quarta-feira, fevereiro 22, 2012
sexta-feira, fevereiro 10, 2012
quarta-feira, janeiro 25, 2012
F. Ramada (RAM PL)
F. Ramada Investimentos is the parent company of a group of companies that, together, develop two business activities:
i) industrial, which includes the activity of steels, from where it stands out the subsegment of steel for molds, and the activity of storage systems, and
ii) property, aimed at managing real estate assets in Portugal.
The activity of steels with a leading position in domestic market, is performed by two companies: F. Ramada Universal Steels and afire. Its clients are international big car manufacturers (like Autoeuropa from Volkswagen) who export almost its entire production.
The activity of Storage Systems is accomplished by four companies: F. Ramada Structures (the largest manufacturer of storage systems in Portugal, which concentrates all production of the group), Storax Equipements based in France, based in Storax Racking UK and Benelux Storax based in Belgium. International activity composes 76% of sales.
90% of total income from real estate assets in Portugal come from long-term rentals of forest land. Total investments are 85.8 million (M) euros, corresponding to leased land to third parties under operating leases, through contracts with an average duration of 20 years. There is about 70M euros of mortage loans related to these assets (info from Investor Relations). Net asset value of about 25.8M euros of these investments alone is far superior than the company's market cap (15.38M). Value per share is 1.01. And they are making an aditional 0.79M anualized net income return. But there's more. A lot more.
Industrial Unit
Sales growth of 25,9% in first 9 months of 2011 and net income for the last 4 quarters of 5.577M euros. A current PE of 2.76.
Lets look at Balance Sheet (3Q2011) without real estate assets and its associated liabilities:
Cash & Near Cash Items: 19.32
Accounts Receivable: 30.14
Inventories: 25.60
Other Current Assets: 10.00
Total Current Assets: 85.05
Net Fixed Assets: 4.93
Other Long Term Assets: 7.26
Total LT Assets (1): 12.19
Total Assets: 97.24
Accounts Payable: 15.01
Short-Term Borrowings: 43.77
Other ST Liabilities (2): 15.77
Total Liabilities (2): 74.55
Total Equity (3): 22.69
(1) Removing from LT Assets 85.81 of real estate assets.
(2) Removing from Other ST Liabilities and LT Borrowings about 60M euros of mortage loans related to real estate assets.
(3) Total Assets - Total Liabilities.
So we have an Industry Unit whose book value is about double the current market cap. Book value of unit is 0.885 and PB is 0.68. Current ROE of 25.45%.
Valuation
Having in mind that this is a microcap but also that it is currently very profitable and that its balance sheet is simple and also strong, I think that book value is a conservative enough valuation.
Real estate assets: 1.01
Industrial Unit: 0.88
Value per share: 1.89, or a 215% potencial from current price of 0.60.
Risks
- The industrial unit is evidently tied to the economic cycle. But I should add than even in dificult years of 2008 and 2009 the company was profitable with earning of 2.723M and 1.850M euros.
- The risk of Portugal leaving the EU. It is in the interest of the euro zone and of the leading countries (Germany and France), that these solvency issues by several country members are resolved soon and their economies recover. That would allow the leading countries to strengthen their growth and protect their financial sector as its institutions were the ones that lent money to Greece, Ireland, Portugal and Spain.
Portugal has already a restructuring program designed to reduced budget deficits and total debt as well as to make the economy more flexible and increase productivity, concentrating on export activities.
The program was designed by the EU, ECB and IMF to bailout the country after it could not finance itself. Portugal will have a couple of years with slow GDP, but structural changes being made will reduce the government involvement in the economy and reduce unproductive businesses activities like building and construction. Odds are the country will eventually emerge stronger.
Portugal did not have a recent housing bubble like UK or Ireland. It also doesn’t have has much public debt as Greece, Italy or Belgium. Hence, the Portuguese problem rests on competitive issues that are being address.
We think the risks of Portugal leaving the euro are low. Ultimately if it did happen, the margin of safety of the ideas presented is so huge that it would protect the investment even in that worst case scenario.
Dividend
Current dividend is 0.07 cents or a 11.67% dividend yield. Payout Ratio is 32.26%.
Shareholders
F. Ramada Investimentos is majorly owned by its managers (+40%). Bestiver Gestion, the great spanish value investors, own 8.92% of the company.
Hugo Roque
i) industrial, which includes the activity of steels, from where it stands out the subsegment of steel for molds, and the activity of storage systems, and
ii) property, aimed at managing real estate assets in Portugal.
The activity of steels with a leading position in domestic market, is performed by two companies: F. Ramada Universal Steels and afire. Its clients are international big car manufacturers (like Autoeuropa from Volkswagen) who export almost its entire production.
The activity of Storage Systems is accomplished by four companies: F. Ramada Structures (the largest manufacturer of storage systems in Portugal, which concentrates all production of the group), Storax Equipements based in France, based in Storax Racking UK and Benelux Storax based in Belgium. International activity composes 76% of sales.
90% of total income from real estate assets in Portugal come from long-term rentals of forest land. Total investments are 85.8 million (M) euros, corresponding to leased land to third parties under operating leases, through contracts with an average duration of 20 years. There is about 70M euros of mortage loans related to these assets (info from Investor Relations). Net asset value of about 25.8M euros of these investments alone is far superior than the company's market cap (15.38M). Value per share is 1.01. And they are making an aditional 0.79M anualized net income return. But there's more. A lot more.
Industrial Unit
Sales growth of 25,9% in first 9 months of 2011 and net income for the last 4 quarters of 5.577M euros. A current PE of 2.76.
Lets look at Balance Sheet (3Q2011) without real estate assets and its associated liabilities:
Cash & Near Cash Items: 19.32
Accounts Receivable: 30.14
Inventories: 25.60
Other Current Assets: 10.00
Total Current Assets: 85.05
Net Fixed Assets: 4.93
Other Long Term Assets: 7.26
Total LT Assets (1): 12.19
Total Assets: 97.24
Accounts Payable: 15.01
Short-Term Borrowings: 43.77
Other ST Liabilities (2): 15.77
Total Liabilities (2): 74.55
Total Equity (3): 22.69
(1) Removing from LT Assets 85.81 of real estate assets.
(2) Removing from Other ST Liabilities and LT Borrowings about 60M euros of mortage loans related to real estate assets.
(3) Total Assets - Total Liabilities.
So we have an Industry Unit whose book value is about double the current market cap. Book value of unit is 0.885 and PB is 0.68. Current ROE of 25.45%.
Valuation
Having in mind that this is a microcap but also that it is currently very profitable and that its balance sheet is simple and also strong, I think that book value is a conservative enough valuation.
Real estate assets: 1.01
Industrial Unit: 0.88
Value per share: 1.89, or a 215% potencial from current price of 0.60.
Risks
- The industrial unit is evidently tied to the economic cycle. But I should add than even in dificult years of 2008 and 2009 the company was profitable with earning of 2.723M and 1.850M euros.
- The risk of Portugal leaving the EU. It is in the interest of the euro zone and of the leading countries (Germany and France), that these solvency issues by several country members are resolved soon and their economies recover. That would allow the leading countries to strengthen their growth and protect their financial sector as its institutions were the ones that lent money to Greece, Ireland, Portugal and Spain.
Portugal has already a restructuring program designed to reduced budget deficits and total debt as well as to make the economy more flexible and increase productivity, concentrating on export activities.
The program was designed by the EU, ECB and IMF to bailout the country after it could not finance itself. Portugal will have a couple of years with slow GDP, but structural changes being made will reduce the government involvement in the economy and reduce unproductive businesses activities like building and construction. Odds are the country will eventually emerge stronger.
Portugal did not have a recent housing bubble like UK or Ireland. It also doesn’t have has much public debt as Greece, Italy or Belgium. Hence, the Portuguese problem rests on competitive issues that are being address.
We think the risks of Portugal leaving the euro are low. Ultimately if it did happen, the margin of safety of the ideas presented is so huge that it would protect the investment even in that worst case scenario.
Dividend
Current dividend is 0.07 cents or a 11.67% dividend yield. Payout Ratio is 32.26%.
Shareholders
F. Ramada Investimentos is majorly owned by its managers (+40%). Bestiver Gestion, the great spanish value investors, own 8.92% of the company.
Hugo Roque
quinta-feira, janeiro 19, 2012
segunda-feira, janeiro 09, 2012
quinta-feira, agosto 25, 2011
Palestra de Prem Watsa
Prem Watsa gere a seguradora canadiana Fairfax no mesmo estilo e filosofia que Warren Buffett gere a sua Berkshire Hathaway.
Esta é uma palestra que Watsa concedeu ao Ben Graham Center for Value Investing na Richard Ivey School of Business.
Link
Esta é uma palestra que Watsa concedeu ao Ben Graham Center for Value Investing na Richard Ivey School of Business.
Link
terça-feira, junho 28, 2011
Corticeira Amorim, SA
CORTICEIRA AMORIM is the world's largest producer of cork products and one of the most international of all Portuguese companies with operations in dozens of countries from all continents. For over a century that is present in this sector, having contributed significantly to the worldwide spreading of the advantages of cork products.
Brand Recognition: An industry leader for over 130 years.
The World Leader: The biggest market share in all product segments,
Corks: 25%
Finishes: 65%
Cork Composites: 55%
Insulation: 80%
Distribution: Sales Force dedicated to supplying customers in over 100 countries. 95% of sales outside of Portugal.
Vertical Structure: Integrated management of the value chain, from procurement of raw material, processing and optimization of all sub-products, production of a diverse range of products, direct presence in major consumer markets knowing the final customers, able to anticipate trends in demand (and discovering the potential for more applications of cork), and for providing an excellent service.
The cork industry in Portugal: Portugal is the biggest producer of cork and simultaneously, holder of the largest cork oak forest area of the world. The Portuguese cork industry absorbs 2.3% of total Portuguese exports, employs about 17,000 people and accounts for 70% of the worldwide transformation of cork, with 90% of its production for exports.
A sustainable product: Cork is 100% natural and recyclable, being extracted from cork trees. The cork oak is a native species with a key role in fixing CO2, in preserving biodiversity and combating desertification.
Inovation at CORTICEIRA: €5 million invested annually in R&D and Innovation; 17 patents subject to registration in the last three years; 11 units with FSC certification.
Américo Amorim: CORTICEIRA is controlled (76.56%) by the personal holding of the richest person in Portugal, Mr. Américo Amorim, with a fortune of about 5 billion euros. The company is in the Amorim family since it was created, being runned since 2001 by António Rios de Amorim, nephew of Mr. Américo Amorim.
VALUATION
CORTICEIRA AMORIM has demonstrated the resilience of its business and even during the worst recession of the last 80 years it managed not to deliver losses. Indeed in 2009 the company reported profits of 5.1 million euros and in 2010 it reported 20.5 million euros, justified primarily by sales growth of around 10%. CORTICEIRA has a very clean balance sheet with 33.3 million euros in cash and equivalents and has been reducing debt (Debt to Equity is 0.5).
CORTICEIRA is trading at historical low multiples with PE being 7.7 and PBook 0.61. Its not a very profitable company (2010 ROE is about 8%) and looking and the very conservative leverage ratios, it could release some cash, reduce the company's assets and improve their profitability ratios. With 2010 earnings the company reinstated a dividend of 0.10 cents or about 8.62%.
A 10X 2011 earnings is a conservative PE multiple and gives us a target of 2.2. But just book value alone more than 2, so this is a good target for CORTICEIRA, which implies a potencial growth of 68%. The company has much more potencial that can come from: sales growth; operational and profitability improvements; dividends and buybacks. These steps can boost valuation. Until then we have book value to protect this investment.
Markets right now are focusing and the struggles of Portuguese government to overcome the debt crisis. And stocks and their companies suffer as a result of that. But the are very valuable companies in Portugal, with great balance sheets and with large share of exports of their sales and they are being ignored. CORTICEIRA exports 95% of its sales and its an opportunity.
Brand Recognition: An industry leader for over 130 years.
The World Leader: The biggest market share in all product segments,
Corks: 25%
Finishes: 65%
Cork Composites: 55%
Insulation: 80%
Distribution: Sales Force dedicated to supplying customers in over 100 countries. 95% of sales outside of Portugal.
Vertical Structure: Integrated management of the value chain, from procurement of raw material, processing and optimization of all sub-products, production of a diverse range of products, direct presence in major consumer markets knowing the final customers, able to anticipate trends in demand (and discovering the potential for more applications of cork), and for providing an excellent service.
The cork industry in Portugal: Portugal is the biggest producer of cork and simultaneously, holder of the largest cork oak forest area of the world. The Portuguese cork industry absorbs 2.3% of total Portuguese exports, employs about 17,000 people and accounts for 70% of the worldwide transformation of cork, with 90% of its production for exports.
A sustainable product: Cork is 100% natural and recyclable, being extracted from cork trees. The cork oak is a native species with a key role in fixing CO2, in preserving biodiversity and combating desertification.
Inovation at CORTICEIRA: €5 million invested annually in R&D and Innovation; 17 patents subject to registration in the last three years; 11 units with FSC certification.
Américo Amorim: CORTICEIRA is controlled (76.56%) by the personal holding of the richest person in Portugal, Mr. Américo Amorim, with a fortune of about 5 billion euros. The company is in the Amorim family since it was created, being runned since 2001 by António Rios de Amorim, nephew of Mr. Américo Amorim.
VALUATION
CORTICEIRA AMORIM has demonstrated the resilience of its business and even during the worst recession of the last 80 years it managed not to deliver losses. Indeed in 2009 the company reported profits of 5.1 million euros and in 2010 it reported 20.5 million euros, justified primarily by sales growth of around 10%. CORTICEIRA has a very clean balance sheet with 33.3 million euros in cash and equivalents and has been reducing debt (Debt to Equity is 0.5).
CORTICEIRA is trading at historical low multiples with PE being 7.7 and PBook 0.61. Its not a very profitable company (2010 ROE is about 8%) and looking and the very conservative leverage ratios, it could release some cash, reduce the company's assets and improve their profitability ratios. With 2010 earnings the company reinstated a dividend of 0.10 cents or about 8.62%.
A 10X 2011 earnings is a conservative PE multiple and gives us a target of 2.2. But just book value alone more than 2, so this is a good target for CORTICEIRA, which implies a potencial growth of 68%. The company has much more potencial that can come from: sales growth; operational and profitability improvements; dividends and buybacks. These steps can boost valuation. Until then we have book value to protect this investment.
Markets right now are focusing and the struggles of Portuguese government to overcome the debt crisis. And stocks and their companies suffer as a result of that. But the are very valuable companies in Portugal, with great balance sheets and with large share of exports of their sales and they are being ignored. CORTICEIRA exports 95% of its sales and its an opportunity.
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