Today I’m going to talk about this Small Cap in Ceará that I really like: M. Dias Branco.
It is a family-owned business based in Aquiraz in Ceará, metropolitan region of Fortaleza. The company’s forte is the pasta and biscuit food sector. The distribution is mainly in the northeast. This company is not one of the stars of the stock exchange nor a darling of analysts but its data is very good and I believe it is a good investment in value for the partner in the long term. Consider it as a growth company, as dividends are very low.
These are the marks that M. Dias White has, do you have there in your city?
The release is crazy stuff, 104 pages, very good for those who like details and many details. The Ri site is very good and has many files to download.
About the governance of the company, it is the core of a unique family, very well known in Fortaleza and rich, perhaps the richest family in Ceará, I’m not sure.
Let’s go to governance:
Activity: Production and Marketing of Biscuits. Pastas. Flour Of Wheat And Bran. Margarine And Fats. Cakes. Snacks. Mixture For Cakes And Toast.
It is from the Novo Mercado, tag along 100% ON, the company has market value R $ 9 billion and 1812 individual members (it’s that thing, the staff does not want to roam slowly with good company, but if you go see OGx whatever. Was more than a promise came to have 50,000 individual members.) Learn that in the stock market most do not want to say much.
In 2003 the company’s equity was 961 million, revenue was 785 million and profit was 51 million annually.
Today, at the annual closing of 2015, the net worth is 3717 million, the revenue is 4743 million was 574 million and the net profit was 604 million.
That is, in 13 years equity increased by 3.86x, revenue increased by 6.04x, and net income increased by 11.04x. Imagine if you made 1 real dividend in 2003, you would earn 11 reais today with the same amount of stock.
If you look at the graph discounted the action M. Dias Branco in 2003 it was worth $ 0.50 cents today it is worth 79 reais, so see how much you would profit by holding this action, your equity would have taken an unimaginable leap. See by google finance:
From May 13, 2011, to here the share has grown + 104%, the FLO representing the 500 largest companies in the US grew 53% and the IBOVESPA index fell -19.96%. This is for you to see how good it can be to choose good companies to invest in instead of buying ETFs, especially the BOVA11 that sucks.
As you can see the company has excellent foundations to be a partner:
It has no debts, it continues to invest, profit historically is always rising, a ROE of 15% and a margin of 12% (for the industry is an excellent margin), since 2007 the CAPEX comes positive, the dividend of 72 cents per share is And the annual DY is 1.3%, apparently this company here has to go into its portfolio part for growth if you choose it to be a partner as well. The 2015 release is very cool and practical:
Remembering that we are in the WORST CRISIS of the last 25 years, that is why we are seeing the revenue increasing and the profit decreasing, this money should be being used to pay debts, make cash and face perhaps the worsening of the times.
Ebitda (which is the company’s operating activity) has fallen a bit but I believe it is in line with the crisis we face (where the industry is suffering a lot), inflation has slightly increased the price of biscuits for the final consumer, too Increased raw material (wheat) and dollar costs.
The company intends to grow in the southeast and south, so let’s wait for the investments already made and factories under construction. The products are directed to class C, D, and E, and we know that the income of these classes has been increasing progressively, as the Brazilian population has been increasing.
Still about 2015:
In the last quarter of 2015, we saw a drop of almost 29% in relation to the profit of the same period of 2014 which shows an expressive worsening in that part. I think it was the prior quarter for many companies in Brazil. See that M.Dias White has even increased its market share a bit so there is not so much to worry about, the margins have dropped even, I hope this is a passing one.
By 2015 the company has invested nearly $ 457 million in internal improvements, new factories, machinery and equipment and IT, all of which will revert to future profits for us partners if we wait. The company was resilient, managed to grow, invest, profit and increase market share even in a crisis year. I am a quiet partner and I hope to give good news in 2016 annual I will do here on the blog next year.