Booking Holdings (BKNG): A Fast Growing Industry Leader Built on Network Effects and a Strong Brand
Write-up by Mister Compounder
Summary
- Asset light business model, with infinite return on capital, that requires little capital to grow enabling the use of cash flow for other purposes.
- Booking is currently trading at a free cash flow yield of 3.6%, before acquisitions and including adjustments for dilution of 1%
- The risks involve pricey valuation, overpaying for acquisitions in M&A deals, young industry and risks of increasing competition due to the attractive economics of the industry.
Overview
Booking Holdings (formerly Priceline) was founded in 1997 by Jay Walker and was listed in 1999. He later left the company in 2000. Since its inception, Booking has not split their stock, so the company today trades at more than $2,000 dollars a share. It wasn´t until recently that the company changed the name to Booking Holdings.
According to the current CEO, Glen Fogel, the reason was:
“We want to have a name aligned with all the different things that we do. We are now doing things that enable people to book hotels, homes, apartments, rental cars, flights, dinner reservations. Booking Holdings unifies all of these different things.”
The easiest way to think about Booking is to think of it as a distributor of inventory of hotels and airlines. Through acquisitions of meta search sites like Kayak and Momondo, they have developed into something like an online travel retailer. These acquisitions were a consequence of the emergence of the meta search sites. Meta search sites are price comparison websites, matching prices of different OTAs (Online Travel Agencies) and in this way challenged the business models of the traditional OTAs. Today, the international online travel market is really considered a travel duopoly, dominated by Booking Holdings and Expedia. These two companies are really holding companies for owning other brands.
There are some differences in the business models, though, where Expedia is more exposed to flight tickets and the merchant model, while Booking is more exposed to hotel rooms and the agency model. I’ll touch more on this topic later in the article, but if you want a nice, brief introduction to the business model, I can recommend this article on Business Insider.
Even though Booking Holdings consists of several brands, the company today is really all about Booking.com which is close to 90% of gross profit. In addition, Booking also has brands like Kayak, Rental Cars, OpenTable and Momondo (which they acquired last year). Booking in total has more than 1.5 million properties in more than 220 countries. Today, Booking Holdings as a company generates more than $12 billion in sales and $10 billion in gross profit. Approximately $9 billion of that gross profit is generated from Booking.com.
Booking has three types of revenue sources:
- agency revenues at approximately 76% of revenues
- merchant revenues at 17% of revenues
- advertising and other revenues at close to 7% of revenues
Agency revenues consists of the commission rate that Booking can take in bookings where Booking is the agent for the hotel that’s selling the hotel room. Book a room at Marriott through Booking.com and Booking takes a commission. Agency revenues have no cost of revenue and Booking only works as an intermediary. As a user you make a reservation and for that Booking.com makes a commission. In 2017, customers made gross bookings of $69.7 billion under this model, which generated close to $9.7 billion in agency revenues, suggesting a commission rate that averaged 13.9%.
Under the merchant model Booking buys hotel rooms, airline tickets and car rentals, and then resells them on their platforms. This is a smaller part of Booking’s business model, but yields a higher margin. Merchant gross bookings has been steadily increasing from $1.2 billion in 2007 to $11.5 billion in 2017. Despite this, the merchant margin has been declining, and in 2016 Booking earned a little above $2.1 billion, hitting a commission around 18.5%. In this case, customers pay upfront and it’s more profitable than agency revenues. The merchant model is also the model that generates the cost of revenue at Booking and is the form that increases the business’s reliance on credit commitments and payment collection.
The agency model is emerging as a more favorable revenue model, as it’s more lucrative for the agency in the sense that they are just the facilitator of the transaction and earn a commission for facilitating the transaction. It’s also favored by the customers who want to pay at checkout.
If you compare the different models of the online travel agencies, the difference in margin can be explained by the reliance on different revenue models and whether the revenue is generated from hotel bookings or airline bookings. If you compare Booking’s revenues to a company like Ctrip, the latter is more dependent on transportation ticketing revenue (airline ticketing) and they receive 45% of revenues from transport ticketing where margins are much lower. The commission rates on airline ticketing are probably down something like 0-3% as a consequence of the major airlines in China dropping the commission rates to the agencies, in combination with the reduced cross selling of products like insurance and lounge access. You had the same thing in the US some 20 years ago, when the big airlines at the time decided to cut the commission rates paid to travel agents.
Booking’s margins are much higher as consequence of their dependency on booking.com, that generates agency revenues where gross margins are considerably higher. This is the reason why the gross margin has been expanding over the years. Ctrip’s take rate is below 7%, while Booking has a take rate of more than 15% and Expedia is closer to 11%. This can, to a great extent, be explained by the differences in business mix. Booking seems to have a better business than both Expedia and Ctrip, because they are more exposed to hotels than Ctrip, and do more business in the agency model compared to Expedia. The increased reliance on agency revenues explains why Booking’s gross margin and EBIT-margins have expanded.
Durability
One of the major questions in identifying long term investment ideas is the question of how durable the business is. In other words: what is the durability of the products or services and the economics of the industry.
Why should there be a middleman enjoying wide margins in this industry?
The biggest risk to the durability of the OTAs is how these companies relies on other suppliers of search to generate traffic to their websites. When you, as a customer, are looking for a holiday breakaway, you have some options. Booking a hotel room or flight is, for most people, not a habitual, recurring process. The booking process for a hotel room or airline ticket of the average customer, is most likely going to be a search driven process. You haven’t created a strong enough habit that you go straight to booking.com and book a hotel. This is also reflected in the numbers of the OTAs as they spend a great amount of cash on performance marketing to generate the necessary traffic to their websites.
Who is the provider of this search traffic?
It’s mostly Google and they are, in some way, a gatekeeper for these companies. If you do a Michael Porter kind of questioning and look at the relationship between Google (supplier of search) and OTAs (buyer of search) and the relative size and market power of these companies, it’s quite clear that the market power is tilted towards Google. The biggest risk towards Booking might just be vertical competition, in the form of a complete new player coming in and attacking the existing model. This might just be a potential larger risk, than horizontal competition from any of the other OTAs. In an article in Skift, some estimates indicate that 40% of all millennials start their traveling planning on Google. That’s high. And having such an important generator of search in a very lucrative and huge, yet young industry, may pose the biggest risk to the company. You can also see this by googling flights, where Google is now making gains with consumers with their Google Flights search and their Hotel Finder.
Apart from this, I think online travel agencies lend themselves to online distribution and I think the business model is durable. An easier way to get about it, might be to invert the problem. If you invert the problem and look at it from the perspective of the airlines and the hotels, there is a need for the OTAs. Hotels and airlines are asset heavy business with a lot of fixed costs. They need the same number of staff, you pay the same rent and a hotel is bound by its asset specificity. You can’t move it. Therefore, an additional room night or another passenger is very valuable, as it contributes directly to the bottom line. This makes yield or occupancy management necessary.
In addition, hotel room nights and airline seats are scarce and perishable. Airlines or hotels can only fill a certain amount of the rooms themselves through their own channels like word of mouth, attracting customers to their own websites and repeat customers. Say a hotel can fill 50% of the rooms themselves and must rely on other sources to fill the rest of the rooms. And the difference of hitting an 80% occupancy rate or 50% occupancy rate for a hotel is huge, because the fixed costs will already be there, and the airline seat or the available hotel room will perish. From a hotel´s perspective it´s lucrative to pay between 10-20% in fees for hitting higher occupancy, or 0-3% for the airline.
Furthermore, hotels and airlines want to segment the customers. They want to differentiate between the different customers and their willingness to pay. So, because unoccupied seats and room are perishable, the hotels and airlines want opaque pricing. As a hotel you really want to differentiate between the girl who book 6 months in advance and the guy who turns up at Booking.com to book a last minute ticket. That’s why airlines or hotels don’t want to reveal the normal price of a hotel room or airline ticket to the public. They really want opaque pricing.
I would also make the argument that Booking is better positioned competitively than the other OTAs. Booking is really dependent on Booking.com which is all about hotel room bookings. If you compare the number of airlines to the number of hotels, the airline industry is more consolidated and with fewer players compared to the hotel industry. In addition, you have the big GDS players, like US-based Sabre and European-based Amadeus, who also claim a commission within the airline industry, as they are delivering the IT solutions that give OTAs access to the airlines inventory. Therefore you´ve had the trend of airlines pushing prices, and they only pay something like 0-3% on airline tickets.
There are some challenges to this model. One is the threat from the hotels themselves. I’ve heard incidents of people who have booked through booking.com and then have received a call or an email directly from the hotel. In this case the hotel offers the customer an upgrade and better price, if the targeted customer promise to cancel the booking through booking.com. Secondly, the OTAs are to a greater extent going head to head with the hotel management companies. The hotel management companies have also pursued a more asset-light model, wanting a cut from the hotel owners to distribute their inventory under the hotel management brand against a commission.
At the same time, few businesses have very high marginal cash revenue from just one online sale. Room rentals, airline bookings and live event bookings are all relevant examples. The comparison to event bookings can be relevant. Arranging a concert or a festival, is quite an asset heavy business, in the sense that the organizer of the concert/festival make a huge initial investment to put up the shop. Therefore, you partner up with the biggest ticketing company to distribute your tickets to ensure that the you sell out the show or festival. That’s why you need scale on both the concert/festival side of the business, but also on the ticketing side. Consequently, you’ll probably see that maximum 1 or 2 ticketing players can survive with profits, because it’s all about scale.
Booking should fit this description. If you compare these services to something like distributing groceries, which has higher distribution costs due to the dependency on physical delivery and the fact that these kinds of product are heavier products in terms of kilos and pounds. It should be cheaper to distribute airline tickets, hotel room bookings or a concert ticket than delivering something like 30 pounds of dog food. Despite being a young industry, you are, in my opinion, seeing signs of network effects giving the leading companies a strong competitive position.
Competition
The online travel agency has oligopoly-like characteristics, where Booking and Expedia is expected to have something like 80% of the total OTA market. I think the OTAs benefit from network effects and they are in a position where the larger, more dominant players are going to have the best prospects. People book where they get best choice and price, while the hotels and airlines are only interested in partnering with platforms that generate sales. It’s all about capturing demand. The value of the services the OTAs provide, increases as more and more people use these services. So, even though the barriers to entry might be quite low, in the sense that it might be technically easy to build such platforms and launch them, it is challenging to compete with the largest players and the market leaders, because people tend to book where the deals are, and the hotels partner up with the biggest platforms.
That doesn’t mean that the competition is not intense. There is tough competition in this industry. One way to assess this competition is to look at something like customer acquisition costs. If you look at the number of room nights Booking have sold, this number has increased from 28 million room nights in 2007 to 673 million room nights in 2017. But this increase has cost Booking something. And it’s not in the way of traditional marketing, by running TV ads and big branded campaigns, but the cost of transforming search on Google for hotel rooms in New York or London into actual bookings of hotel rooms on booking.com. This is so-called performance marketing. This is a competitive business and quite expensive because Expedia, Booking, Ctrip and other agencies try to convert search on hotel rooms into actual bookings.
If you look at actual costs of converting search into actual bookings per hotel room booking, there seems to be little scale in this way of marketing and there has been a slightly upward trend since 2007. The median cost of acquiring a hotel room was $6.50 in the period from 2007-2017. For 2017 the same number by my estimates was $6.20 and in the latest earning transcripts the management talked about the increased marketing efficiency on performance marketing. If you take total cost of marketing, including branding, advertising and other sales and marketing costs, there is more scale. If you take this number, the total cost for acquiring a customer was $9.20 in 2007, the median for 2007 to 2017 was $7.90 and the cost for 2017 was $7.60.
If you look at Booking, more of the profit is ending up on the bottom line because there is no cost of revenue in the agency model. The agency model has a lower take rate than the merchant model. The transition to the agency model has had a negative effect on revenue, because you have a lower take rate, but a positive effect on gross margins, as there is no cost of rooms sold. That’s why you will see that the revenue per room night has been declining, that gross profit per room night has been declining, but that the margin on each room night sold has been increasing.
I’ve been throwing out numbers about customer acquisition cost here. But what does this really say about the business?
There is little doubt that the OTAs have strong business models, generating loads of cash and they require little reinvestments into the business. But what really drives traffic to these sites are the huge investments in performance marketing. This traffic is really dependent on getting good results on Google or any other meta-search site when you, the customer, is looking for a hotel room in a specific city. What you really need here – to take the next step – is to have some sort of increased retention on the apps or sites of these companies. You really want to see customers developing a habit for going straight to Booking.com or using the app. If you’re going to track two numbers to understand the microeconomics of this business, it’s really all about the cost of acquiring a room night, and the lifetime value of a customer. The former is easier to track, and the latter can be explored by looking at the development in gross profit per room night. Now, the gross profit per room is not the same as lifetime value per customer, but can give an indication of the development in the gross revenue per room night over time.
The challenge of reaching sufficient scale in performance marketing is a probable explanation to why these companies now are turning more to creating brands in their own right by investing more in traditional advertising. The article “Why Expedia or Priceline Might Just Be the Next Great Hotel Brand” reflects on how the business models of OTAs and traditional hotel management companies, like Marriott, are overlapping each other and how they compete. These companies are trying their best to differentiate themselves and create their own brands. Booking wants to increase the customer captivity and the retention rate of the business. For most people booking a hotel room or an airline ticket, the purchase is infrequent and not habitual. The challenge for these businesses is to build the necessary retention rate to get potential customers to go directly to Booking.com or the app, instead of search like Google, or meta-search sites. To get to that point, you need to build brand recognition and customer habit.
Quality & Growth
The online travel industry is an attractive and very profitable industry. The companies enjoy competitive advantages protected, and reinforced, by network effects. This is a type of company where the net income understates the cash flow generation of the business, because there is no major capex requirements in the business and it requires little in the way of physical assets to grow. This means that Booking can have infinite returns on invested capital. So, the quality of the business in terms of returns on invested capital is solid. There is little need to precisely calculate the return of the underlying business, as it is, in any case very good.
You are starting to see some formation of stability, in the sense that the larger, major players like Booking, Expedia and Ctrip are operating with infinite returns and high gross margins. All of the major OTAs have high gross margin. For the fiscal year of 2017, Booking had a gross margin of 98% compared to 45% in 2007. The gross margins have been climbing as a consequence of the cost of goods sold, or the variable cost, in selling an extra room has been declining over the last years, as the business has moved more towards the agency revenue model. This has been causing gross margins to increase and is also the reason why you will see higher gross profitability at Booking, compared to Ctrip or Expedia.
So, Booking is the type of company that has a high quality business, that can grow without retaining much capital to grow. For the fiscal year 2017, earnings were $2.3 billion, while free cash flow was $4.2 billion before acquisitions. Both earnings of 2016 and 2017 have been depressed by one-offs. The 2016 earnings were depressed by a $943 million in write-off of the OpenTable transaction. The earnings for 2017 were depressed by tax effects that doesn’t affect the underlying intrinsic value driver in the company. Booking is really a company that should generate infinite return on capital, where growth costs nothing and where free cash flow should be higher than net income. Therefore, Booking is cheaper based on a free cash flow calculation than on earnings.
The underlying growth in the travelling industry is something like 4-5% a year. The total market was estimated to be $1.3 trillion in 2014, growing at 5% through 2017, indicating a total value of $1.5 trillion in 2017. Of this, hotels constitute 33% of the value, while airlines constitutes 40% of the value. With gross bookings of $81 billion, it Booking has a 5.4% market share of the total market and 16.4% of the hotel market.
Online should be growing faster than the overall market, as online penetration in the US and Europe is around 50%, while emerging markets like China are lower than 50%. As a consequence, underlying growth at Booking and other OTAs should be solid over the next 10-15 years. I think Booking should have the possibility to grow annually in the range of low double digits for the next 10-15 years. Growth is speculative, so it’s challenging, and not necessary very productive, to give clear and precise numbers on the possible growth for the company over the next 10-15 years.
For this growth to materialize, the underlying traveling market has to grow at 4-5% and Booking should be gaining 0.5% of the total market each year. That would give Booking more than a 10% share of the total market and more than 30% of the hotel market in 2027. It might be doable, but it’s speculative and a question of expected possibilities based on uncertain assumptions. What is most likely, in any case, is that Booking is positioned to outgrow the 4-5% of the industry over the next 10-15 years and that this growth is cheap.
Capital Allocation
If Booking stopped buying back its own shares and acquiring other companies, it would probably have earned something like $300 per share over the next 3 years. That says something about the cash generative characteristics of the business.
Since 2007, Booking has generated cumulatively $22 billion in cash flow. They have used something like $1 billion, or 5% in capex, and close to $6 billion, or 27% on acquisitions. So, you may argue that total capex has been around 32%. It’s challenging, however, to estimate how much of these acquisitions should be described as expansion capex to support the growth of the company and protect the competitive position of Booking. But the underlying business, Booking.com, requires little cash to grow.
In the past, they have done several acquisitions. In fact, their most important asset, Booking.com, was an acquisition back in 2005. The acquisitions have been driven by the competition in the industry, because of the search driven part of acquiring customers to your site.
These are some of Booking´s major acquisitions:
- 2005: Booking.com $135 million
- 2013: Kayak.com $1.8 billion
- 2014: OpenTable.com $2.6 billion
- 2017: Momondo.com $550 million for $105 million in revenue
Booking bought Momondo in 2017, which was their biggest acquisition since OpenTable. Booking bought OpenTable in 2014 for $2.6 billion, but they later had to write down the OpenTable assets, as they couldn’t reach their expected growth targets.
I guess you will have some strategic acquisitions of relevant brands that may strengthen the overall competitive position of the Booking shop. These acquisitions must be understood in the sense that Booking has made them to strengthen and widen the product portfolio in their online travel retail shop. The risk is that the online shelf space has few limitations, and in a competitive environment you may feel obliged to keep acquiring businesses to keep pace with the competition.
That being said, Booking.com was a hugely successful acquisition, and the Kayak-acquisition has been important in establishing a footprint in meta-search. So, given the competitive landscape, these acquisitions have probably been necessary to consolidate the industry and to fend off competitors. The challenge is that the underlying business (Booking.com) is the crown jewel of the company, so it will be difficult for new brands to be as valuable as Booking. For the excess cash, the company will be buying back stock. They now have a board authorization to make $10 billion in stock buybacks and it’s not unlikely to expect increases in buybacks going forward, whenever Booking can’t find interesting acquisition opportunities. That means, overall, the cash generated by Booking will be deployed towards making strategic acquisitions to strengthening the competitive position, expanding the product portfolio and buying back stocks. Some of the acquisitions may be hit or miss, but overall, the capital allocation should be quite predictable, built around these two cash deployments.
Value
The way to frame Booking is to really look at it as a very cash generative business that generates almost infinite returns on capital. However, it’s not a typical value investment where you get a 10-15% cash flow yield from the start and you grow from there. The starting coupon here is too low to be characterized as a value investment. However, it’s not necessarily meaningful to distinguish between value and growth. Both are components of the equation in value generation for the business over time. Value may be described as the cash flow yield or coupon you start off with, while the growth is the value that is generated in the future. Both are valuable, but the challenge is that the latter is more difficult to appraise and more difficult to predict. Furthermore, investors differ in how comfortable they are in relying on the different parts of the equation.
How should you frame this?
Booking generated some $3.7 billion in free cash flow for 2016. For 2017 the free cash flow was closer to $3.4 billion after capex and acquisitions and $4.4 billion in free cash flow not including acquisitions. They have something like 50 million shares outstanding. That gives $88 in free cash flow per share before acquisitions. As I’m writing this, Booking is trading at something like $2,090 per share which gives a total market cap of around $101 billion. The enterprise value is closer to $95 billion, as they carry $2.5 billion in cash, $4.8 billion in short term investments which consists of mostly corporate bonds and $10.4 billion in long-term investments which are mostly corporate bonds. In total, it is $15.2 billion, and they have $8.8 billion in long-term debt. This gives a free cash flow yield of 4.6% and EV/FCF of 21.6x. In addition, Booking tends to dilute their shareholders by about 1% a year over time. So, you have to subtract this, which gives you 3.6% in free cash flow yield which is low compared to the average business which probably trades at something like 4-5% free cash flow yield. But Booking is a much better business than the average business and Booking can probably grow free cash flow by low double-digits for many years without much reinvestment into the business due to its capital light model. So, if you add the growth in free cash flow to the cash flow yield, the idea becomes more interesting.
The question is what should Booking stock trade at once it grows at its terminal growth rate, closer to something like 3-5 % a year? Booking must retain very little of its earnings to grow. From its history it has used 5 % of CFFO in capex to grow.
Since growth costs so little at Booking, growing something like 3-5% would translate into almost exactly the running cash flow yield. That means, it can almost pay out all its cash flow in dividends or buybacks, even while the underlying company is still growing at 3% to 5%. To find the P/E ratio that Booking should trade at, once it grows slower, I will compare this to the return of the S&P500 and assume it has given a long-term return of 9 %. 9% minus the earnings yield is what Booking should trade at the end of that period. This gives 9% minus 3.2% equals 5.8%.
Booking should trade at something like 17.5x earnings (1/0.058) when it grows as slow as 3-5%. That’s higher than the average company has done in the past because its cash conversion from earnings to cash flow is higher than the average company.
So, it really comes down to how long Booking can grow faster than 3-5% a year. As I mentioned in the growth section, I think it’s possible that it can grow at 10% for the next 10 years. If Booking by 2027 double their share of total market to 10.5% share, they will have gross bookings between $231 billion and $255 billion of a total travel market of $2.2 trillion and $2.5 trillion, depending on whether the overall travel market grows 4% or 5%. If you assume a take rate of between 13-15% you’ll have revenues between $30 billion and $38 billion. In the last 10 years, Booking’s median cash conversion of sales into free cash flow after capex, has been 32%, which is extreme. This yield has expanded as a consequence of better business mix and reductions in working capital as a consequence of the shift to agency revenues. This has given Booking float, in the sense that customers are funding the growth and the net working capital deficit has expanded over the years. It’s speculative, but it’s possible that Booking can generate between $9.6 billion and $12 billion in free cash flow in 2027 if it still manages to convert 32% of sales into free cash flow. Applying a 20x free cash flow multiple, which a company like this should trade at, you might have a market cap between $192 billion and $240 billion in 10 years based on 10% growth. I’ve laid out the thinking here, but the end result is really dependent on your assumptions and how you weigh the expected outcomes of these. You are free to change them, and I encourage you to do so, to make your own thoughts on the matter. If Booking can maintain, or even better, increase its competitive position, these assumptions are probably too conservative. If they are disrupted, for example by vertical competition, they are probably too aggressive.
However, it’s important to stress that making judgement of the future growth of a fast-growing company is speculative and I don’t have a better crystal ball than you. So, a more practical approach might be to compare to a relevant peer, like for example Copart. They do auctions in the salvaged car market in the US, and also sell some salvaged cars to international markets. Copart has approximately 40% market share of this market in the US, while the other main rival, Insurance Auto Auctions, also has a 40% market share. So, two players combined control 80% of the market.
Booking and Copart may have more things in common, than you would think looking at them for the first time. Both companies derive a large part of total revenues from agency revenues. Copart earns a commission on the auctioned vehicles on their websites which is 89% of the revenue. This may be compared to the agency revenue at Booking. The rest, some 11% of Copart´s revenue is from buying cars, and selling them, just like Booking does with their merchant model, where they pay for a room and resell it.
I would argue that the quality of the underlying business of Booking is better than that of Copart, but Copart´s competitive position to fend off peers and possibly new competitors, may be more attractive and stable than that of Booking. Copart combines both local scale and proximity with international scale through their software platform. They have more than 200 salvage yards in 12 countries. In Copart’s business model you have the risk of self-driving cars making this business model completely obsolete in the future. A peer comparison is useful, because it indicates what Booking might be valued at in the future if they reach the same competitive position as Copart. Copart is a wide moat company, but also faces the future risk of decelerating sales growth. As of now, Copart trades at EV/S of 7.2x while Booking trades at EV/S of 7.5x. The cash conversion and growth prospects for the next 10-15 years should be better at Booking, but Copart enjoys a wider moat.
In the end, I’m unsure if a traditional valuation will provide you a comfortable answer in this stock, because most of the value in this company is in the future growth and not in its current cash flow. And both the future and growth rates at this level are speculative. This is more like a Phil Fisher type of growth stock, which makes the qualitative aspects of the investment thesis more important. The important question an investor in Booking has to ask is if you are comfortable with the competitive situation and the structure of the industry. There are several long-term value drivers here, including 4-5% international growth in the total travel market, the transition from physical to online where the penetration is approximately 50% and the cash generative and asset light model. Whether you buy Bookings at 20x free cash flow or 25x free cash flow isn’t necessarily the way to frame this. This is more a thesis for the next 10-15 year horizon where you bet that this company can grow the number of hotels and room nights on its website. And this bet is dependent on the durability of the competitive structure of the industry and that Booking will continue to scale and increase their market dominance within this industry structure.
Disclosure: This should not be considered to be personal investment advice and has been prepared without regard to the person who read it. Investors should independently evaluate particular investment ideas.