Today’s research analysts are following tomorrow’s emerging market companies superstars. Look for three important megatrends at work in the Asian and Indian markets to identify companies with high-growth potential over the next five to 10 years.
If you’re considering an initial public offering of your emerging markets company, read as much as you can about economic megatrends in place. For instance, if you’re a cement producer in India, the decision to sell shares to the public might be particularly timely. Emerging markets countries are focusing on infrastructure development, and power generation or steel and cement producers are expected to deliver against rising earnings expectations. Electronics and software companies in the emerging markets also have great long-term earnings potential. That’s because emerging market companies’ valuations are attractive in comparison to comparable industry names in the developed markets.
Emerging markets investing isn’t without risk, so it’s essential to communicate the business’s IPO or secondary value proposition. Tomorrow’s emerging market rising stars must face hurdles like rising interest rates and potential new trade barriers in the United States. Fundamental divergence makes for enticing pickings now. Investors must buy separate signals from market chatter and noise. If emerging market companies on radar can rise above macroeconomic conditions, consider the following names now.
What Are Emerging Market Companies?
The publicly-traded emerging markets company is a relatively young business that operates in a sector with good future growth prospects. Consequently, investing in early stage emerging market companies can offer large returns over the long-term. However, identifying very early stage businesses can be risky. The anticipated growth of the company might not happen because industry competitors, government intervention, or political instability derail it.
Present your company’s potential from the investor’s perspective. He or she will look for the following basic elements in an emerging market stock:
- Look for a higher percentage of management owners. When management maintains a vested interest in the company, it’s more likely to succeed in the long-term.
- Consider the stage of the industry in which the company operates. Purchasing an already mature name in a strong growth industry may be less risky than buying an early stage business in an industry that’s turning the corner.
- Ask “Where is the emerging market company focusing its capital and effort within the sector?”
- Identify the competition. Does the target company have a long-term game plan to excel in its industry?
Public companies have added responsibilities to their investors. Review and analyze high-growth public companies in your industry and market. Learn how these companies marketed their debt, stock IPOs, and secondary security issues. Look for strong syndicate partners to place your securities in strong hands. Let’s review emerging market companies that research analysts say have the potential to become high-growth superstars for years to come.
Profiting from Emerging Market – Top 7 Emerging Market Companies
Discuss your financing needs with investment bankers because you aren’t required to solicit advice from New York, London, or Hong Kong bankers. It’s entirely possible to sell your deal through a strong local or regional bank partner. You’ll pay much more to market your stock or bond deal through a major market investment bank or broker-dealer.
Next, review case studies of relevant companies in your industry and competitive markets:
1. Amorepacific South Korea
If you’re an emerging markets cosmetics company, you recognize that consumers want more luxury goods. You’re probably already profiting from the megatrend fueled by newly affluent and middle-class consumers in your market. Study the success of companies like Amorepacific South Korea (PINX: AMPCF). Amorepacific operates a portfolio of 33 personal care, health, and beauty brands such as Etude House, Annick Goutal, Innisfree, Lolita Lempicka, and Laneige. AMPCF has successfully marketed its products to major retailers around the world.
Users everywhere seem to need building materials. If you’re a concrete company in Colombia, study the success of CEMEX, S.A.B. de C.V. (NYSE: CX). Mexico-based Cemex makes and markets cement and ready-mixed aggregates in concrete in 50-plus countries. Its subsidiaries include Ready Mix USA, Rinker Group, Neoris, and also many others.
3. Vale S.A.
If you’re a family-owned metals and mining company in Brazil, Vale S.A. (NYSE: VALE.P) is a well-known competitor. Vale is one of the world’s largest iron ore and nickel producers on earth. It’s also one of the biggest logistics operations in South America. With so much building and infrastructure development and renovation going on everywhere, the launch of your debt or equity may be well-received by local and foreign investors.
4. Samsung Electronics Limited
Samsung Electronics Limited,(OTCMKTS: SSNLF) a subsidiary of well-known South Korea-headquartered Samsung Group, is a multinational electronics manufacturer. Electronics is a highly competitive industry because consumers and investors are searching for the next great life-changing electronic device. Recent competitor failures can create opportunities for an IPO or secondary financing.
5. GRUMA, S.A.B. de C.V.
GRUMA, S.A.B. de C.V. (ADR) is a multinational flatbread, tortilla and corn flour manufacturer with headquarters in Mexico. Consumers want healthy whole grain foods at attractive price points. Gruma owns several subsidiaries with high name recognition, including Mission Foods. Gruma shares trade in the local market and as ADRs in the U.S. market. An American Depository Receipt typically traces the underlying shares in the market. However, currency shifts can also affect market value. There’s clear upside to the issuer. ADRs trade like other shares in the U.S. public market.
6. Largan Precision Co., Ltd.
Largan Precision Co., Ltd. (Grey Market TWSE: 3008) makes smartphone and tablet components as well as other electronic devices. Largan supplies computer manufacturers around the world with the cost-effective parts they need.
7. WGH Group, Ltd.
WGH Group, Ltd. (OTCPK) is a sausage and meat processor based in Hong Kong. The company makes staple goods and shares offer an attractive dividend. WGHPY also trades as an ADR.
In conclusion, choosing the right partner for your financing is a challenging task. You should also not assume that the largest New York-based bankers are the best fit for your company. Today more than ever, high-growth emerging market companies appreciate the value of engaging local or regional marketing and distribution strength.
As you can see, potential emerging market superstars are plentiful. Management’s decisions and commitment to the enterprise are key. Therefore, if possible, align an IPO or secondary with recognized market megatrends. Investors (and your bankers) want to hear management’s authentic story. Finally, investors buy management as well as rising industries in exciting emerging markets.