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Ladies and gentlemen, good morning. Thank you for holding. Welcome to MRV Engenharia. [Operator Instructions]
Now, I would like to turn the floor over to Mr. Eduardo Fischer. Mr. Eduardo, please proceed.
Good morning to all. Eduardo here. Thank you very much for your participation. I'm going to start talking about 2017, and what we're expecting for 2018. So starting by 2017, results were extremely positive. We were able to start to put into practice what we had planned 2, 3 years ago, the most aggressive purchases. If we get the fourth quarter -- the second quarter of 2017, we launched and sold annualizing the 50,000 units. It was our proposal 2, 3 years ago. And we pursue in 2018, the consolidation of these figures. 2018 will be the year where we're going to look at the operation, MRV launching and selling during the year the 50,000 units. The year started well. We're moving to the phase -- ending phase of the first quarter. The demand has been growing. 2018, we're going to look at the consolidation of the units -- the 50,000 units that we have as a goal.
The consequence of this is that our expectation and our numbers will be better in 2018, as we're going to launch more, therefore, sell more. Our revenue tends to be higher, and we will have the dilution of expenditures, and our expectation is to have growing profitability during 2018. So in terms of comparison, we -- in 2018, we maintained the strategy of continuing to invest in bank. We should see the same investment that we saw in '16 and '17. And behind this there's a reason that despite the market showing an improved higher competition in some locations, because of the purchase of land, in most of the locations, the competition we're in hasn't arrived yet, the competition. So we think it is the moment to continue with a strategic and important investment, which will be useful for growth pillars. 2018 should be a year with great investments in the bank, because this still makes sense in economic terms.
Another important thing for this year, as we said at the end of last year, we're going to have in the second semester, probably, our new product in the market, which is the premium product. And we will be able to increase the platform and the reach of MRV in terms of dwellings in Brazil. As we had said, it's going to be something complementary. This does not overlap our project of 50,000 and the current operations. It's an operation -- it's an opportunity of gains that we see. And our goal and our objective is that in the second semester this year, we can have the product on the shelf.
Another important point is that, we may follow in 2018, the implementation of our project, which is guaranteed income. It's important objective. This project should be completely implemented during 2018, and looking at 2019, a company that should have close to 0 destruct. And it's a lighter and more agile company with less liabilities. So we see opportunities for gain in the operation during 2018, within this project of ours.
And to close, we continue capturing gains in the implementation of our aluminum and concrete walls. This quarter, we're finishing with 80%, 85% of job sites with this process implemented. But most important than this, we still see chances for a shortening of the cycle with a new building process. It was -- it's being implemented -- it's been implemented during the last 5 years, where we see a chance of really shortening the cycle even in these 80% of job sites that are already using this technology. So our perspective for 2018 is that we continue with a more efficient operation, growing and delivering more profitability.
Now, I'm going to pass the floor to Leo.
Good morning to all. I'm going to comment on the aspect which is so important for our business, which is the funding and financing for customers. I'm going to split the subject in 2. First in regards to banks, and then we're going to talk about the fund for length of service for FGTS.
First, talking about Banco do Brasil. Clearly, considering greater appetite for this sector, we -- they've been hiring entrepreneurships with enterprises with Banco do Brasil. The partnership was very strong in the past. Suddenly, it cooled down. But now it's recovering, recapturing. It has a long and strong balance sheet, strong base. So we see this partnership very well with Banco do Brasil.
Moving to the Caixa Econômica Federal. It's been a greater partner in the last year and has a great percentage of our business. Now we're extremely comfortable with the Caixa Econômica. We see the changes that have been taking place. They are positive and bringing more transparency through great governance for Caixa. We see Caixa focusing more and more in its operations in a sense of real estate portfolio. And this brings great tranquility in terms of Basel issues. It was out on the press. We've seen reports talking about the results of Caixa being quite positive, especially in the fourth quarter. And this result also brings -- bring a space of -- in terms of Basel for Caixa Econômica. The default that is completely under control, very adjusted. It has a good guarantee, which are the apartments. They were hired with a good loan to value. It brings a good quality for the portfolio of Caixa Econômica. From the point of view of MRV with Caixa, the first quarter is being completely normalized from the point of view of hiring enterprises. It has been happening normally.
Change -- moving to FGTS, another topic. Some people have a more conservative vision in terms of FGTS. We're looking at the cash flow for the next 4, 5 years. We look not only at the budget of the first year, this year, but we see a budget that's completely feasible both from the point of view of contracting volume as well as funds and resources to subsidize the 1.5 level, very easy this year -- that year. It's very important for us to have this planning -- multi-annual planning because the land we're buying today, we're only going to launch in 2 or 2.5 years' time in average.
The budget from the point of view of allocation from 1.5 to 2.5 and 3, we see it's quite balanced. We have 70,000 units for 1.5, perhaps some increase, but it depends still on dealings with FGTS and the budget of the union. The message is that we're seeing very calmly the accounts of FGTC (sic) [ FGTS ]. The unemployment decreasing slowly. This should improve the cash flow for FGTS and availability of resources to be able to finance the market.
Now, I'm going to ask Rafael to speak.
[So repeating what Rafael and Fischer said now.] We saw a great result vis-à-vis delivering what we promised in the past. I would like to highlight the growth of the net profit of BRL 180 million, a very robust growth.
ROE reached 10% now. It reached a ROE which is very healthy. It hasn't reached the level we want. We're really targeting 15% to 17%. The ROE is very sound now. Revenues have grown 29% in regards to the last quarter of 2016, BRL 1 billion. During this, the EBITDA also had a great advance -- the capital advance at 68% in regards to the fourth quarter of 2016 EBITDA of BRL 250 million. Over -- the financial indicators all of them had a great advance. This is the result of a healthy operation, an operation that has been growing and very assertive planning that was made 3, 4 years ago that company was able to preserve its size during the crisis. But let the crisis much more prepared, much more profitable and very ready to enter this type of growth and consolidating 50,000 units.
Now, we're going to pass to the questions and answers.
[Operator Instructions] Mr. Victor from Bradesco BBA would like to ask a question.
First point I would like to discuss here is the dividends that you have announced -- extraordinary dividends you announced of BRL 155 million. So you have a leverage that is low in generation of cash should continue solid, very robust, even with the issue of increasing the land bank in 2018. Given this, when could we see this payout increasing? And another point that I would like to discuss is that we had recently -- we were recently in Brasília and discussing with government representatives the very focus on the quality of the program. And they forbid individuals to access. So given this, you have more spread in more than 150 cities, perhaps the competition with these it will add -- individuals may be higher. How are you seeing this move during the 2 first months of the year? Is there an improvement in this competition?
This is Rafael. In regards to dividends, first of all, we have a formal right. We have to go through GE if you know risk. The company should release or make the payments of -- payment of dividends during the start of the second quarter. It's important that our dividend payout was close to 50% in the last year, and given the situation of the cash low leverage, the economy moving better, political risk exists, but it's more under control, the company is more confident and perhaps growing -- perhaps going beyond 50%. What we say that the most difficult part is to make the money, make more profit with generation of cash that could be solid and continuous. This is the difficult part to distribute dividend or have a rebuying program. This is easy. It's the right moment. The company will address this and return more capital to shareholders. Today, we're more comfortable than we were in the past and, therefore, we should see in the midterm, the payout dividend going beyond 50%, which is a very healthy threshold already. And being conservative with low lever, we see no problem with cash perhaps during the year. In the past, we had a strong investment in LOG, and in our opinion, it was very assertive and it will pay during this year. And looking forward, with less obligations, investments will be focused much more on MRV. And this will open a space for us to be more aggressive at some moment in terms of dividends. In regards to the build -- and in fact, the government or individual is looking at more sustainability for the program. The companies that were more irregularly or in a more informal manner, they face more difficulties today to capture the FGTS funds. There's no doubt, looking forward, this was a very correct vision. We see small companies with a bit more difficulties, but I think it's early to say that if the market -- if our market share will grow at a higher or lower pace. As important as this difficulty with you're using this little add, the land bank that was bought by us during -- it's very stratified, very strong the MRV brand, what we do in terms of experience -- the customer experience, quality of the product. MRV has been implementing during the last year. A more and more round operations, smooth operation, a product that can be better and better. I have no doubt that in a more competitive environment, this will make a great difference looking at the mid- and long term.
Enrico Trotta with Itaú BBA.
I have 2 questions. The first one, looking at sales expenses in this quarter, it's quite stable in regards to the third quarter. And this increase also, we could see very clear dilution. So I would like to understand, how -- what can we expect in terms of sales expenses given you have this target, this goal of 50,000 units. Can we really expect this dilution that has been occurring during 2018? How are you looking at this? And the second question about the ready stock raised in the semester. Is it because of greater rigor that's triggered from the bank, 4% of the total, it was 2%, if it's more concentrated over Minha Casa Minha Vida. If you see any movement of this ready stock? If it should increase during 2018 given that the banks can continue -- should continue being working? I would like to understand your mindset.
Enrico, it's Ricardo here. So the first point, in terms of sales expenses, we've been saying that we had a structure that was a bit more swollen than was needed. But in our growth plan, it would make sense to maintain these expenses a bit higher in percent of -- thinking about the growth of the company. This growth is being delivered -- starting to being delivered where this threshold of 50,000 expectation is really a dilution. The commercial expense, which is linked to the quantity of sales burden, it's an important portion. It's a fixed number so we can see this during the year. In regards to ready stock went from 2% to 4%, it's a very low number. It doesn't worry us. And on higher -- with enterprises with Banco do Brasil, we don't expect this number to continue growing with the conclusion of these enterprises of these -- with Banco do Brasil or any other partner.
Next question comes from Morgan Stanley.
I have 2 questions. The first is the land. You're investing in this land bank. How do you -- where did you want to invest in other cities or you think you are close to universe of the bank? And second question is mission for 2018. Hearing you speak today, you have a quite an optimistic view. I would like to understand, which are the things that worry you most, such as the risks that you are more worried about? What type of things may concern you?
So official land bank, as I said in the opening, we have some opportunities for the buying of land banks in some places where we operate. We have more competition in metropolitan areas. But if you look at our behavior of land bank purchase, was stronger, we have consolidated this. And today, we're making a strategic move towards the cities and interior of the country. We want to reinforce the purchase of these lands in metropolitan areas and use the opportunities in very good conditions where conditions are much better. In regards to 2018, we have some points that are important. We had a great concern about electoral risk, political risk and what could happen in 2018, especially in the middle of last year. This was worried, really bothered us. This risk today is smaller, we believe. We're more comfortable, and we're more optimistic. This reflects on operations. Since the second semester last year, we have seen much growth -- higher growth in our stands and sales, and our communication channels with potential customers. This is a very important and positive point. The risk I worry is with cash and funding. But looking at what happened in the last 6 months, as Leo was saying at the opening, it is something that I considered that is mitigated and well balanced. I see 2018 -- I'm much more comfortable March 2018 than I was in March 2017 -- March 2018 than March 2017. So I think we have the condition to deliver everything we're starting to -- we had started in second semester of 2017.
Next question from Marcelo Motta from JPMorgan.
Two questions. If you could comment on the land. We saw there was a great improvement of threshold that was better. I want to see the tendency and if you would like to give comment on the free cash flow after 1 year with a normalized cash, without any stumbling to the end of the year. If we could expect a higher recovery in 2018, how are you seeing this scenario?
Hello, Marcelo. First, the equity income has been improved -- improving for 2 reasons. One for Prime and MRL have been improving operating, selling at good price, with very compatible prices. Some Prime operations are even above the average of MRV, I can say, in terms of margin. This is clearly contributing. And with this, operations are at a phase where they can improve the generation of -- cash generation. And important, as these are leveraged entities, the drop in interest rates can help a lot their operation and diminishes the financial cost. It brought an important improvement that is continuing. So the 2 factors brought this improvement, and we see a continuation. It is slow, but steady. And this line will behave well. In terms of free cash flow, last year, we generated a bit less cash than we would have liked or we had planned, which is the reasons that are well known. The fourth quarter was lower. We've been accumulating a volume of receivables and of clients. This is high. This cash will be stronger this year of 2018. And as Rafael already mentioned, cash generation, good part of it will go to our shareholders. This is our objective, and we have mentioned this already.
Next question Luis Stacchini, Crédit Suisse.
I have 2 questions. You talked about -- with regards to sales expenses. You mentioned that there is a fixed part of this. Could you quantify the puzzle of this part of share fixed expenses. Do you have any contracts or institutional expenses that have more fixed characters? If you could try and quantify this, it would be very interesting. And second point, I would like to discuss, the interest capitalized in stock. We saw the first -- I think, it's since 2012. If it makes sense to assume a stability or a drop at this level since the pace of growth have been faster or if the company, given the growth indebtment could be larger? It's the -- I want to understand the dynamic of this interest rate capitalization?
Luis, this is. Ricardo. In regards to trade of commercial expenses, more than half of it is fixed. And consequently, the rest is something in terms of variable expenses. It is an important expense since we are increasing volume. In terms of capitalized interest, yes, we reached a certain stability. It is important here -- it is a mathematical factor here, when in 2016, beginning of 2017, the interest rate was higher. Therefore, in terms of number of reais, the capitalization of volume, as more reais being capitalized with a lower interest rate, the receivables are less. We have a level of cash that is quite high. So we're not going to increase the indebtment to increase the cash volume. It could happen pinpointed situations, since we always try to have a longer and longer debt -- longer and longer profile debt. So when we have good opportunities, we're always going to try to stretch the debt. But we shouldn't change much what we have in terms of debt value. We have certain due dates in 2018. This should be amortized, and the company will try and do this. What we're going to see is a balance in terms of the quantity of interest in maintaining the [indiscernible] inter-bank rate at the same level, and we're going to have more expenses since the lands -- the stock of interest, we will see this coming through DRE. There is not a great change in terms of what we have now.
Look -- and just help me here. Would you be able to say, how much is in land? And how much is in stocks?
I don't have this in my memory right now how much it is divided in terms of stock of land and stock of apartments.
Victor Tapia from Bradesco BBA.
I have one more question, in terms of the premium product that you want to launch. You commented that this would be linked to the same model that you have with Minha Casa Minha Vida. How are the talks going on, this conversations with banks going on?
We're talking to some banks, and these conversations have been good. We don't necessarily depend only on them. I can do it with Banco do Brasil and Caixa the same way we do it today. Obviously, if you have more partners to develop the products of this platform, it's better, but it's not exactly attached to commercial banks entering the game. The expectation is good. The sine qua non condition for us to do this as MRV works with FGTS and constructions with short cycle. The model doesn't change. So regardless, the banks that we're going to search, the premises that this model should work the way it is doing now.
[Operator Instructions] So as there are no questions, I would like to turn the floor over to the President for their final considerations.
First of all, we want to thank you all to be here, present at our DRE. We had 2017 that was very good financial indicators and operating indicators, very, very good. Our great project is MRV 50,000 is completely feasible, as Fischer said. Analyze the fourth quarter, the main objectives are at this level, next year is really consolidating the project. We see that the demand is good. And looking forward, we're going to have very relevant launches, strong entities with little competition. The economy is improving, consumers are more confident, employment is slowly growing and improving. We're optimistic, and we're sure that was made in the past will put MRV in a even more differentiated position. We made very robust investments in our key people, land bank, and we -- it put MRV at a very highlighted position. In the next quarters or years, we're going to let the benefit of these investments over the last years. So it's important to emphasize that we continue comfortable with program as it's being managed by the government. Always with this sustainability, predictability, the Fundo de Garantia, FGTS, the same way, search for a better qualification of the industry. It's very important that formal companies do things right, be it in the hiring or the -- and labor, the delivery of products with guarantees. I'm sure that the companies will have a competitive advantage over more informed. And the Ministry of Cities has had -- this is favoring MRV, as all other companies would -- that had this long vision, and I have no doubt that we're very well positioned in an industry affected that will have a strong demand for many years. So again, thank you all for your presence. And reemphasize we're positive and optimistic, not only for the company, but also for the industry in which we operate. Thank you very much, and see you next call.
The conference call is closed. We thank you, all, for your participation, and have a nice day.