jch548 Posted April 14, 2014 Share Posted April 14, 2014 2013 AR released by Conduril. Thought I would start a dedicated thread to mark the occasion. It would have been nice if they published the AR in English like they did for 2012. I went through some of it with my google translator. EPS was E20.32. Ebitda came in around E75mm. Net debt was down. Only 7% of their revenue was related to Portugal vs 33% a couple of years ago. They continue to expand in Africa. They will pay a E3.00 dividend for 2013. Link to comment Share on other sites More sharing options...
writser Posted April 14, 2014 Share Posted April 14, 2014 The English version of the annual report should be finished around the end of the month. Link to comment Share on other sites More sharing options...
jch548 Posted June 26, 2014 Author Share Posted June 26, 2014 Conduril has been moving up not on volume though as the shares are tightly held. Still trading at four times 2013 EPS. I read through the 2013 A/R. Didn't see any comments about the low share price or ways to enhance shareholder value. Not sure there is much they could do as close to 69% of the shares are held by four 10% plus owners so it is more a question of trading liquidity than anything else. I tried to google Antonio Martins who owns 34% to find his age. No luck. BPI Private Equity-Sociedade de Capital de Risco, S.A. came up in a search. They are 10% owners. Haven't noticed them before. Has to be a positive to have them counter balance the insiders. Not complaining as the company is doing excellent operationally with their push into Africa. Very impressive the way they are able to grow while their home market Portugal is depressed. Link to comment Share on other sites More sharing options...
Hielko Posted June 26, 2014 Share Posted June 26, 2014 Hadn't noticed that there was a Conduril thread in this forum. Has been my biggest position and highest conviction pick for the past two years now, and I still think it is incredibly cheap. And yes: BPI owns a bit more than 10% of the stock. But for some reason the percentage ownership is calculated based on the shares outstanding + shares in treasury so their stake isn't reported anymore in Conduril's annual report (they are a 9.2% owner using that nonsensical calculation method). You can track their stake in BPI's annual reports. I first thought that BPI was the party selling that big 75K block of shares in 2012 because in 2013 they dropped from the 10% holder list, but it appears that it was a <10% holder doing the selling. Link to comment Share on other sites More sharing options...
writser Posted June 26, 2014 Share Posted June 26, 2014 @jch548 In case you didn't know the Martins family bought the company in the 1970's. They still own a majority stake and due to legal reasons can't increase their position. Nor are they planning to sell a single share. Link to comment Share on other sites More sharing options...
jch548 Posted June 28, 2014 Author Share Posted June 28, 2014 Only 2mm shares outstanding and roughly 70% tightly held. Fortunately others besides the Martins hold significant stakes. After a point I would guess the large stakeholders would rather see a more realistic valuation. I mean we are not talking about a micro cap here. Hundreds of millions lie between here and fair value. Not sure how they can go about increasing the share price. Options are limited if a sale is off the table. A five for one split and the insiders sell some shares via a listing in London? BPI would have an exit opportunity if they wanted one. I'm going to hang onto my shares, collect the dividend and see where this goes. There must be more upside in Africa and a post austerity Portugal. My largest holding now too. Think I bought my shares a year ago and added a few on a couple of up moves. Thanks for providing some background on this one. Link to comment Share on other sites More sharing options...
Hielko Posted June 28, 2014 Share Posted June 28, 2014 For the valuation gap to fully close something probably has to happen w.r.t. the float and the liquidity, but plenty of companies that are also tightly held but don't trade at a huge discount like Conduril (in fact: I wish I knew a second company like Conduril). Don't think anything really needs to change just to have a lot of upside. Also seems that trading liquidity is improving. Already more trades in 2014 than in any other year before. Link to comment Share on other sites More sharing options...
yadayada Posted June 28, 2014 Share Posted June 28, 2014 hielko you buy this through fidelity? Link to comment Share on other sites More sharing options...
Hielko Posted June 28, 2014 Share Posted June 28, 2014 I bought this through Binck (Dutch broker) Link to comment Share on other sites More sharing options...
writser Posted June 28, 2014 Share Posted June 28, 2014 For the valuation gap to fully close something probably has to happen w.r.t. the float and the liquidity, but plenty of companies that are also tightly held but don't trade at a huge discount like Conduril (in fact: I wish I knew a second company like Conduril). Don't think anything really needs to change just to have a lot of upside. Agreed. The valuation itself could be a catalyst, an uplisting, bigger dividends, whatever. I don't really care. It's just too cheap. The stock has quadrupled in 2 years and is still trading at a P/E of 4. It's 25% of my portfolio now. Really amazing. The only thing that annoys me are the Portuguese withholding taxes. @jch548: where do you live? Do you pay these as well? Link to comment Share on other sites More sharing options...
jch548 Posted June 28, 2014 Author Share Posted June 28, 2014 I live in the U.S. and claim a 100% foreign tax credit for the withholding tax at origin. Not sure if 100% is correct but I claim it any way. Though my largest holding at the moment I don't have seven figures in this one so the income and tax is rather immaterial. Link to comment Share on other sites More sharing options...
Packer16 Posted July 1, 2014 Share Posted July 1, 2014 How did you guys get comfortable with the 400 days plus of A/R (called clients on the balance sheet) especially with only an average of Euro 6.2m of CFO over the past 5 years versus an average earnings of Euro 30.2m? Packer Link to comment Share on other sites More sharing options...
Hielko Posted July 1, 2014 Share Posted July 1, 2014 How did you guys get comfortable with the 400 days plus of A/R (called clients on the balance sheet) especially with only an average of Euro 6.2m of CFO over the past 5 years versus an average earnings of Euro 30.2m? Packer That's indeed the one thing that should catch your attention when you look at the financials, but I think this isn't a big issue. They work on projects that take a long time to complete, and (apparently) they often get paid the majority of the contract only after the work is done. This isn't ideal, but since their customers are government entities the credit risk is acceptable and in Africa financing is often also guaranteed by other entities such as the European Union. Looking at the 5 year average is also a bit unfortunate because they did generate a massive amount of CFO in 2008. Cash flows are lumpy, but so far it doesn't seem they have trouble collecting receivables. And you have also have other signs that this isn't an issue when you see insiders buying a large amount of shares or when the company continues to pay and increase dividends. Link to comment Share on other sites More sharing options...
rijk Posted July 2, 2014 Share Posted July 2, 2014 angola's political stability (30 year civil war period, dictatorship) and oil dependence are definitely risk factors, however, management seems to be acting prudently and history demonstrates that their receivables were good current valuation still seems cheap, but no longer ultra cheap, potential upside from additional projects in angola and a recovery in portugal is significant regards rijk Link to comment Share on other sites More sharing options...
jch548 Posted July 2, 2014 Author Share Posted July 2, 2014 About a month ago I looked at a number of small cap European engineering companies. Many were up 100% to 200% discounting the end to austerity and the pickup in government spending. If Portugal should ever turn this as you say would be very significant. Link to comment Share on other sites More sharing options...
jch548 Posted July 2, 2014 Author Share Posted July 2, 2014 Should have also mentioned Operating Cash Flow was a positive 39mm Euros in 2012. Link to comment Share on other sites More sharing options...
jch548 Posted July 30, 2014 Author Share Posted July 30, 2014 I don't see any half year results reported on the company's web site for any prior years. Does this mean we won't be seeing any? Do they release anything on the Lisbon exchange? Thanks. Link to comment Share on other sites More sharing options...
oddballstocks Posted July 30, 2014 Share Posted July 30, 2014 They don't release anything on their website, but they do email out reports to shareholders who ask. Regarding a comment you posted earlier, the company is based in Portugal, but they are mostly an African engineering company. If Portugal comes back they will most likely experience an increase in business, but the main driver for them is Africa. The perception of Portugal surviving could be key to the stock price. This stock has exceeded my wildest dreams, I'm still holding on tight. At this point I wouldn't be surprised to see 120EUR or greater. Conduril is a private company that (unfortunately for management, but fortunately for us) has an exchange listing, shareholder benefit as management grows their wealth. Link to comment Share on other sites More sharing options...
jch548 Posted July 30, 2014 Author Share Posted July 30, 2014 I'll try to get on their mailing list. In the meantime if you get the numbers first maybe you could post a synopsis. Thanks. I read an editorial a couple of weeks ago criticizing the austerity programs in Europe with emphasis on the collapse of public spending on infrastructure. Economic studies suggest that infrastructure spending creates a pretty strong multiplier effect on future years growth as opposed to say dolling out more welfare or unemployment checks which only produces a short-term stimulus. It would seem that to get economies operating at their potential a pick up in spending will be needed. Link to comment Share on other sites More sharing options...
jch548 Posted September 23, 2014 Author Share Posted September 23, 2014 I had sent my proof of ownership to Conduril to get on their mailing list. IR said H1 results should be out by the end of September. Has anyone seen anything? Thanks. Link to comment Share on other sites More sharing options...
writser Posted September 23, 2014 Share Posted September 23, 2014 Results are out, pm me. Link to comment Share on other sites More sharing options...
jch548 Posted November 27, 2014 Author Share Posted November 27, 2014 Saw some old news on Mota-Engil a portugeuse engineering outfit where they had been planning a London IPO for their African sub.... The African sub was to be valued at over $2B. Mota doesn't have a English web site but as best that I can tell their African business was generating most of the profits. African ebitda is running at $360mm annually in 2014. Mota is also bidding on a state owned waste business in Portugal. Not much else going on in Conduril land. The shares never seem to trade though I did see what looked like a half million dollar trade awhile back. We must be trading at three or four times trailing eps. Mota-Engil Africa Postpones London IPO After Espirito Santo Woes By Henrique Almeida July 11, 2014 Mota-Engil SGPS SA, Portugal’s biggest builder, canceled plans for an initial public offering next week in London for its African unit after concerns about Grupo Espirito Santo’s finances roiled global markets. “Events and the performance of equity markets in the last 48 hours meant that the scale of orders was negatively impacted,” Mota-Engil Africa said in a regulatory filing today. Mota-Engil Africa, which was scheduled to begin trading on the London Stock Exchange (LSE) on July 16, remains “fully committed” to carrying out an IPO in the future, it said. Mota-Engil, which owns 100 percent of Mota-Engil Africa, fell as much as 11 percent to 4.40 euros, the biggest decline in more than a year, and traded down 3.8 percent to 4.77 euros at 12:21 p.m. in Lisbon. Portugal’s benchmark PSI 20 Index rose 1.6 percent, trimming this week’s slide to 8.4 percent. Portugal’s Banco Espirito Santo SA jolted global markets yesterday after a parent company missed short-term debt payments. Mota Engil Africa is the latest of a handful of companies to postpone a listing this year. At least five companies in London, including Eastern European (CEC) budget carrier Wizz Air Holdings Plc and U.K. retailer Fat Face Group Ltd. have postponed or withdrawn their sales in the busiest first-half for IPOs since 2007, according to data compiled by Bloomberg. Mota-Engil and the Africa unit planned to offer 35 million shares for 920 pence to 1,160 pence each in the IPO, according to the prospectus of offer published last month. At the upper end of the range, that would translate into a market value of 1.33 billion pounds ($2.28 billion), based on 115 million shares outstanding. Mota-Engil Africa was scheduled to announce the IPO price today. “Despite a book of high-quality institutional orders within the announced price range, the aggregate demand was such that a successful listing and after market could not be assured,” Mota-Engil Africa said. Johannesburg-based Stanlib Asset Management Ltd., which manages more than 542 billion rand ($51 billion) of assets in Africa, said on July 8 it planned to buy shares in Mota-Engil Africa. To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net Marco Bertacche, Srinivasan Sivabalan Link to comment Share on other sites More sharing options...
jch548 Posted November 30, 2014 Author Share Posted November 30, 2014 I was reading a bit about demographics in Africa. Read there will be more births in Nigeria this year than all of Europe. Discretionary income is growing faster in Africa than India. Urbanization is taking hold in Africa. Seven of the ten fastest growing economies are in Africa. The banking market cap in Nigeria is $15B while Brazil's banking sector is valued at $300B. In ten years Nigeria's population will exceed that of Brazil. I know Africa is dicey with all the corruption etc. but you can't argue demographics. They are the antithesis of the declining populations of the developed markets. Besides holding some Conduril I picked up some Atlas Mara Co-Nvest ltd near NAV. They hold a minority stake in Union Bank of Nigeria and controlling stakes in two other banks located in Botswana and Rawanda. Very small position. Carlyle has also taken an 18% stake in Diamond Bank in Nigeria for $150mm. Link to comment Share on other sites More sharing options...
Hielko Posted December 1, 2014 Share Posted December 1, 2014 @jch548: while the Mota-Engil Africa IPO was indeed cancelled, they did a partial spinoff and the company is now listed in Amsterdam. Wrote a bit about it here: http://alphavulture.com/2014/12/01/mota-engil-africa-debuts-on-dutch-stock-exchange/ The listing prospectus of the company is also a good read wrt economic expectations in Africa and the competitive environment that Mota-Engil and Conduril are operating in. Link to comment Share on other sites More sharing options...
writser Posted April 1, 2015 Share Posted April 1, 2015 2015 annual (in Portuguese): link . EPS: €16.39, NCAV €78.99, BVPS €118.05. Revenue was unchanged y/y and they announced a €2 dividend. As was to be expected the drop in commodity prices has been bad for some of the African countries they operate in (mostly Angola). Backlog is down to 450m compared to 750m last year. Interesting quote from the AR (roughly translated): Betting on geographical diversification, Conduril is still searching for new markets and opportunities in especially Latin America. Link to comment Share on other sites More sharing options...
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