Now we have to discount normal investments. On page 12 of 2Q11 report they say that they spent BRL 90 mi in maintenance. For the sake of prudence, let's say that they will spend BRL 200 mi in investments regularly. So FCF would be BRL 400 mi (10% of mkt value).
That's too good to be true. And it is. I see at least 2 problems:
- They're considering investments (not maintenance) something that will not yield cash in the future, like spends to make footbridge.
- They also say that they will spend BRL 3.3 billions between 2012-2015. That's more than BRL 800 millions annually, more than its cash generation. In other words, OHLB won't have FCF until there (2015).
So, unless I misunderstood something, I'm not interested in.
3 comments:
That's what we tought in 2008. They already own a lot of money and must invest more billions BRL in the next years to come. The FCF, however huge it will be, won't be available to stakeholders formany years.
Ola,
somos leitores assiduos do seu otimo blog sobre value investment. Aqui vao 2 bons artigos para serem discutidos se interessar sobre bolha imobiliaria (tudo em ingles):
http://www.brazilianbubble.com/2011/11/pin-that-bursts-housing-bubble-warning.html
http://www.brazilianbubble.com/2011/11/brazil-property-price-correction.html
Abc!
Thanks Brazilian Bubble.
We added your blog to our list in order to keep us updated.
Post a Comment
We encourage your feedback and we will take your comments into serious consideration. However, you must be warned that any comment that does not follow the blog philosophy (Value Investing and Behavioural Finance) will be promptly removed.