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Strategies & Market Trends : Value Investing
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To: RWS who wrote (72294)2/4/2023 1:30:29 PM
From: E_K_S  Read Replies (1) of 78702
 
Re: LND - an interesting first look

Will need to look at it but I like that it may/could be a 'pure' play in Brazil Ag. AGGZF, CTVA & ADM all have exposure to Brazil and from their reports have profitable growing operations in that country.

My first take is there may/could be $US currency exposure and w/ the falling $US compared to last year could be a good time to invest. Barchart shows a div yielding 20.5% (remember the Foreign Tax). I suspect that div must change yearly depending on results of their operations and/or assets sales.
BrasilAgro Cia Brasileira de Propriedades Agricolas focuses on the acquisition, development and exploration of agricultural properties. It operates through the following segments: Real Estate, Grains, Sugarcane, Cattle Raising, Cotton and Other. The Real Estate segment presents the P&L from operations carried out in the Company’s subsidiaries. The Grain segment produces and markets soy and corn. The Sugarcane segment includes the sale of the raw product. The cattle raising segment consists of producing and selling beef calves after weaning, which characterizes the activity as breeding and fattening of cattle. The cotton segment is engaged primarily in the production and sale of cotton lint and seed. The Other segment engages in corporate activities. The company was founded on September 23, 2005 and is headquartered in Sao Paulo, Brazil.


LND is definitely one to dig deeper into. I do own several ADR's and typically there is an ADR management fee but not huge. I own South African gold miners through ADR's so these generally transact enough vol so they do get price discovery. Not so much w/ AGGZF so I typically hold this for 24 months from low to high (at least w/i the last 7 years with 2 excellent buying opportunities 2016 & 2020).

Marketcap for LND only $354 million; Large number of shares at 62 million.
LND generate a very nice FCF even w/ periodic land sales/Buys At 3.25x Price/Cash Flow is extremely cheap! I love I can buy such cheap FCF streams.

From the balances sheet it shows they have $1.37/share in Cash & Equivalents & Debt surprisingly low w/ Debt/Equity at 0.25.

Typically you see these land properties pretty leveraged and hope & pray that their FCF can cover any weather disaster (even w. insurance).

I recall that BP has made several investments in Brazil specifically acquiring biofuel businesses. ( 3/2011 - acquire majority control of the Brazilian ethanol and sugar producer Companhia Nacional de Açúcar e Álcool (CNAA).) and then this last month ( BP may buy out partner Bunge in Brazilian joint venture BP Bunge Bioenergia -source)

Based on the above, those sugar cane property assets LND owns are quite valuable. From my quick review, LND is the perfect 'pure' Ag play for Brazil agriculture to put in the EKS Ag basket. Thank's for the name. I missed it in my SIC ( SIC-0100 Agricultural Production - Crops Agriculture Operations) screen but now see it in the list.


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