AML Foods Limited

AML Foods is a rare thing on the Bahamian exchange, a well-run, cash-generative business, and one of the clearest cases of why a BISX stock is worth two different numbers. To a global investor who charges the full Bahamas country risk premium, fair value is about $10.71 against a $9.00 price, roughly 19% of upside. To a domestic Bahamian investor, who by law cannot move much capital abroad and so measures the stock against a Bahamas government bond rather than a US Treasury, fair value is about $21.43.

Both numbers come from the same cash flows. The only thing that changes is the discount rate, and within it the country risk premium. Understand that one assumption and you understand the entire gap between what AML is worth to an outsider and what it is worth to the people who actually set its price.

IThe business

AML Foods Limited (BISX: AML) is one of the largest food retailers in the Bahamas. The business combines supermarket and wholesale grocery formats with a franchised quick-service segment (Domino's Pizza), which contributes roughly 5% of revenue. The fiscal year ends April 30, and the model is built off the FY25 audited report in thousands of Bahamian dollars, which are pegged one-to-one to the US dollar.

Revenue has compounded from about $175M in FY21 to $203M in FY25, a mid-single-digit rate driven by population, tourism-linked consumption, and store expansion. Gross margin has widened toward 34%, and operating (EBIT) margin runs in the 6 to 7% range. The balance sheet is conservative, with a current ratio above two, interest coverage above six times, and returns on invested capital (roughly 19% trailing, rising toward 27% by FY30) that sit well above the cost of capital, which means growth creates value rather than destroying it.

A note on FY25

FY25 results carried two large offsetting one-off items, roughly $24M of insurance-claim income against about $21M of fire-related destruction loss (Note 23). Normalising for these matters. The underlying earnings power is cleaner than the headline suggests, and the episode is a reminder that a concentrated, single-market retailer carries real event risk from fire and weather.

IIWhere the value sits

AML is undervalued on both lenses, clearly so to a domestic buyer and by about a fifth even to a global one, and the useful work is in isolating what determines each figure and why they diverge so widely.

1. Undervalued even to a global investor. Carrying the full 5.13% Bahamas country risk premium, fair value is about $10.71 versus a $9.00 price, roughly 19% of upside. An allocator pricing Bahamas sovereign, liquidity, and currency-peg risk in full still sees value here.
2. Worth far more to a domestic investor. A Bahamian buyer cannot freely invest abroad, so the relevant alternative is a Bahamas government bond, not a US Treasury. Dropping the country risk premium lifts fair value to roughly $21.43. That is not a different model, only a different buyer.
3. The premium is the whole story. The country risk premium is the largest single component of the global cost of equity. Move it and fair value moves materially. Hold every operating assumption fixed and the Bahamas-risk input alone roughly doubles the answer between the two lenses.

The country risk premium is not a footnote in the discount rate. For a BISX name it is the difference between two entirely different valuations.

IIIValuation

I value AML with a bottom-up discounted cash flow, five years of explicit unlevered free cash flow discounted at its weighted-average cost of capital, with a Gordon-growth terminal value. The WACC blends the cost of equity with an after-tax cost of debt across AML's roughly 69% equity, 28% debt, and 3% preferred capital structure. I run it through two lenses. The global lens builds the cost of equity from a US risk-free rate plus the full Bahamas country risk premium, the return an international allocator would demand. The domestic lens starts from a Bahamas government bond and charges no separate country premium, the return a local investor barred from freely investing abroad actually faces. The same weights carry each through to a WACC near 11% globally and near 7.3% domestically.

The two lenses share the same cash flows and a 2.5% terminal growth rate. At a global WACC of about 11.0%, carrying the full country risk premium, fair value is about $10.71, roughly 19% above the price. At the domestic WACC of about 7.3%, with no country premium, it is about $21.43, more than double the price. The full model, with every assumption, is available to download.

What moves the value

The single most important input is the country risk premium, because it is the largest driver of the distance between the global and domestic valuations. At the full 5.13% an international investor should pay about $10.71. Strip it out, as a domestic investor effectively does, and the same cash flows are worth about $21.43. Terminal growth (set at 2.5%, below Bahamian nominal GDP growth) is the second lever, and because AML's terminal return on capital exceeds its cost of capital, higher terminal growth raises fair value rather than lowering it. Operating assumptions matter far less than either.

Against the tape, AML trades near 9x trailing earnings, about 8x EV/EBITDA, and a 2.8% dividend yield. To a global investor charging full Bahamas risk that is roughly a fifth too cheap, and to a domestic investor cheaper still, which is a large part of why the local market is content to own it here.

IVWhat could break it

1. Single-market concentration and event risk. AML operates in one small economy, so it is exposed to Bahamian macro, tourism cycles, and physical events. FY25's fire loss is the concrete example, and hurricanes are the recurring one.
2. The country risk premium is an assumption, not a fact. The valuation leans heavily on a 5.13% CRP. If sovereign risk deteriorates, the premium rises and fair value falls, and the same input that anchors the thesis is also its largest source of estimation risk.
3. Thin liquidity. BISX is a small, illiquid market. Even a correct view can be hard to express at scale, and prices can stay away from fair value for long stretches.

VThe model