I've recently taken a position in Ultrapar (UGP), a nicely diversified Brazilian energy company trading on the NYSE, and since no one writes about it here, I thought I would share my notes.
Dodge & Cox is the largest institutional shareholder; they are a value-minded fund company I respect. Other large institutions increasing their holdings last month:
nasdaq.com
UGP pays a .83 dividend, currently yielding 2.70% and a payout ratio of 28%
A few weeks ago they settled an agreement with the Brazilian justice department dividing up the spoils of a company with 4,240 service stations. Petrobras (PBR) gets services stations in the north and UGP gets the south, making UGP Brazil's second-biggest fuel distributor with a market share of 15%. UGP will get 1/3 of the oil refinery with a capacity of 17,000 barrels a day.
Using a growth rate of 11% vs. next year's consensus of 14.7%, UGP looks attractively priced:
Company: UGP
Date: 6/1/2007
Next year's expected earnings: $2.73
EPS growth rate used for estimate: 11%
Multiple Graham used for estimate: 8.5
Graham Fair Value: $58.62
Current Price: $30.46
$ difference: $28.16
Percent Growth to Fair Value: 92.44%
Note estimates have risen 23.5% in the last 30 days:
finance.yahoo.com
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Ultrapar Participacoes S.A. Releases Its 1Q07 Results
7:19 p.m. 05/09/2007 Provided by
SAO PAULO, Brazil, May 9, 2007 /PRNewswire-FirstCall via COMTEX/ -- Ultrapar Participacoes S.A. (BOVESPA: UGPA4 / NYSE: UGP), a company engaged in the distribution of LPG (Ultragaz), the production of chemicals (Oxiteno), and in providing integrated solutions for special bulk cargo (Ultracargo), hereby reports its results for the first quarter of 2007.
In March 2007 Ultrapar carried out the acquisition of the fuel and lubricant distribution businesses of Ipiranga Group in the South and Southeast regions, in one of the largest acquisition transactions ever carried out in Brazil. In parallel, the other businesses of Ultrapar have continued to grow in 1Q07, with consolidated EBITDA of R$ 115 million, 8% up on 1Q06,
-- ANNOUNCING OF THE ACQUISITION OF THE IPIRANGA GROUP TOGETHER WITH PETROBRAS AND BRASKEM
-- EBITDA AT ULTRAGAZ AMOUNTED TO R$ 60 MILLION IN 1Q07, UP 9% COMPARED TO 1Q06
-- EBITDA AT OXITENO TOTALLED R$ 42 MILLION, UP 4% COMPARED TO 1Q06
-- EBITDA AT ULTRACARGO AMOUNTED TO R$ 11 MILLION, 19% HIGHER THAN IN 1Q06
-- ANNOUNCING OF THE ACQUISITIONS OF UNION QUIMICA IN MEXICO, FOR US$ 4 MILLION, AND PETROLOG SERVICOS E ARMAZENS GERAIS, FOR R$ 10 MILLION
"In one of the largest acquisition transactions in the history of Brazil, we acquired the Ipiranga's fuel and lubricant distribution businesses in the South and Southeast regions of Brazil, together with the Ipiranga brand, moving Ultrapar up to a new level of size and scale, and generating several results and growth opportunities for the company. With this, Ultrapar reinforces its commitment to sustainable growth, taking another step forward in the project of increasing its presence in the capital market."
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Ultrapar Participacoes S.A. (UGP) is a Brazilian firm whose main lines of business are distribution of LPG, production of chemicals and petrochemicals, and provisioning of integrated logistics services. The company also provides storage and transportation-related products. Its wholly owned subsidiary, Ultragaz, distributes liquefied petroleum gas to residents and other firms. Another subsidiary, Oxiteno, produces a variety of commodity and specialty chemicals in Mercosur countries Brazil, Argentina, Paraguay and Uruguay. The logistics segment, Ultracargo, provides distribution and storage services for chemical and fuel companies, primarily in Brazil. Ultra S.A holds a 66% stake in Ultrapar.
The firm enjoys high brand-recognition and intends to reinforce this market perception by continuing to supply high-quality products and introducing new services. In January 2006, Oxiteno, signed a contract with Project Management and Development Co. (PWD), a Saudi-Arabian company, for the licensing of technologies to produce ethanolamines and
ethoxylates. The technologies licensed by Oxiteno will be used in the petrochemical complex located in Al Jubail. The Saudi plants using Oxiteno technologies will have capacities of 100,000 tons/year of ethanolamines and 40,000 tons/year
of ethoxylates. The company has also invested R$81 million in capacity-expansion programs.
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Market Cap (intraday): 2.47B
Enterprise Value (1-Jun-07)3: 2.78B
Trailing P/E (ttm, intraday): 18.32
Forward P/E (fye 31-Dec-08) 1: 11.14
PEG Ratio (5 yr expected): N/A
Price/Sales (ttm): 0.99
Price/Book (mrq): 2.44
Profit Margin (ttm): 5.39%
Operating Margin (ttm): 6.95%
Return on Assets (ttm): 5.85%
Return on Equity (ttm): 13.74%
Revenue (ttm): 2.50B
Revenue Per Share (ttm): 30.78
Qtrly Revenue Growth (yoy): 7.00%
Gross Profit (ttm): 391.11M
EBITDA (ttm): 269.54M
Net Income Avl to Common (ttm): 134.63M
Diluted EPS (ttm): 1.66
Qtrly Earnings Growth (yoy): -34.40%
Total Cash (mrq): 445.73M
Total Cash Per Share (mrq): 5.495
Total Debt (mrq): 755.67M
Total Debt/Equity (mrq): 0.748
Current Ratio (mrq): 2.482
Book Value Per Share (mrq): 12.45
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