Company Reports

DBS Group is the largest bank in Singapore and operates in Hong Kong, Greater China, Southeast Asia, and India. Besides being Singapore's largest bank, it has also delivered the highest average return on equity in recent years and we view the group as a top-class operator among Asian banks.

We think Monolithic Power Systems is a disruptor in the power management chip market, using its proprietary process technology to differentiate from larger competitors. In our view, electrical engineers tend to buy power management semiconductors from reputable, proven vendors that use lagging-edge manufacturing. As a relative newcomer, MPS differentiates via its unique fabless model, with which it develops advanced manufacturing processes that integrate many functions on a single chip to offer a smaller form factor and greater energy efficiency to its customers. While MPS remains a small player in power management, we think revenue growth far above its largest competitors shows its differentiated approach to power management is gaining traction in the market.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Fastly has a new take on the now relatively antiquated model for running content delivery networks, or CDNs. We believe the more modern approach gives Fastly an opportunity to take share from legacy CDN providers with a lower-cost model, by way of a smaller geographic footprint.

Samsung Electro-Mechanics is the global second supplier of multilayer ceramic capacitors, which account for about 40% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

We expect Bapcor's strong earnings growth to continue as the competitively advantaged trade business capitalizes on favorable industry dynamics. We forecast Bapcor continuing to capture market share in the fragmented trade business as it rolls out stores. We also project same-store sales growth of around 2%-3% per year and growing private-label penetration to more than offset near-term headwinds, leading to a five-year EPS CAGR of 9%.

Sonoco Products makes a wide range of consumer and industrial packaging, from Pringles cans to foam automotive bumpers to toilet paper cores. The firm operates over 300 manufacturing facilities and serves customers across 85 countries, with North America accounting for roughly 75% of sales. Its two primary segments, consumer packaging and industrial paper packaging, supply customers with both flexible and rigid packaging products that serve nearly any packaging need. In recent years, Sonoco has undergone a portfolio transformation; it now focuses on a few core businesses and has divested from nonprioritized products and markets like high-density film, European contract packaging, and more.

DoorDash holds the number one position as an online food order aggregator in the US, ahead of Uber Technologies’ Uber Eats and Grubhub. The firm is at the early stages in trying to attract a larger piece of what we estimate could be $1 trillion worth of goods and services by 2025 to its platform. DoorDash benefits from the network effects between merchants, deliverers (or “dashers”), and consumers, plus intangible assets, in the form of data, which we believe together warrant our narrow moat rating.

Silgan Holdings is the largest producer of steel and aluminum food cans in North America. The company also operates a large packaging business where it sells dispensing, closure, and container products for a wide array of end markets. Silgan, which operates over 100 manufacturing facilities, serves customers across the world, however, North America accounts for over 75% of sales. Silgan’s two primary segments, dispensing and specialty closures and metal containers, supply customers with rigid packaging products that serve a variety of food, beverage, beauty, garden, and other consumer end markets. In recent years, Silgan has focused on expanding its dispensing and closures business as demand for food cans in North America continues to decline.

ESAB is a leading manufacturer of equipment and consumables used in welding, cutting, and joining applications. The company is one of the top three players in the welding solutions space, alongside Lincoln Electric and ITW’s Miller brand.

We like MPLX's portfolio of refining and Appalachia-based gathering and processing assets, given the propensity for fee-for-capacity and minimum volume commitment contracts, which present a highly secure stream of income over the long run. With the highly secure cash flows, management has taken a smart approach to capital allocation. It initially prioritized unit buybacks, as repurchases between 2020 and 2022 totaled over $1 billion, but shifted to boosting the distribution in 2023. 2024 seems so far like a mix, with a healthy distribution increase but also buybacks.

Dayforce offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Dayforce derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Brunswick is a long-established manufacturer of pleasure boats and engines, operating under market-leading brands like Sea Ray and Mercury Marine. We believe a portfolio of innovative products has allowed Brunswick to capture consistent pricing power, supporting its brand intangible asset, which underpins our narrow moat rating. Bolstering its market leadership is an ability to meet evolving customer preferences through its autonomy, connectivity, electrification, and shared access, or ACES, strategies, which strive to elevate the user experience, cater to the impending migration to electric products, and facilitate higher awareness through Freedom Boat Club.

Starbucks is the largest specialty coffee chain in the world, generating $36 billion in sales during fiscal 2023. The firm’s attention to premium-quality coffee distinguishes it from chained competitors, alleviating pressure from quick-service peers and at-home consumption while underpinning substantially higher pricing for what has historically been a commoditized product. This positioning looks increasingly important to us moving forward, as vending, single-serve coffee machines, and quick-service restaurants continue to improve at the lower end of the market, and as China approaches a similarly tiered competitive equilibrium.

Cencora is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $200 billion in annual US healthcare distribution sales, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the US market.

Following impressive growth over the past decade, Old Dominion Freight Line is the second-largest US less-than-truckload carrier by revenue (after FedEx Freight) and the clear industry leader in terms of execution, freight selection, and service quality, which is no small factor for shippers. Even during the Great Recession, the company kept its head above water via impressive pricing discipline. While other carriers slashed rates dramatically, Old Dominion held firm, keeping core revenue per hundredweight flat.

Tractor Supply is the largest consumer farm specialty retailer in the United States, surpassing $14.5 billion in sales in fiscal 2023. The firm has differentiated itself through its products and customer demographics, which provide underlying support to its brand intangible assets and wide economic moat. At the end of 2023, the store base had grown about 24% over the prior five-year period, to more than 2,400 locations, including 81 acquired locations from Orscheln and Petsense, driving sales and EPS compound annual growth rates over the past three years of 11% and 14%, respectively. We forecast that the firm will grow to over 3,200 stores by 2033 as it populates big-box centers in the western half of the US, with Petsense accounting for about 300 units.

China YuHua Education used to be known for its complete coverage of kindergarten to university education. Following the deconsolidation of K-9 assets in 2021, YuHua moved closer to peers that only operate schools at higher education and secondary education level. However, YuHua’s secondary schools are academically focused and face higher regulatory risk compared with secondary vocational schools.

O-I Glass is one of the world's largest glass container manufacturers, with furnaces in North America, South America, and Europe. It turns molten glass into containers for beer, wine, spirits, and food, using standard and custom molds for a wide variety of customers. O-I operates roughly 70 glass plants and serves customers across the world, with the US its largest region at about 30% of sales. In the past few years, O-I has gone through a portfolio-optimization plan to increase its focus on its glass container business and prioritized regions. As part of this plan, O-I divested its tabletop glass business as well as its Australia and New Zealand operations and is using the proceeds to fund capacity expansion and modernization projects.

Scotts Miracle-Gro is the largest and most recognizable name in the US consumer lawn and gardening market. The firm sells a wide array of products used for lawncare and gardening.