An Attempt to Assess DASA Free Cash Flow

I'll try to make an estimate of what would be DASA Free Cash Flow. It's a very interesting company, but it's very hard to analyse it.

Investments in Work Capital

Inventories and receivables has been quite steady between the range of 25-30% of net revenue since 2005. The average is 26.5%. On the other hand, suppliers are floating around 4-5%, in an average of 4.3%. So the net investment in work capital historically has been around 25% of net revenue growth. 

That is, if revenue grows from 1 bi to 1.1 bi we can expect a net investment in work capital of 25 millions.

CTAX4 - Contax - Review

I promised, in an older post, to take a closer look in Contax. 

The first thing I saw was a recent change in the controller group. BNDESPAR, PREVI, PETROS and FUNCEF ceased to be shareholders of CTX, increasing the domains of  Telemar. I also saw in the reference form that Oi stands for more than half Contax revenue. It's too much conflict of interest with a low safety margin.

Besides that, Atento, from Telefonica group, announced that are planning to make IPO. And Csu Card System is seriously commited in grow in contact center. So I ask, for how much time should Contax be able to maintain that beautiful return?

I'm out for now, at this current prices. I would prefer to take something at a discount, when most think is going to be wrong.

CTAX4 - Contax

As CTAX4 has gone up in my watchlist and taking in account that I'm now more prone to use/analyse FCF, I have calculated FCF for Contax for the last 3 years:

Cash Flow - CTAX4	2010	2009	2008
Net Income	108.498	131.691	9.240
Depreciation	122.109	116.411	100.851
Earnings + DEP	230.607	248.102	110.091
Fixed Assets Purchase	162.533	158.901	167.930
FCF	68.074	89.201	-57.839

BEMA3 - Bematech

Bematech published 2010 results. Earnings of 35 millions, which gives a P/E >10 and ROE < 10 %. Not so exciting.
Besides that, what realy makes me keeping out this company is the fact that 15 millions was due to tax incentives (ICMS). The notes to the financial statements said nothing about when it will finish and I guess that that amount need to have specific use/investment.
So the earnings from operations would be miserables 20 million, at a moment that commerce are growing fast! And even with that tax incentive, FCF is just about 20 to 25 millions, a yield of only 6%. I'm definitely out.