Company review TCS Group (TCS, TCSG)
Current portfolio volume ~17% (70 stocks). In general, I have personally known Tinkoff Bank for quite a long time, since August 2016, from those times when the only bank cards in use were Sberbank and VTB, and saying the name of the bank out loud made the interlocutor want to twirl his finger at his temple 😂.
Let's just say that in many ways this investment idea was born in everyday life - Tinkoff was convenient for me as an individual client, gave normal points for purchases, credited the balance to the account, was turned over on everything online, when other banks had to go to branches and sit in line, the only one of the banks once gave me a credit card without asking for a single document at all, except for a passport. For me, in terms of personal use, Tinkoff is now No. 1, and the queues that appear at its ATMs indicate that I am not the only one who thinks so 🙊
So, from philosophy, let's get down to business. The current share price is TCSG – 934 RUB/piece (traded on the MSC exchange in RUB), TCS – $11.77 (traded on the LSE in dollars). By the way, literally every day I see sufferers on the forums and in the Pulse of the Tinkoff. Investment application who discuss which stocks to buy - TCSG or TCS, thus: “well, TCS are traded in dollars, and the ruble usually falls, which means it’s more profitable to hold them than TCSG”😆
I’ll explain for the last time: guys, the stocks are the same, the bank is the same. And he earns in RUB. It’s like if you have a friend who works with you in the same position and receives the same salary, in RUB, and after the payday you leave the money in RUB, and he goes to the exchanger and buys dollars with it. The question is, which of you earns more? 😐 I think it is clear that there is no difference in stocks, only in currency. Previously, when only TCS was traded, there was no choice; you had to convert RUB into dollars and buy. Now there are TCSG, I think it’s more logical to take them to avoid conversion, since you most likely receive your salary and other income in RUB.
The company's capitalization at the time of writing is 177 billion RUB, earnings per share are 193.62 RUB P/E = 4.82!!!! PEG ~ 0.3. Over the course of a month, the stock plunged from 1685 RUB per share down by ~45% for reasons:
1⃣ Ahhh coronavirus pamagite
2⃣ The US tax authorities started asking Oleg questions
3⃣ Oleg said that he had leukemia
After this, the company published report for the 4th quarter and the entire year 2019.
To put it very briefly, there is growth in all indicators, net profit +30% year on year, forecast for 2020 – profit growth to at least 42 billion RUB (currently 36), i.e. by 17%. Some of the indicators, of course, fall with business growth, but we have:
🔥 Still high rates of profit growth, over the horizon of 3-5 years I expect +15% annually in a conservative option
🔥 Wild underestimation due to events that do not directly affect the business. With the virus, everything is clear, regarding leukemia, I think Oleg has a very good chance of recovery, but the tax claim is against an individual, Tinkov, and not the bank, and the bank itself has been managed by good management for a long time, so I don’t see any special risks.
At a price below 1200 RUB per share, I consider it extremely attractive to buy; I will keep the current share in the portfolio or increase it. In the application traditionally:
1⃣ Graph of stock price dynamics for 5 years
2⃣ Revenue and profit dynamics 2017-2019, then until 2023 – forecast values
3⃣ Earnings per share dynamics 2017-2019, then until 2023 – forecast values.
Expected share price at the end of 2022 (or earlier) = 2500 RUB (conservative option), 150% of the current price. Not investment advice. The forecast is also not a target price, a take profit; if good fundamental indicators are maintained, I will hold the bank’s stocks after reaching the target.
Ideas
March 19, 2020