Reasons to invest in Phoenix Beverages

Limited
Phoenix Beverages Limited (PBL) is the main brewery in Mauritius and is
engaged in the manufacture and sales of beverage products both locally
and internationally, namely Africa, Madagascar, India, Mayotte, Reunion
Island. In 2008, the company acquired the whole share capital of Phoenix
Camp Minerals Limited (PCM) which was the sole authorized bottler of
Coca-Cola Company Limited in Mauritius and is now the sole company
having this right. The Phoenix Beverages Limited produces a variety of
drinks and of several brands such as non-alcoholic drinks (Fanta,
Powerade, Malta Guiness, Crystal, etc) and beer such as Blue Marlin
(local), Guiness, Warsteiner, Kings and Smirnoff Ice. The company also
produces the Phoenix beer which is very famous among Mauritian and
which they consider as their national beer. Phoenix Beverages Limited
has 20% shares of the United Breweries Lanka Limited in Sri Lanka.
Every investors aim is to maximize returns on their initial amount of
capital they have invested. We assumed that Phoenix Beverages Limited
was our best choice among 9 companies namely Gamma Civic Limited, Go
Life International, Phoenix Beverages Limited, United Basalts Products
Limited, etc because of the following reasons:
The dividend per share increased from Rs 5.00 to Rs 6.70 from
the year 2007 to the year 2011.
The volume traded increased from 620 286 million in 2007 to 798
584 million in 2011. In 2008, the volume traded had more than
doubled compared to 2007 (1 384 784 million).
From 2007-2011, the market price of Phoenix Beverages Limited
was constantly increasing. In 2007, the market price was Rs 98 but
in 2011, it was nearly Rs 208 and it kept on increasing till April
2012, although it remained constant during long periods of time.
The lowest market price in 2007 was Rs 73 and in 2011, it was Rs
151.
The market capitalization of Phoenix Beverages Limited has
increased from Rs 1.61 billion in 2007 to Rs 3.42 billion in 2011.
Although it fell slightly in 2008,it kept on increasing after that.

The turnover of Phoenix Beverages Limited increased from Rs 2

709 million in 2007 to 3 747 million in 2011.
Net asset value per share increased from Rs 109.54 in 2007 to Rs
132.76 in 2011.
The investment in fixed aster increased from Rs 138 million in
2007 to Rs 183 million in 2011.
Phoenix Beverages Limited experienced a reduction in operating
losses due to change of management team at the beginning of the
year 2011, as said by its Chairman, Mr. T. Lagesse in the companys
annual report of year 2011.
The net interest-borrowing debt has decreased from Rs372.3
million at June 2010 to Rs 312.7 million at June 2011,i.e by 16 %.
The volume of the Sparkling Drink of Phoenix Beverages Limited
has slightly improved due to gains in the market share.
The table water business of the company continuously shows strong
growth, up to 12.6 % in terms of volume.
Strategic partners such as Coca-Cola and Diageo provide valuable
brands, technical inputs and best practices which assist in the
operations and development of Phoenix Beverages Limited.
An associated company of Phoenix Beverages Limited in
Madagascar, the Nouvelle Patisserie de Madagascar SA has been
demonstrating satisfactory sales.
Apart from the reasons mentioned above, many factors influenced our
decision to invest in Phoenix Beverages Limited and these were the
economic situation of the country, the stable market price, the positive
points outlined by experts with respect to the company and also the
position and situation of other potential companies on the market.

COMPARING PHOENIX BEVERAGES LIMITED

WITH POTENTIAL COMPANIES:
The
the
The
30th

following table shows the changes in the market price of

following companies during 3 different periods of time.
figures are compared till the date of investment,i.e till
March 2011.
GAMMA CIVIC PHOENIX
BEVERAGES
LIMITED
LIMITED

UNITED
BASALTS
PRODUCT
LIMITED

1 MONTH
Decrease
Decrease
Increase
by 6.18 % : Rs by 2.91 % : Rs by 2.80 % : Rs
356 Rs 334
206 Rs 200
107 Rs 110

6 MONTHS
Decrease by 10 Increase by 3.6 Decrease by 10.6
% : Rs 400 Rs %: Rs 195 Rs %: RS 123 Rs
360
202
110

12 MONTHS
Decrease by 10 No change
%: Rs 400 Rs
360

Decrease by 20.3
% Rs 138 Rs 110

In the short period of 1 month, the market price of United Basalt

Products Limited rose by 2.80% while those of Gamma Civic Limited and
Phoenix Beverages Limited were falling by 6.18% and 2.91% respectively.
In a 6 months period, it can be noted that market price of United Basalt
Products Limited and Gamma Civic Limited are falling by more or less the
same percentage, while that of Phoenix Beverages Limited was increasing
by 3.6 %.
During a 12 months lapse, it can be noted that the market price of United
Basalt Products Limited falls drastically while that of Phoenix Beverages
Limited and Gamma Civic Limited remain more or less stable.

It can be noted that United Basalt Products Limited did not have a
satisfactory performance on the market as its market price was very
unstable. Although the market value of Gamma Civic Limited was more or
less as satisfactory as that of Phoenix Beverages Limited, other points
had to be considered before making the final choice.
The reports of Gamma Civic Limited say that the outlook for the building
sector is quite pessimistic due to a slow down in that sector. Due to global
economic slowdown, there is more pressure on the contracting business of
Gamma Civic Limited to secure projects at very competitive prices. In
2011,the contracting company suffered major operational losses due to
the Belle Rivire IRS villas project and the Goodlands Bypass Road
project. The losses were estimated to be around Rs 86 millions. The
political climate in Madagascar also proves to be a major challenge for the
operations of Gamma Civic Limited as one of its subsidiary companies, the
Reel Mada SA is operates there in the lottery sector. The company was
launched in February 2011 and incurred a loss of Rs 186 millions.
Thus, our final choice was Phoenix Beverages Limited as there were many
positive signs about the company. This choice was quite right as it can be
noted from the following illustration that the price per share was Rs 199
on the 30th March 2012. It rose to Rs 202 in the beginning of April,
remained constant during a short period and then rose to Rs 203. On the
9th May 2012, the market price of Phoenix Beverages Limited climbed up
to Rs 208. It then remained constant and fell to Rs 204 when the end of
May was nearing. However, after few days the price rose to Rs 205 and
remained the same during the month of June until the closing date of the
competition.
Market price