By Tim Seymour
Walmart and India: Scott Price, Wal-Mart’s (NYSE:WMT) Head of Asia, reassures that Asia is important for the U.S. giant while the JV relationship with Bjharti and its JV may dissolve.
Walmart has been in India for 5 years in the “cash and carry” format (a wholesale approach) in addition to the straight retail format with Bharti.
Last fall India passed a bill to allow foreign corporations the ability to own 51% of retail operations in India with a requirement that 30% of the products carried be locally sourced.
Very little has happened, however, as red tape and investigations into practices have retarded growth and left players like Walmart cautious on near-term prospects.
India may offer the bigger opportunity but China is the easier path to glory for Walmart in Asia.
More stores are to be opened in in China. They are moving to smaller cities and have been buying from local suppliers and have added to quality control and pricing power.
Walmart has 4000 stores in China today according to Scott Price and the WSJ, reporting today that they will make additional acquisitions in China.
For investors looking at Walmart stock the chart and techincals are getting interesting to step in. When I am asked about which U.S. multinationals are growing in emerging markets, Wal-Mart is a name I have been reluctant to lead with, but this is changing.
Walmart International is now almost 30% of the revenue stream and is over 40% of the commitment of CAPEX. Walmart knows it needs these markets for additional growth as the U.S. opt line has been sluggish for the last few years.
International revenue has gone from $40 billion to $135 billion in 10 years. This is pretty impressive and when coupled with managements commitment.
The 71-72 dollar range takes you back to key support hit a few times since February. The nine-day Relative Strength Indicator or RSI is hovering around the 23 level, telling us the stock is oversold.
It’s time to at least add Wal-Mart to your emerging market and multinational watch list.