Friday, July 8, 2011

SUZB5 - Suzano - Return on Investments

I know it's almost a futurology issue, but I'll try to shed some light about what would be the return on planned investments until 2015.
  • I went to the company site and from there I got that quarterly median net margin (earnings/revenue) for the last 20 quarters is 13.3%.
  • The 2 projects (Maranhão and Piauí) will add 3 million tons of hardwood pulp. As international price is now at US$ 870.00, the investments will earn US$ 2,6 billion revenue.
  • That revenue, at historically net margin will yield earnings of about US$ 350 millions.
  • Orbe said (I failed to confirm this number in the company site) that this investments will consume about US$ 7 billions. (I saw now in company site that the estimated total value of investments for the 2 projects is US$ 5.3 billions)
  • So the expected return on new investments would be miserable 5% (with new company data it jumps to 6.6%).
Probably I misunderstood or forget something. However, if my figures are closer to what would be the expected returns, I'm certainly out of this shit.

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9 comments:

sid said...

Current ROE for SUZB is 8.9%, but earnings are inflated by fixed assets sales. So it's probably that my estimates for future return are quite fair. It's a ridiculous return.

sid said...

Or, putting it in another way, for each dollar invested, company can generate just above 50 cents in NET REVENUE (Net Revenue/Equity=52%)

sid said...

Did you give up of SUZB5?

cessna said...

Yes. ROE is the most important quality indicator and SUZB5 lacks it.

cessna said...

The relation FCF/Price is much higher for SUZB5 than for KLBN4. I would prefer KLBN4 for the same price, but SUZB5 is ridiculously cheap.

cessna said...

Infomoney:Goldman Sachs rebaixa para venda recomendação das ações da suzano

O banco também revisou para baixo suas estimativas para o Ebtida (geração operacional de caixa) da companhia entre 2011 e 2013, para R$ 1,16 bilhão, R$ 1,25 bilhão e R$ 1,43 bilhão...

Well, the 1,16B EBITDA forecast means that the market value is only 2.7 times the EBITDA.

They can say Sell!!!!!! while they are buying for themselves.

sid said...

Ahahahah!
That's probably the case.
I don't give a shit for what they say.

sid said...

Suzano reduzirá custos e decide sobre venda de ativos em 2012

cessna said...

Valor: Suzano considera adiar fábrica do Maranhão

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