fool Singapore contributor Jeremy Chia doesn’t own shares in any companies mentioned.
Motley Fool Singapore 2019