Jerry Zhao discusses the rise of the leading conglomerate in Southeast Asia.
The future growth prospect of the business depends on its future ROE and asset appreciation. ROE often reflects the competitive position or moat of the underlying business. Will the moat of its underlying businesses deteriorate in the future? That doesn't seem very likely, given that the businesses (as listed in Table 1 above) often enjoy strong brand and/or scale advantage and they operate in industries less prone to technological disruptions. Will the economies and currencies of the East and Southeast Asia continue to grow faster than the U.S.? No one knows for sure, but it's hard to see a drastic and permanent slowdown. So my guess is that the future growth may be slower than what we saw before, but still respectable and very likely at a double-digit rate.
May 10, 2012