monster pitch
TRANSCRIPT
HEAD ANALYSTThabani
ANALYSTSVanessa
MackenzieJamesPlinioRahimRick
AdamThomas
Consumer staples
Sponsored By:
Target Price:$$ 129
CEO:Rodney Cyril Sacks
52wk low/high:63.00 - 122.27
Market Price:$$ 118
CFO:Hilton H. Schlosberg
Free Float:138.22 M
Upside: 9% Listed on:NASDAQ
Market Cap. 19.65bn USD
Company
Sponsored By:
Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. The Company’s subsidiaries market and distribute energy drinks and alternative beverages Holding company
Java Monster
Blue-Sky
X-Presso
Key people / Management
Sponsored By:
Rodney Cyril Sacks, 65Chairman & Chief Executive Officer, Monster Beverage Corp.• Chairman at Hansen Beverage Co., Chairman at
Monster Energy Co.• Chairman & Chief Executive Officer at Monster
Beverage Corp.• Independent Non-Executive Director at ComAir Ltd.
He is on the Board of Directors at ComAir Ltd.Hilton H. Schlosberg, 62 Vice chairman, President, COO, CFO & Secretary, Monster Beverage Corp.• Vice Chairman & Secretary at Hansen Beverage Co.• Vice Chairman & Secretary at Monster Energy Co.• Vice Chairman, President, COO, CFO & Secretary at
Monster Beverage CorpMark J. Hall, 58Director, Monster Beverage Corp.• Chief Brand Officer at Monster Energy Co. • Was employed by the Arizona Beverage Co. as Vice
President of SalesHe is on the Board of Directors at Monster Beverage Corp..
Business Model• Sells over 50 varieties in the US• In the UK products include: Monster Green, Monster
Export, Monster Ripper• Partnership with Coca Cola Enterprise• Monster is on average 25% cheaper than Red Bull for
operators• Use of social media• Ethos is to build the brand
Sponsored By:
Company Strategy Product Awareness - Through the use of sporting
events, sampling and various sponsorship deals
Brand Differentiation - It’s eye-catching logo and slogan “unleash the beast” helps it to stand out from competitors
Healthier Direction - Focused on developing healthier products with fewer calories in order to attract customers
Efficient Capital Structure - Monster’s strategy of outsourcing helps to lower labour, operating and overhead costs Sponsored By:
Company Strengths
• US drinks giant Coca-Cola bought a 16.7% stake in Monster Beverage in August and Coca-Cola has confirmed that it is to close its acquisition of Monster Drinks in March 2015
• In 2013/14 Monster Beverage Corp. held 39% of the market share
• The company has a pipeline of new products, such as the new Ultra Sunrise, Monster Unleaded and the new “core Monster”. Sponsored By:
Industry Analysis
• Main competitor is Red Bull• The market for energy drinks is estimated to grow at a
compound annual growth rate of over 10% by 2016• The soft drink industry is in the midst of a secular
decline in popularity, with sales in key markets, such as North America, suffering a prolonged decline. United States fizzy drinks sales volumes have followed a downward trend over the last ten years.
Sponsored By:
Fundament Analysis (Income Statement)
Sponsored By:
2012 2013 2014E 2015E1750.001950.002150.002350.002550.002750.002950.00
YoY Sales($M)
2015E 2014E 2013 2012
Gross Income 1596 1319 1173 1066
Sponsored By:
2012 2013 2014E 2015E500.00550.00600.00650.00700.00750.00800.00850.00900.00950.00
YoY Operating Income (EBIT) ($M)
2012 2013 2014E 2015E
Net Income 339 340 460 595
Fundament Analysis (Income Statement)
Profitability Ratios & Valuation
2012 2013 2014E 2015E20.0025.0030.0035.0040.0045.0050.0055.00
ROE
ROE
%
2012 2013 2014E 2015EEBITDA Margin
% 27,7 26,9 30,5 33,2
P/E 28,4 34,8 40,8 36,4P/S 4,4 5,1 7,1 6,8
Sponsored By:
Risk Analysis• Beta of 0.41• Legislation , Regulation and Health Concerns• Due to Monster’s increasingly global presence, they
are becoming more exposed to foreign currency exchange risks
• The principal market risks to which they are exposed are fluctuations in commodity prices affecting the costs of juice concentrates and other raw materials.
Sponsored By:
New & Events(Stock Specific)• Feb – Energy Drink Sales will Skyrocket to $21 Billion by 2017• April – Monster Beverage Corp lawsuit by the Beastie Boys
Quarterly Earnings 2015- Q1 – End of February / Early March • EPS Est $0.65 vs $0.44 Same Quarter Last Year- Q2 – July• EPS Est $0.92 vs $0.81 Same Quarter Last Year
(Macro)• February 25th – US Consumer Confidence• March 18th – US Fed Interest Rate Decision
Sponsored By:
The Coke Effect• Coca-Cola six months ago took a 16.7% stake in Monster in exchange
for $2.15 billion• While Monster has taken advantage of Coca-Cola's unparalleled
distribution network• Monster has a lot of room to grow in international markets where
Coca-Cola partnership could keep paying dividends well into the future• Monster stock is priced for perfection, with shares priced at 37 times
this year's earnings estimate on expected growth of just 21%• The deal that the companies agreed to has a provision which would
allow Coke to purchase up to 25% of the company
Sponsored By:
Monster
• Monster’s presence in the global markets grew beyond 20%.• Monster is looking to launch new energy drinks and other new products
to capture emerging markets like China and Japan• The company does indeed boast a P/E ratio of 37.5 times the expected
earnings for next year. This compares to an expected growth rate of 16.1 percent per year for the next five years
• Monster maintains zero long term debt on its books. It retains just a hair under a billion dollars ($996.36 million) in cash, and a healthy 18% profit margin
• Monster is a fast grower, with a popular product, and plenty of money to pile into more growth and expansion
Sponsored By:
Exit Strategy
Sponsored By:
BUY TAKE PROFIT STOP LOSS
CURRENT PRICE 127.93 109.53
Recommendation: Buy 120 Shares (Full Investment)
Q&A