The Huntsman – is the new movie starring the muse of the blog Jessica Chastain. Photo of the launch in Singapore in April / 2016.
Today I do not have much new thing to talk about so I’m going straight to the annual WEGE, one of the best companies I think of bovespa.
WEGE (WEGE3) is a company based in Jaraguá do Sul and was founded by 3 Brazilians. It is from Novo Mercado and has 100% tag along with ON shares (those in which you are really a partner). It has 4,810 individuals in Brazil, 1262 legal persons and 682 institutional investors (funds). It may seem like a bit, but it has a good company, which is just the same, see that OGX, which has always been rubbish, has already had 50,000 people-physical members. WEGE is not a much-loved company in the media, nor is it in bovespa, it does not appear so much in the spotlight and goes unnoticed even by experienced investors. WEGE is a family-owned company, of those southern families who know the importance of work, it is very industrial in the sense of the word, it is a CUP industry that manufactures gigantic and heavy machinery, compressors, turbines, turbines for wind energy, Electrical materials etc … that is, it is an industry that supplies raw material to other industries worldwide. The industry is called “industrial goods”, so see that it does not sell pots or spoons, it is a highly specialized sale and with high added value due to the degree of refinement of the product.
What does she sell?
I will summarize the last 14 years of WEGE’s history:
In 2001, shareholders’ equity was 573 million, today it is 6,156 billion. (R $)
in 2001 annual revenue was 1.065 billion in 2015 was 9.760 billion.
In 2001 the annual profit was 175 million, in 2015 it was 1.166 billion.
The ROE is almost 19% and the profit margin is almost 12%.
Currently it has almost 5.1 billion, but it has 4.4 billion in cash, ie it is a small debt in relation to the profit and to the one that is in cash, that is to say, it is almost tied and without debts, and still the company is always investing, Expanding plants, reinvesting almost 40% of the profit and growing always.
One interesting thing about WEGE is that almost half of its revenue in 2015 was in dollars. And as the dollar soared a lot in 2015, her profit rose together. It is an exporting company and was not much affected by the robbery of the PT and the crisis of the Brazilian industry in 2015, although its operating in Brazil did not grow as much. WEGE’s average profit growth over the last five years was almost 17% a year. An impressive result considering that Brazil is very difficult.
From 2009 to here that the PL comes above 20 and does not show signs of regressing. The WEGE Payout is almost 50% and came in at 30% in the last 4 years. So she has always been able to grow in equity, profits, payout and dividends (it can be said that she is a dividend growth company and always reinvesting more and more to grow more). In my opinion, she found a good equation between growing and paying dividends (she pays bimonthly dividends – which is good for people who want to see the color of money and see cash flow positive and always dripping money into account).
I particularly like investing in the industrial sector. For personal reasons, I like to see the transformation of goods and the growth of other industries and this is what WEGE does, that’s her job. See that when you invest in a business you become a partner and benefit from the results. Looking at the macro, WEGE is investing heavily in providing turbines and propellers for the wind energy sector and this sector has a lot to grow in Brazil because in the future (next 50 years) I think that counting on oil, coal, and gas will be half out of fashion. There is no way, the solution is clean technology.
Let’s go to Release prints so you can feel the pressure:
These are the three most important prints in the release in my opinion. First, you have to always look for consistent earnings growth, controlled debt, balanced cash, reinvestments within the company and ultimately analyze the company’s own business, its competing peers (in Brazil none, within bovespa). The numbers are very good. It is a company that I bought satisfied.
In 2015 the share price fell 2.3% despite the almost 40% increase in annual net income. See how the market is irrational in the short term? Do not try to invest expecting price increase, this here is not fixed income. Stock prices fluctuate in the wind. It is better to see the profit going up and you in the business. The release has only 14 pages and is very quiet to read, the prospects are good, and even better when Brazil improves. SE, right?
That’s it for now. I gave a review in the annual and next year reanalysis the company, meanwhile I am buying and increasing my part in it.