The muse of the blog riding a bicycle in disguise on the Memorial Day holiday.
It was almost unintentionally that I discovered this company.
Some time ago I had passed my eye over it and I do not know why I did not consider it with the necessary attention. That thing happen.
This I think it is a bit erased in bovespa, I never saw the news about it, which makes it difficult for you to know, but let’s go, another because it’s a company from Maranhão and Pará. And who the hell would invest in a company in Maranhão or Pará, Is not it? The economy news is mostly southeast and southeast.
To start the company has good willingness to be from the New Market, have excellent liquidity, ON shares with 100% tag along, 1246 Individuals with partners (very little is it?), 20 legal entities and 589 institutional as partners and 74 % Free float. They are very good governance data. You see, this electric, unlike the others, is growing, paying a few dividends, and has the payout of only 17% and DY of 2.09% so it is in the growth part of my portfolio.
Remembering that electrical is difficult to analyze.
For me the benchmarks of the electric ones are the tractebel catarinenses (from Santa Catarina state), from this we can see others. The tractebel generates energy and distributes, Equatorial is practically only distributor despite having a small thermoelectric that influences very little.
I entered this company to not concentrate too much on tractebel and I was positively surprised.
The fact is that this crisis of electric via Dilma’s pen makes things much more difficult. If you do not remember the Dilma lowered the light bill in the pen giving billionaire losses in the electrical, which are gradually recovering, so the increase in profits is a bit artificial and some non-recurring.
Equatorial is the junction of two electric companies: Celpa do Pará and Cemar do Maranhão.
She does not have a lot of generation, mostly she’s just a distributor. She was born the privatization of CEMAR ( CEMAR was privatized on June 15, 2000) and entered the Bovespa in March 2006.
Reading the annual release, which by the way has much to improve the graphic quality, we see that the companies CELPA and CEMAR are treated separately and then they are consolidated within Equatorial, I skipped the individual analysis and I went to the consolidated one. There is no PowerPoint material on the RI website, there are 2 gigantic pdfs to be dismembered.
If we disregard 2013, which was a very unusual year for what I have already said, things have been improving for the company in 2014, with an EBITDA greater than 1 billion, net margin higher than 12% and ROE of 22.5% in those 3 years I think that the situation has calmed down a little, profits are full of non-recurring items, and it does not have a sustainable baseline to consolidate an average, it reached a loss of 200 million in 2Q14, and then it gained 549 million in 2Q15. A very large amplitude.
This very great volatility of profits and losses does not please me much, one-half you think a profit of + 100% and in the other half of the other year a loss of -200%, it is not much for me that I do not want so much emotion, In addition EBITDA is not growing that much. Let’s see if these profits are more stable and consistent and if this EBITDA can grow as well. I’m not that interested in financial income for this type of company, which has been impacting some of the balance sheets, but one day this tide could turn against the company. The current debt of 3.7 billion is almost balanced with the cash of 2.4 billion + net profit of almost 1 billion last year.
The company continues with new investments, combating waste, the “cat” and trying to improve efficiency. The pictures are not so nice but I’ll paste here from the release because there are people who do not care and really like to see. These states PA and MA are very poor states and have much to grow and improve, and with that the consumption of electric energy also, if good policies are made in the economy of these states we can see a quite expressive growth in the energy consumption, much greater Than other regions of Brazil could grow.
We see here efficiency by improving and reducing the losses of thefts and clandestine links. We still have a lot of energy theft in Brazil. 12.4% robbery.
Another indicator of quality is the number of hours interrupted. The smaller the better. See what garbage was like in 2008 and continually improved so far.
Here’s what matters, net profit, but see that the gigantic leap in profit may not be as good. And Ebitda was not that cool either, falling 14%.
Here below we see a giant leap in profit, I have to wait to see if this will hold. Quotation increased a lot, the market liked the result.
It is impressive how much tax that is imposed on the Brazilian companies, there in an area lacking in investments what could be done to improve the company and the capital itself if it were not all for the purse of the government.
That’s it for now.
I had gotten very excited about the company, but now after reading the Release, I saw that it was not so good, just a distributor company and even more in two poor and very corrupt states, it’s very difficult, but nothing that needs to be done or Worry so much, now is to monitor and reevaluate better when buying.
That’s it for now.