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Second Case Study: Amorepacific Corp
第2个案例：爱茉莉太平洋公司

The Megastudy case began in December 2004. The second case, Amorepacific Corp., takes place today. It’s a live situation, which makes it more interesting because we don’t know the outcome.
Megastudy案始于2004年12月。第二起案件是爱茉莉太平洋公司，发生在今天（2012春）。这是一个实时的情况，这使得它更有趣，因为我们不知道结果。
You all have the Amorepacific handouts. Tell me about the company.你们都有爱茉莉太平洋的讲义。跟我说说这家公司吧。

AMOREPACIFIC CORP.
Year ended December 31,截至12月31日的年度（KRW billions; USD millions at 1,000 to 1 fx rate 十亿韩元=百万美元，汇率为 1,000 比 1）

	(2011-2006) CAGR	2011	2010	2009	2008	2007	2006
Domestic	14%	2,248	2,004	1,720	1,493	1,331	1,169
International	24%	306	248	220	185	127	104
Sales ……………………………………………..	15%	2,555	2,252	1,940	1,678	1,457	1,273
year-over-year		13%	16%	16%	15%	14%	9%
Gross profit ………………………………………..	15%	1,780	1,674	1,401	1,180	1,027	878
gross margin		70%	74%	72%	70%	70%	69%
Operating profit ……………………………………..	10%	373	356	309	246	234	231
operating margin		15%	16%	16%	15%	16%	18%
Net profit	15%	327	284	226	184	179	162
Shares outstanding	0%	6.9	6.9	6.9	6.9	6.9	6.9
Net profit per share ………………………………..	15%	47,411	41,242	32,746	26,695	25,984	23,457
Dividends per share ………………………………..	8%	6,500	6,000	5,500	5,000	5,000	4,500
payout ratio		14%	15%	17%	19%	19%	19%
Return on beginning shareholders’ equity		21%	22%	20%	19%	22%	22%
Cash		343	326	302	197	203	203
Receivables		152	141	150	134	110	114
Inventories		226	204	160	173	136	106
Prepaid & other		32	39	24	23	38	29
Current assets …………………………… ……………………		754	711	636	527	488	453
Property, plant & equipment, net		1,771	1,186	967	858	726	642
Investments & other		291	128	151	153	123	85
Total assets ……………………………… ……………………		2,815	2,024	1,754	1,538	1,337	1,180
Payables		78	81	71	54	43	46
Accrued & other		332	209	193	177	162	158
Current liabilities ………………………… ……………………		410	290	265	231	205	204
Postretirement & other		205	163	169	166	160	156
Debt, including short-term		61	13	20	25	19	22
Equity		2,138	1,558	1,300	1,115	953	798
Total liabilities & equity ………………… ……………………		2,815	2,024	1,754	1,538	1,337	1,180

[Student: It’s a Korean cosmetics and skincare company. They’re the market leader in both retail and direct sales.] [学生：这是一家韩国化妆品和护肤品公司。他们是零售和直销的市场领导者。

What else? 还有什么？

[Student: They own all the top domestic skincare brands and have three times the market share of their next-largest competitor.] [学生：他们拥有所有国内顶级护肤品牌，市场份额是第二大竞争对手的三倍。

What about the financial results? When you look at the results, what makes this business stand out? 财务业绩如何？当您查看结果时，是什么让这项业务脱颖而出？

[Student: They have a big international business.] [学生：他们有很大的国际业务。

What else? 还有什么？

[Student: They’re growing and earning good returns on capital.] [学生：他们正在成长，并获得良好的资本回报。

We’re looking at a business with the following qualities: ownership of the leading brands; dominant market share; strong multi-channel distribution capabilities; mid-teens growth with high returns on equity and no net debt; and an international business that has succeeded in large markets—including China. Does that sound like an appealing company? Of course it does. If you can’t recognize that, you’re in the wrong business. 我们正在关注的是具有以下品质的企业：领先品牌的所有权;占主导地位的市场份额;强大的多渠道分销能力;中期的增长，股本回报率高，没有净债务;以及在包括中国在内的大型市场取得成功的国际业务。这听起来像是一家吸引人的公司吗？当然可以。如果你不能认识到这一点，你就做错了生意。

What about the valuation? What makes Amorepacific a unique situation? 估值呢？爱茉莉太平洋的独特之处是什么？

[Student: The common and the preferred trade at different prices.] [学生：普通股和优先股价格不同。

What prices do they trade at? 他们的交易价格是多少？

[Student: The common trades at 1,180,000 won per share and the preferred trades at 275,000 won per share.] [学生：普通股每股1,180,000韩元，优先股每股275,000韩元。

What about the market capitalization? What’s Amorepacific’s market capitalization based on the common stock price? 市值呢？爱茉莉太平洋的普通股市值是多少？

[Student: $8.1 billion.] [学生：81亿美元。

They have 6.9 million shares outstanding—5.84 million common shares and 1.06 million preferred shares. At 1,180,000 won ($1,180), Amorepacific has a market capitalization of around $8 billion. 他们拥有 690 万股流通股——584 万股普通股和 106 万股优先股。爱茉莉太平洋普通股股价为1,180,000韩元（1,180美元）* 690万流通股，市值约为80亿美元。

What about at the preferred price of 275,000 won ($275). 以 275,000 韩元（275 美元）的计算690万股流通股价格怎么样。

[Student: $1.9 billion.] [学生：19亿美元。

Right. 6.9 million shares times the 275,000 won preferred price gets you a market capitalization of around $2 billion. 对的，690 万股乘以 275,000 韩元的优先股价格，您的市值约为 20 亿美元。

How much did Amorepacific earn last year?爱茉莉太平洋去年赚了多少钱？

[Student: Their net income was $327 million.] [学生：他们的净收入为3.27亿美元。 

What about their shareholders’ equity? 他们的股东权益呢？

[Student: $2.2 billion.] [学生：22亿美元。

And do they pay a dividend? 他们支付股息吗？

[Student: Last year, they paid 6,500 won to the common and 6,550 won to the preferred.] [学生：去年，他们向普通股股东支付了6,500韩元，向优先股股东支付了6,550韩元。

We have the same company with two different valuations: 我们有同一家公司，有两种不同的估值：

• Common shares: 25 times earnings, 4 times book value and a 0.6% yield. 普通股：25倍PE市盈率，4倍PB账面价值，股息率0.6%。
• Preferred shares: 6 times earnings, 1 times book value and a 2.4% yield. 优先股：6倍PE市盈率，1倍PB账面价值，股息率2.4%。

AMOREPACIFIC CORP.

Common Share price KRW 1,180,000 ，Shares outstanding 6.9 million 普通股股价 1180美元/股, 流通股690万股

Preferred stock share price KRW 275,000 优先股股价 275美元/股

Market capitalization ………………………………………………………..	8,139	1,897
Cash	(343)	(343)
Investments	(262)	(262)
Debt	61        61
Net debt (cash) ………………………………………………………………	(544)	(544)
Market capitalization — net of cash	7,595	1,353
P / E ………………………………………………………………………………	24.9	5.8
P / E — net of cash ……………………………………….. ………………….	23.2	4.1
P / B ………………………………………………………………………………	3.8	0.9
Dividend yield …………………………………………………………………..	0.6%	2.4%

Why are the preferred shares cheaper? How are the preferred different from the common? 为什么优先股更便宜？优先股与普通股有何不同？

[Student: The preferred shares don’t have voting rights.] [学生：优先股没有投票权。

What else? 还有什么？

[Student: The preferred pays a higher dividend.] [学生：优先股支付更高的股息。

Yes. The preferred are entitled to 50 won per share more than the common. Any other differences? 是的。优先股有权获得每股比普通股多50韩元的股份。还有其他区别吗？

[No comments] [无差异]

Can we agree that the preferred are equivalent to non-voting common that pays a higher dividend? If that’s the case, why do the preferred trade at a discount? Are voting rights worth a 400% premium? 我们能否同意优先股等同于支付更高股息的无投票权普通股？如果是这样的话，为什么优先股交易会打折呢？投票权值得 400% 的溢价吗？

[Student: Voting rights aren’t worth a lot because the founding family controls the company.][学生：投票权不值钱，因为创始家族控制着公司。 

Right. The family controls a holding company, Amorepacific Group, and the holding company owns a majority interest in Amorepacific Inc. Common shareholders have voting rights. Those rights, however, aren’t worth a lot if insiders control the company. 对，该家族控制着一家控股公司爱茉莉太平洋集团，控股公司拥有爱茉莉太平洋株式会社的多数股权，普通股股东拥有投票权。然而，如果内部人员控制公司，这些权利就没有多大价值。

Any other reasons for the discount? 折扣还有其他原因吗？

[Student: Maybe it’s due to a lack of convertibility. Can you convert the preferred shares into common shares?] [学生：也许是由于缺乏可兑换性。您可以将优先股转换为普通股吗？

You can’t convert the preferred into common. But that doesn’t, by itself, make them less valuable. 您无法将优先股转换为普通股。但这本身并不能降低它们的价值。

[Student: It could be due to a liquidity discount.] [学生：这可能是由于流动性折扣。

The preferred are more illiquid. But should the liquidity discount be 75%? I don’t think so. 优先股的流动性较差。但流动性折扣应该是75%吗？我不这么认为。

[Student: Maybe it’s due to the dividend rights. Can Amorepacific stop paying dividends to the preferred but still pay them to the common?] [学生：也许是由于分红权。爱茉莉太平洋能否停止向优先股支付股息，但仍向普通股支付股息？

Korean companies must pay preferred dividends before they pay common dividends. Of course, the preferred are noncumulative and don’t have a coupon, so Amorepacific could stop paying them. But then they would have to stop paying common dividends as well.韩国公司在支付普通股股息之前必须支付优先股股息。当然，优先股不是累积的，也没有优惠券，因此爱茉莉太平洋可以停止支付。但随后他们也必须停止支付普通股股息。

[Student: It seems like investors don’t think the preferred have a claim on the company’s earnings.] [学生：投资者似乎不认为优先股对公司的收益有要求。

Do we all agree that Mr. Market doesn’t think the preferred have the same rights to Amorepacific’s earnings as the common? 我们是否都同意市场先生认为优先股与普通股一样享有爱茉莉太平洋收益的权利？

[Students: Yes.][学生：是的。

How can we research what rights the preferred have? 我们如何研究优先者拥有哪些权利？

[Student: We can look at the company’s financial statements.] [学生：我们可以看看公司的财务报表。

Let’s look at the financials. How does the company allocate their earnings in last year’s annual report? 让我们看看财务状况。公司在去年的年报中如何分配收益？

[Student: They don’t allocate any profits to the preferred.] [学生：他们不会将任何利润分配给优先股。

Right. The company allocates all the profits to the common. But that’s not all. If you look at the footnotes, you’ll notice that they also (a) exclude the preferred from the number of shares outstanding and (b) deduct the preferred dividend from net profit like it’s an interest payment to a junior security. 是的，公司将所有利润分配给普通股股东。但这还不是全部。如果你看一下脚注，你会注意到它们还（a）从流通股数量中排除优先股，（b）从净利润中扣除优先股股息，就像向初级证券支付利息一样。

Amorepacific 2010 Annual Report

Are there any other ways we can confirm the status of the preferred? 有没有其他方法可以确认优先股的状态？

[Student: We can research the legal rights that preferred shares have in Korea.] [学生：我们可以研究优先股在韩国的合法权利。

Anything else? 别的东西？

[Student: We can look at Amorepacific’s preferred offering documents in the securities filings.] [学生：我们可以在证券文件中查看爱茉莉太平洋的优先发行文件。

Anything else? 别的东西？

[Student: We can look at some other Korean companies that have issued preferred shares.] [学生：我们可以看看其他一些发行优先股的韩国公司。

What company should we look at? Think of a large Korean company—a company that sets the standard for accounting best practices in the country. 我们应该看哪家公司？想想一家大型韩国公司——一家为该国会计最佳实践设定标准的公司。

[Student: Samsung Electronics.] [学生：三星电子。

How does Samsung calculate earnings per share? 三星如何计算每股收益？

[Student: They allocate a pro-rata interest in their earnings to the preferred.] [学生：他们按比例将收入中的权益分配给优先股股东。

Right. They allocate a pro-rata interest in their earnings to the preferred and divide by the number of preferred shares. The result? Earnings per preferred share of 105,592 won, which is close to the earnings per common share of 105,992. 是的，他们按比例将收益中的权益分配给优先股股东，然后除以优先股的数量。结果呢？优先股每股收益为105,592韩元，接近普通股每股收益105,992韩元。

Samsung Electronics 2010 Annual Report

Where does that leave us? Perhaps Amorepacific was wrong to exclude the preferred shares from earnings per share? Perhaps the preferred shares do represent a claim on the company’s earnings? And if the preferred represent a claim on the company’s earnings, then perhaps the market is wrong to discount them by 75%. 这给我们留下了什么？也许爱茉莉太平洋将优先股排除在每股收益之外是错误的？也许优先股确实代表了对公司收益的索赔？如果优先股代表了对公司收益的索赔，那么市场可能将它们折现 75% 是错误的。

It reminds me of the debate over stock options. Until 2006, businesses didn’t have to account for stock options as an expense. Executives argued that if options weren’t expensed for accounting purposes, then they must be free. But that logic was flawed. Warren Buffett, in fact, wrote an article about it in 2002. Buffett asked three questions: 这让我想起了关于股票期权的争论。直到 2006 年，企业不必将股票期权作为一项费用进行会计处理。高管们认为，如果期权不用于会计目的，那么它们一定是免费的。但这种逻辑是有缺陷的。事实上，沃伦·巴菲特（Warren Buffett）在2002年写了一篇关于它的文章。巴菲特问了三个问题：

• If options aren’t a form of compensation, then what are they?如果期权不是一种补偿形式，那么它们是什么？
• If compensation isn’t an expense, then what is it? And如果补偿不是费用，那它是什么？和
• If expenses shouldn’t go into the earnings calculations, then where should they go?
• 如果费用不应该计入收入计算，那么它们应该去哪里？

You should apply this same reasoning to the Korean preferred:您应该将相同的推理应用于韩国优先股：

• If preferred shares aren’t a form of equity, then what are they?如果优先股不是一种股权形式，那么它们是什么？
• If equity isn’t a claim on earnings, then what is it? And如果股权不是对收益的要求，那么它是什么？和
• If a claim on earnings shouldn’t go into the earnings per share calculations, then where should they go?如果对收益的索赔不应该计入每股收益的计算中，那么它们应该去哪里？

NOTE注意

Soon after Li Lu gave his lecture, Amorepacific published their 2011 annual report. The report included an updated earnings per share footnote that allocated a pro-rata interest in the company’s earnings to the preferred shares.李录发表演讲后不久，爱茉莉太平洋就发布了2011年年报。该报告包括更新的每股收益脚注，将公司收益中的权益按比例分配给优先股。

Amorepacific 2011 Annual Report

Any questions?有问题吗？

[Student: Can you describe how to think about the control issue. Amorepacific is an emerging-market company, and the family controls both management and the board of directors. The outside shareholders have no say in how the company is run. How do you get comfortable with this?][学生：您能描述一下如何思考控制问题吗？爱茉莉太平洋是一家新兴市场公司，家族控制着管理层和董事会。外部股东对公司的运营方式没有发言权。你如何适应这一点？

In most situations, either a majority shareholder or the management controls the company. So your question applies to all publicly-traded businesses. You need to ask yourself: Do I want to be a passive minority shareholder in this company? It’s a question that must be answered before you make any investment.在大多数情况下，大股东或管理层控制着公司。因此，您的问题适用于所有公开交易的企业。你需要问问自己：我想成为这家公司的被动小股东吗？这是在进行任何投资之前必须回答的问题。

[Student: Do you invest in China? What are your thoughts on A shares, H shares and Chinese ADRs?][学生：你在中国投资吗？您对A股、H股和中国ADR有何看法？

I don’t focus on where the company is listed. Remember the three basic concepts of value investing:我不关注公司在哪里上市。记住价值投资的三个基本概念：

1. Stocks represent partial ownership in a business—they aren’t just pieces of paper;股票代表了企业的部分所有权——它们不仅仅是一张纸;
2. Investing demands a margin of safety; and投资需要安全边际;和
3. The concept of Mr. Market.市场先生的概念。

When looking at a business, I focus on three things:在看待一家企业时，我关注三件事：

1. Do I understand it?我明白了吗？
2. Is it a good business? And 这是一门好生意吗？和
3. Is it available at a good price? 它以优惠的价格出售吗？

Those are the things you need to think about—not where the company is listed.这些是您需要考虑的事情，而不是公司在哪里上市。

Concluding Remarks 结束语

Today we covered two of my investments—Megastudy and Amorepacific. Why choose these two investments? Because I want you to know what it’s like to take the opposite view of Mr. Market. You must always remember Charlie Munger’s advice: “I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.” Those who don’t listen to his advice will be influenced by the market’s ups and downs. Those who do listen, however, will have made a big step towards becoming a good investor.今天，我们介绍了我的两项投资——Megastudy和爱茉莉太平洋。为什么选择这两项投资？因为我想让你知道，对市场先生持相反观点是什么感觉。你必须永远记住查理·芒格（Charlie Munger）的建议：“我从不允许自己对任何我不比他们更了解对方论点的事情发表意见。那些不听他建议的人会受到市场起伏的影响。然而，那些倾听的人将朝着成为一名优秀的投资者迈出一大步。

Thank you all.谢谢大家。

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