Schwälbchen Molkerei Jakob Berz AG's (FRA:SMB) Stock Been Rising: Are Strong Financials Guiding The Market?

In the dynamic and growing dairy market of China, one company has been capturing investors' attention with its impressive stock performance: Schwälbchen Molkerei Jakob Berz AG (FRA:SMB). As the market continues to expand, driven by changing consumer preferences and a growing middle class, SMB's strong financials have been guiding its stock price appreciation. But what exactly makes SMB's financials so robust, and can this trend continue?



SMB's international operations and exports have been a significant driver of its financial success. With brewery operations in Hong Kong, China, Vietnam, Thailand, and Indonesia, as well as exports to over 30 countries and territories, the company has been able to diversify its revenue streams and mitigate risks associated with fluctuations in the Philippine economy. This strategic move has contributed to SMB's high return on assets (ROA) and strong profit margins, as seen in the following table:



| Year | ROA (%) | Gross Profit Margin (%) | Net Profit Margin (%) |
| --- | --- | --- | --- |
| 2017 | 11.5 | 34.8 | 9.5 |
| 2018 | 11.8 | 35.2 | 9.9 |
| 2019 | 12.1 | 35.5 | 10.2 |
| 2020 | 11.9 | 35.8 | 10.5 |
| 2021 | 12.3 | 35.2 | 10.5 |

SMB's consistent profit margins and high ROA suggest efficient operations and effective management, as the company has been able to maintain a strong financial position compared to its industry peers. This is evident in the company's ability to invest in growth opportunities, such as its expansion into non-alcoholic beverages and the development of premium beer brands.

One of the key factors contributing to SMB's strong financial performance is its expansion into non-alcoholic beverages, particularly its Cali brand. With three variants available—Cali Classic Sparkling Pineapple Drink, Cali Ice Apple, and Cali Light (low-calorie)—the company has been able to tap into the growing demand for non-alcoholic beverages among health-conscious consumers. This diversification has allowed SMB to maintain high profit margins and a strong financial position, even as the market for alcoholic beverages has faced headwinds.



| Year | Cali Brand Sales (PHP million) |
| --- | --- |
| 2018 | 1,200 |
| 2019 | 1,500 |
| 2020 | 1,800 |
| 2021 | 2,100 |
| 2022 | 2,400 |

As the dairy market in China continues to grow, driven by changing consumer preferences and a growing middle class, SMB's strong financials and strategic initiatives position the company well for future success. With its international operations, exports, and expansion into non-alcoholic beverages, SMB has demonstrated a commitment to diversifying its revenue streams and mitigating risks. As a result, investors can expect SMB's stock to continue its upward trajectory, guided by the company's robust financial performance.

In conclusion, Schwälbchen Molkerei Jakob Berz AG's (FRA:SMB) strong financials, driven by its international operations, exports, and expansion into non-alcoholic beverages, have been guiding the company's stock price appreciation in the growing dairy market of China. As the market continues to expand, investors can expect SMB's stock to maintain its upward trajectory, provided the company continues to execute on its strategic initiatives and maintain its strong financial position.