Net Debt x Cash Flow

M. Dias Branco (MDIA3) cash flow for 2011 is the following:

• Net Cash generated in operating activities: 431.50
• Net Cash used in Investment Activities: -273.70
• Net Cash used in Financing Activities: -116.90

So, in 2011 the increase in cash and cash equivalents was 40.90. That is, it generated cash to pay investments, dividends and also to amortize 29,4 in debt.

However, net debt totaled 468.4 million in 4Q11, up 121.8% on 4Q10! 

How could that be? Where the trick is?

ALPA4 - Alpargatas

Alpargatas stands out in creating and managing brands that are desired by consumers in many countries (like Havaianas). Besides that, is controlled by a well known and defined group (Camargo Correa). Also shows strong and stable cash generation.

So I decided to take a look at the three last cash flows available (2011 was multiplied by 4/3 to put in an annual basis):

As you can see, it's an exceptional company, with average FCF over Equity above 20%. However, it's not cheap right now.
I added it to my wish list.

Food and Meat Companies

I took a look at the three major food/meat companies.

By far BRFS3 it's the best, not just because it's not indebted, but also because of its core business: 50% of net sales comes from milk and processed foodstuffs, sold in internal market. It's not a commodity like business. But it's not cheap. Cash flow is 8% of market value and, after deducting investments, I guess a 5% FCF Yield.

The other two (JBSS3 and MRFG3) are rubbish. JBS has a huge revenue, if it improves margin a little, it can generate a lot of cash. But Marfrig can't even generate a dime!

NATU3 - Natura

The most beautiful graph you've ever seen:

Natura has been paying steadily and growing dividends (BRL millions):

Dividends adjusted by inflation have grown at 16% annually in the last 6 years and net equity (also inflation adjusted) has increased more than 600 millions.

BEEF3 - Minerva

Returning to the cash point, look how this shit likes to burn cash.
It doesn't pay any dividends, so where the cash goes to?
Are they investing so much? I can't believe.
I think that's one of the best Fundamentus Graph.
As the saying goes, who's likes to burn cash is crazy!

AMBV3 - Ambev

Unlike DTEX, AMBV results were very good:


Net Revenue               10.5%
Gross Profit                11.3% 
EBITDA                     13.7%
Net Earnings               21.7%


That's a Company a la Buffet, with a high cash flow, but sadly not at an adequate price at the moment.                           

BEEF3 - Minerva

Orbe announced in its last release that bought Minerva. The main reasons exposed were:

• Minerva is completing an intensive investment program started in 2006 that prompted the company to a slaughter capacity of 3,400 head per day to almost 10,000 head daily during the year 2011.
• As a result, net debt increased, but the company has 600 mi in cash and the debt maturity is most due in 2019. But the company is now ready to start a deleveraging process.
• Has initiated a joint venture with Dawn Farm to sell cooked frozen products and food service business. Minerva is now a global supplier to pizza Hut and Subway. 

I have to confess I'm not so much excited about this company/sector, but I'll take a look, because I know nothing about the it.