- Cash flow from operations since 1Q2010 is BRL 73,7 mi. Since receivables increased a lot, total cash flow generated is under BRL 20 mi (less than BRL 3 mi per quarter).
- Cost of debt is very low. Almost 3/4 of it is TJLP + 2.5%.
- According to the company, cost of TEU per day of own boat is 80% less than chartered boat (Cost TEU/day of BRL 6.00 x BRL 29.00).
- One boat just begun (Jacaranda) and other will begin (Jatoba) commercial operation soon.
So, if you believe company is pre-operational (except for TVV Vilha Velha) and the new boats will reduce costs and increase FCF, it may be a good pick.
But bear in mind that today it doesn't generate cash and doesn't pay dividends, so you'll have to make a bet. What is yours?
7 comments:
The past is not a good guide for Log-In. It's a changing company, for the better I hope. They say that 2011 was the transition period and 2012-2013 will be the harvest time. If that's true, it's time to buy.
As you said, it's a bet, not a sure thing.
But Fama had 16,37% in set/11, for a much higher price than the closing price last friday.
The simple fact that Fama has a huge position in LOGN doesn't seduces me. It has a bigger share in MDIA and a I don't think it's cheap (it's an excelent company, no doubt, but isn't cheap).
Log-In belevies that after 2014, when all boats will be in operation, volume will increase 70%, besides huge costs decreases.
Anyway, I think more research is necessary.
The problem is: i don't know how to value a business based on the future prospects. I just take the average returns in the past fes years and project a modest growth rate for the future.
Maybe in 2012 log-in will show some results that justify the price. I calculated an annual FCF of Bout 40 millions Usd as the minimum fcf to buy logn3 at friday's closing price.
Vale estuda vender participação na empresa de cabotagem Log-In
I true believe in the potential growth of Log-In.
However, I can't get a clue if that growth will turn out to be profitable.
So I'm not going to make any move until I see 4Q11 release and analyse Jaracanda boat performance.
Valor: Armadores tem 246 porta-conteineres parados nos portos
This is the risk for the shipping business. The capacity buildup usually occurs after the market passed its peak.
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