Bernardo Calvente Danilo Kamiji Danton Koga Renan Criscio Insper 2012.pdf · Bernardo Calvente...
Transcript of Bernardo Calvente Danilo Kamiji Danton Koga Renan Criscio Insper 2012.pdf · Bernardo Calvente...
Bernardo Calvente Danilo Kamiji Danton Koga Guilherme Barros Renan Criscio
28/11/2012 2
“A high quality stock with great growth potential”
0
20
40
60
80
100
Oct-06 Dec-07 Mar-09 May-10 Jul-11 Oct-12 Dec-13
BRL
UPSIDE
25.1%
Reference Date 19-oct
Ticker MDIA3
Market Cap. BRL7,362 mn
Avg. Daily Traded Volume
BRL19.7 mn
Governance Level
Novo Mercado
Recommendation
Market Price
BRL65.10
Target Price
BRL81.42
Source: Bloomberg and Team’s estimates.
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
BUY
72%
16%
6% 4%
2%
MDB: Leading producer of Cookies and Pasta in Brazil
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Net Revenue breakdown
South
Middlewest North
Southeast
56%
21%
18%
4% 1%
Wheat Flour and
Bran
Margarine and Fats
Pasta
Snacks and Cakes
Source: Company data.
Cookies market share in volume
MDB 26.3%
Nestlé 8.9%
Nabisco 7.2% Source: Company data.
Northeast
Cookies
Pasta market share in volume
MDB 25.1%
Selmi 11.7%
J.Macêdo 9.5%
1,507
2,193 2,348 2,444 2,911
2007A 2008A 2009A 2010A 2011A
Net Revenue
Market Leadership
Vertical
Integration
New Products
Organic & Acquisition
Growth
SUCCESSFUL STRATEGY EXCELLENT RESULTS
18% CAGR2007-2011
204
378 469 461 475
2007A 2008A 2009A 2010A 2011A
EBITDA 23% CAGR2007-2011
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
*International data Source: Company data and Bloomberg.
Source: Company data.
MDB Kraft* Nestlé* Selmi J.Macêdo
EBITDA Margin
18.0% 17.6%
7.6% 5.5%
18.4%
FURTHER POTENTIAL
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UNMATCHED BUSINESS MODEL
GROWTH OPPORTUNITIES
CONFIRMATIVE VALUATION
BUY
Business Model
Innovation
Vertical integration
Sales strategy
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Distribution Center (DC)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Innovation
Vertical integration
Sales strategy
Branding Distribution
Model
36%
3% 1%
16%
44%
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Innovation
Vertical integration
Sales strategy Direct Sales
(40% of sales)
Indirect Sales
(60% of sales)
Small Retailers
Industry
Others
Large Chains
Whole Sale and
Intermediate CLIENT
MIX
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Innovation
Vertical integration
Sales strategy Power of Brands
Distribution
Model Cross-selling
Brand-streching
ENTRY
BARRIERS
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Innovation
Vertical integration
Sales strategy Sales
Strategy
Strong
Brands
Adding value in current portfolio…
BRL7.68/kg BRL21.30/kg
BRL2.48/kg BRL36.35/kg
+1,365%
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
+177%
Innovation
Vertical integration
Sales strategy
... and entering new higher margins segments
2012 FUTURE
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Innovation
Vertical integration
Sales strategy
MDB Avg. Ticket
BRL2.26/kg
BRL22.25/kg
BRL16.00/kg
Sales
Margins
Mills Shortening Division
Wheat Flour
72%
Shortening
67%
Fully integrated by 2015
100bps gain in Gross Margin
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Vertical Integration
Level
Cost reduction & Quality control
Innovation
Vertical integration
Sales strategy
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UNMATCHED BUSINESS MODEL
GROWTH OPPORTUNITIES
CONFIRMATIVE VALUATION
BUY Sales Strategy Innovation Vertical Integration
Northeast presence
New markets
Consumer preference
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Growth Opportunities
Monthly In BRL terms
Above 4,000 2,000 to 3,000 400 to 1,200 Below 400
6.000
7.000
8.000
9.000
10.000
11.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
As income per capita increases…
11,000
10,000
9,000
8,000
7,000
6,000
100 125
104 86 100
139 146
187
100 135
165
271 … families spend more with Cookies and Pasta
Rice Pasta Cookie
Income per capitaannual-USD
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: IBGE.
Source: IBGE.
Northeast presence
New markets
Consumer preference
9.2 9 8.8 8.5 8.4 8.4 8 8 7.3 7.2 6.7 6.6 6.6 6
Brazilian cookies consumption has potential...
13 11.9 10.4 9.7 9 8.8 8.4 8.3 8
6.6 6.4
...the same for pasta consumption
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: International Pasta Organization (2011).
Source: Lafis/Simabesp (2011).
Northeast presence
New markets
Consumer preference Per capita consumption kg/year
Per capita consumption kg/year
Household income/capita (BRL)
250
350
450
550
650
750
850
2003 2004 2005 2006 2007 2008 2009
Northeast Other regions Southeast
CAGR 6.9%
CAGR 3.9% CAGR 5.2%
1.5%
58.6% 2.5%
37.2%
Others
4.3%
0.8%
52.2% 0.6%
30.1% 16.3%
Others
Cookies Market-share
Pasta Market-share
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: IBGE.
Source: Company data.
Northeast presence
New markets
Consumer preference
2008 2011 2011 2012
Past acquisitions in the Northeast
Northeast
2nd largest market in
Brazil
2nd largest market in
Brazil
Income tax ICMS (VAT)
300bps of Gross Margin
Effective I.T. of 16% (from 34%)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Northeast presence
New markets
Consumer preference
Tax Benefits
Southeast – Largest market in Brazil
10.5% 9.4% 8.6%
52.4%
Others
10.1%
15.2% 17.2% 15.9% 41.7% 10.0%
Others
Cookies Market-share
Pasta Market-share
NE MG Population2012E mn 55.5 20.6
Est. Population CAGR2012E-2022E
0.63% 0.60%
Household Per capita Income2009
(in BRL) 443.05 703.74
MG Targets: 328
MG
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Copany data.
Source: IBGE and Team’s estimates.
Northeast presence
New markets
Consumer preference
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UNMATCHED BUSINESS MODEL
GROWTH OPPORTUNITIES
CONFIRMATIVE VALUATION
BUY Sales Strategy Innovation Vertical Integration
Consumer preferences Northeast presence New markets
Revenue
Regional
National
Cookies & Pasta
Other Products
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Valuation: 10y projected FCFF + Terminal Value
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Net Revenu
e
Revenue
Consumer preference Northeast dominance
Vertical integration Consolidation of past acquisitions
EBITDA
Net Profit
Deleverage Tax benefits
CAGR2012E-2016E: 12.2%
CAGR2012E-2016E: 14.5%
CAGR2012E-2016E: 17.2%
Source: Team’s estimates.
Source: Team’s estimates.
643 741
884 1,027
1,104
447 494 621
759 842
2012E 2013E 2014E 2015E 2016E
EBITDA
Net Profit
3,521 4,018
4,570 5,170
5,580
2012E 2013E 2014E 2015E 2016E
Net Revenue
18.3% 18.4% 19.3% 19.9% 19.8%
12.7% 12.3% 13.6%
14.7% 15.1%
2012E 2013E 2014E 2015E 2016E
EBITDA Margin Net Profit Margin
ROIC 2012E → 2016E 14.6% → 19.0%
ROE 2012E → 2016E 19.6% → 22.9%
Debt: 15% Equity: 85%
238
401 527
624 705 750 804 861
947 995
700
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E
Free Cash Flow to the Firm
10Y DCF
Terminal Value
BRL37.05
BRL44.37
BRL81.42
Assumptions (nominal terms)
WACC 10.4%
g 5.0%
Tax Benefits cut by half
Tax Benefits
30% of Target Price (BRL24.2)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Target Price
Source: Team’s estimates.
CAGR2012E-2022E: 11.3%
Market Price
BRL65.10
Target Price
BRL81.42
BUY UPSIDE
25.1%
Comparables P/E
LTM*
M. Dias Branco 16.8x
Kraft 16.5x
Nestlé 18.2x
BR Foods 49.9x
Bimbo 33.6x
Kellogg Company 16.1x
H.J. Heinz 16.8x
General Mills 15.5x
Average 23.8x
Multiples
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
*LTM: Last 12-months Source: Bloomberg.
Current 16.8x
Historical average
20.1x
10
15
20
25
30
35
40
Trading below peer’s average and historical average
Source: Bloomberg.
Market Price
BRL65.10
Avg Peer Target P/E
17.6x Target Price
BRL78.82 EPS E13
BRL4.48
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UPSIDE
21.1%
Multiples
Considering peer’s target mutiples…
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UNMATCHED BUSINESS MODEL
GROWTH OPPORTUNITIES
CONFIRMATIVE VALUATION
BUY Sales Strategy Innovation Vertical Integration
Consumer preferences Northeast presence New markets
DCF Multiples
Investment risks
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Tax Benefits
Governance
Stocks Liquidity
M&A Execution
CADE Regulation
Source: Team’s estimates.
Commodities
Competition
Currency
Commodities
Raw Materials: 66% of COGS
Wheat V. Shortening Others
32% 11% 23%
WHEAT HEDGE
INVENTORIES
OTHER
PRODUCTS
ICMS DISCOUNT
0
100
200
300
400
500
600
700
0%
10%
20%
30%
40%
50%
60%Gross Margin Wheat Price (BRL/ton)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Source: Company data and Team’s estimates.
Tax Benefits
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Income tax ICMS (VAT)
300bps of Gross Margin
Effective I.T. of 16% (from 34%)
END OF TAX BENEFITS?
Partial Tax benefits maintenance (50% tax cut in terminal value)
NE’s socioeconomic perspectives
Contracts effective in the long run
Monte Carlo simulation
0
200
400
600
800
1000
1200
42 50 57 65 72 80 88 95 103 110 118 126 133
Fre
qu
en
cy (
x)
Target Price (BRL)
Distribution of estimated Target Prices
HOLD: 23.7% SELL: 9.3% BUY: 67%
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Variables •Inflation rate (Normal)
• Wheat prices (Lognormal)
• GDP growth (Normal)
• Exchange rate (Lognormal)
Source: Company data, Central Bank of Brazil and Team’s estimates.
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UNMATCHED BUSINESS MODEL
GROWTH OPPORTUNITIES
CONFIRMATIVE VALUATION
BUY
“A high quality stock with great growth potential”
Upside 25.1%
Sales Strategy Innovation Vertical Integration
Consumer preferences Northeast presence New markets
DCF Multiples
28/11/2012 34
Bernardo Calvente Danilo Kamiji Danton Koga Guilherme Barros Renan Criscio
Thank You
Q&A Session 1
Multiples 1. Why P/E? 2. P/E Multiples 3. P/E Target 4. EV Multiples 5. Target Prices
Industry Overview 1. Competition – Cookies Market 2. Competition – Pasta Market 3. Cookies Producer in Brazil 4. Cookie Consumption in Brazil 5. MDB vs. Cookies Market 6. MDB vs. Pasta Market
Valuation 1. Wheat Costs 2. CAPEX 3. Inflation and Currency 4. Gross Margin 5. EBITDA Margin 6. Net Profit Margin 7. ROIC 8. ROE 9. ROE – DuPont Analysis 10. ROA 11. Net Debt/EBITDA 12. WACC Assumptions 13. Beta Calculation 14. Tax Shield 15. Expenses 16. EPS
Company Data 1. Balance Sheet – 2010A-2015E – Assets 2. Balance Sheet – 2010A-2015E – Liabilities & Equity 3. Balance Sheet – 2016E-2022E – Assets 4. Balance Sheet – 2016E-2022E – Liabilities & Equity 5. Income Statement – 2010A-2016E 6. Income Statement – 2017E-2022E 7. Cash-Flow Statement – 2010A-2015E 8. Cash-Flow Statement – 2015E-2022E 9. FCFF 10. Vertical Integration 11. Creditors in BR
Q&A Session 2 → Q&A Session 3 →→
Q&A Session 2 Risks 1. Currency 2. Stocks Liquidity 3. Corporate Governance – Stockholders 4. Corporate Governance – Board of Directors 5. Commodities – Historical Wheat Prices 6. Commodities – Inventories Management 7. Commodities – Plantation/Harvest 8. Bullish Case – Result 9. Bullish Case – Variables 10. Bullish Case – Acquisition Assumptions 11. Bearish Case – Result 12. Bearish Case – Variables 13. Sensitivity Analysis – g and WACC 14. Montecarlo Simulation
Tax Benefits 1. ICMS 2. Income Tax 3. Reasons to Maintain 4. Reasons to Remove 5. The ICMS Debate 6. Sensitivity Analysis – ICMS and I.T.
Static slides 1. Recommendation 2. Overview I 3. Overview II 4. Past Performance I 5. Past Performance II 6. Sales Strategy I 7. Sales Strategy II 8. Sales Strategy III 9. Innovation I 10. Innovation II 11. Innovation III 12. Vertical Integration 13. Consumer preferences I 14. Consumer preferences II 15. Northeast presence I 16. Northeast presence II 17. Northeast presence III 18. New markets I 19. Valuation I 20. Valuation II 21. Valuation III 22. Valuation IV 23. Valuation V
← Q&A Session 1 Q&A Session 3 →
Q&A Session 3 Static slides 1. Recommendation 2. Overview I 3. Overview II 4. Past Performance I 5. Past Performance II 6. Sales Strategy I 7. Sales Strategy II 8. Sales Strategy III 9. Innovation I 10. Innovation II 11. Innovation III 12. Vertical Integration 13. Consumer preferences I 14. Consumer preferences II 15. Northeast presence I 16. Northeast presence II 17. Northeast presence III 18. New markets I 19. Valuation I 20. Valuation II 21. Valuation III 22. Valuation IV 23. Valuation V
← ← Q&A Session 1 ← Q&A Session 2
Static slides 1. Multiples I 2. Multiples II 3. Risks I 4. Risks II 5. Risks III 6. Conclusion
Balance Sheet 2010A-2015E - Assets
Balance Sheet (BRLmm)
2010 2011 2012E 2013E 2014E 2015E
ASSETS Cash and Cash
Equivalents 54.4 95.3 200.4 388.9 691.0 1,037.7
Receivable 359.9 436.1 524.6 567.2 645.0 729.7 Inventories 264.5 308.0 380.6 400.7 448.9 504.5
Other Current Assets 1.6 1.3 - - - - Total Current Assets 680.4 840.7 1,105.6 1,356.8 1,784.9 2,271.8
Net Fixed Assets 977.7 1,181.3 1,318.6 1,439.5 1,500.1 1,567.3 Intangible 557.4 861.2 897.4 861.5 827.0 793.9
Other Non Current Assets
146.1 175.0 188.9 189.1 189.3 189.4
Total Non Current Assets
1,535.1 2,042.5 2,215.9 2,300.9 2,327.1 2,361.2
Total Assets 2,215.5 2,883.2 3,321.6 3,657.7 4,112.0 4,633.1
Main Menu
Balance Sheet 2010A-2015E – Liabilities & Equity
Balance Sheet (BRLmm)
2010 2011 2012E 2013E 2014E 2015E
LIABILITIES & EQUITY Suppliers 62.4 92.4 88.7 93.3 104.6 117.5
Short Term Debt 41.0 227.3 129.8 125.7 129.2 131.5 Other Current Liabilities 183.9 240.1 348.0 394.5 493.2 607.2 Total Current Liabilities 287.3 559.8 566.5 613.6 726.9 856.3
Long Term Debt 235.2 348.2 469.5 477.3 483.2 487.9 Other Non Current
Liabilities 78.7 144.4 200.7 200.7 200.7 200.7
Total Non Current Liabilities
313.8 492.6 670.2 678.0 683.8 688.6
Capital Stock 746.5 777.8 801.3 801.3 801.3 801.3 Revaluation Account 123.2 122.0 122.0 122.0 122.0 122.0
Retained Earnings 890.8 1,105.9 1,350.5 1,632.0 1,967.2 2,354.3 Total Equity 1,760.5 2,005.8 2,273.8 2,555.3 2,890.6 3,277.6
Total Liabilities 2,361.6 3,058.2 3,510.5 3,846.8 4,301.3 4,822.5
Main Menu
Balance Sheet 2016E-2022E - Assets
Balance Sheet (BRLmm)
2016E 2017E 2018E 2019E 2020E 2021E 2022E
ASSETS Cash and Cash
Equivalents 1,406.2 1,783.4 2,174.5 2,578.5 2,992.2 3,392.6 3,439.6
Receivable 785.5 845.7 904.6 988.7 1,048.8 1,116.4 1,183.0 Inventories 543.7 585.5 626.2 684.4 725.9 772.8 840.1
Other Current Assets
- - - - - - -
Total Current Assets
2,735.4 3,214.6 3,705.3 4,251.6 4,766.9 5,281.8 5,462.6
Net Fixed Assets 1,643.3 1,727.2 1,818.4 1,916.9 2,022.7 2,135.7 2,345.4 Intangible 762.2 731.7 702.4 674.3 647.3 621.4 596.6
Other Non Current Assets
189.6 189.9 190.1 190.3 190.4 190.6 190.8
Total Non Current Assets
2,405.5 2,458.9 2,520.8 2,591.2 2,670.0 2,757.1 2,942.0
Total Assets 5,140.9 5,673.5 6,226.1 6,842.8 7,436.9 8,038.9 8,404.6
Main Menu
Balance Sheet 2016E-2022E – Liabilities & Equity Balance Sheet
(BRLmm) 2016E 2017E 2018E 2019E 2020E 2021E 2022E
LIABILITIES & EQUITY Suppliers 126.7 136.4 145.9 159.4 169.1 180.0 195.7
Short Term Debt 134.2 134.3 135.3 138.4 140.8 142.0 144.0
Other Current Liabilities 691.6 786.7 889.3 1,029.8 1,150.2 1,281.6 1,255.7
Total Current Liabilities 952.5 1,057.4 1,170.4 1,327.6 1,460.1 1,603.6 1,595.4
Long Term Debt 495.4 503.7 511.9 518.5 525.1 531.5 538.0 Other Non Current
Liabilities 200.7 200.7 200.7 200.7 200.7 200.7 200.7
Total Non Current Liabilities
696.1 704.3 712.6 719.1 725.8 732.2 738.7
Capital Stock 801.3 801.3 801.3 801.3 801.3 801.3 801.3 Revaluation Account 122.0 122.0 122.0 122.0 122.0 122.0 122.0
Retained Earnings 2,758.5 3,178.3 3,609.9 4,063.0 4,518.2 4,970.4 5,338.0
Total Equity 3,681.9 4,101.6 4,533.2 4,986.3 5,441.5 5,893.7 6,261.3
Balance Sheet (BRLmm) 5,330.5 5,863.3 6,416.2 7,033.1 7,627.3 8,229.5 8,595.4
Main Menu
Income Statement 2010A-2016E
Income Statement (BRLmn)
2010 2011 2012E 2013E 2014E 2015E 2016E
Gross Revenue 2,887.5 3,436.3 4,164.3 4,819.2 5,480.9 6,200.3 6692.6 (-) Taxes and
Discounts (443.5) (525.3) (643.5) (801.1) (911.1) (1,030.7) (1,112.5)
Net Revenue 2,444.0 2,911.0 3,520.8 4,018.1 4,569.8 5,169.6 5,580.1 (-) Cost of Products (1,423.7) (1,812.5) (2,088.0) (2,342.7) (2,624.6) (2,949.4) (3,187.5)
(=) Gross Profit 1,020.3 1,098.5 1,432.8 1,675.4 1,945.2 2,220.2 2,392.6 (-) Sales Expenses (452.6) (525.5) (649.2) (747.5) (850.2) (961.7) (1,038.1)
(-) G&A (148.0) (150.1) (194.3) (238.2) (268.4) (292.1) (314.5) (-)
Depreciation/Amortization
(12.7) (13.9) (41.2) (63.5) (63.5) (62.6) (61.9)
(=) EBIT 406.9 409.0 548.0 626.2 763.2 903.8 978.1 (+) Financial Revenues 39.4 37.6 41.7 14.9 29.9 55.7 87.7 (-) Financial Expenses (55.2) (50.6) (57.8) (53.4) (53.9) (56.0) (63.3)
(=) EBT 391.1 396.0 531.9 587.8 739.2 903.5 1,002.4 (-) Taxes (45.2) (36.1) (85.1) (94.0) (118.3) (144.6) (160.4)
(=) Net Profit 345.8 359.9 446.8 493.7 620.9 758.9 842.0
Main Menu
Income Statement 2017E-2022E
Income Statement (BRLmn) 2017E 2018E 2019E 2020E 2021E 2022E
Gross Revenue 7185.6 7686.4 8401.2 8935.7 9486.1 10051.6
(-) Taxes and Discounts (1,194.5) (1,277.7) (1,396.5) (1,485.4) (1,576.9) (1,670.9)
Net Revenue 5,991.2 6,408.7 7,004.7 7,450.4 7,909.3 8,380.8
(-) Cost of Products (3,423.0) (3,661.1) (4,001.3) (4,255.8) (4,518.1) (4,911.8)
(=) Gross Profit 2,568.2 2,747.6 3,003.4 3,194.5 3,391.2 3,468.9
(-) Sales Expenses (1,114.6) (1,192.3) (1,303.1) (1,386.1) (1,471.4) (1,559.1)
(-) G&A (337.0) (359.9) (383.4) (407.7) (432.9) (458.7)
(-) Depreciation/Amortization (61.5) (61.2) (61.0) (61.0) (61.2) (61.6)
(=) EBIT 1,055.1 1,134.3 1,255.8 1,339.7 1,425.7 1,389.5 (+) Financial Revenues 121.9 157.6 195.0 235.5 276.9 316.9 (-) Financial Expenses (66.6) (68.5) (67.7) (70.0) (71.2) (72.6)
(=) EBT 1,110.4 1,223.4 1,383.1 1,505.2 1,631.4 1,633.8 (-) Taxes (177.7) (195.7) (221.3) (240.8) (261.0) (408.4)
(=) Net Profit 932.7 1,027.6 1,161.8 1,264.3 1,370.4 1,225.3
Main Menu
Cash-Flow Statement 2010A-2015E Cash flow statemennt (BRL mn) 2010 2011 2012E 2013E 2014E 2015E
EBIT 406.9 409.0 548.0 626.2 763.2 903.8
Depriciation and amortization 53.6 65.6 95.1 115.0 120.8 123.1
(+/-) Working capital need (27.0) (62.0) (111.1) (45.8) (91.5) (101.6)
Cash flow from activity 433.5 412.7 531.9 695.5 792.5 925.3
Financial result (15.9) (13.0) 0.5 (28.7) (16.8) 5.6
Other non-cash expenses (102.7) (50.3) 31.4 0.0 0.0 0.0
Net change in other current liabilities and assets
2.1 2.7 (3.2) 0.0 0.0 0.0
Income tax (45.2) (36.1) (129.3) (93.2) (116.3) (142.4)
Cash flow from operating activities 271.8 315.9 431.3 573.5 659.4 788.4
Capital expenditure (240.7) (273.6) (208.7) (200.0) (147.0) (157.2)
Cash flow from investing activities (240.7) (273.6) (208.7) (200.0) (147.0) (157.2)
Net changes in debt (30.8) 78.6 (41.2) (6.3) 1.9 1.1
Net common stock issued 0.0 0.0 0.0 0.0 0.0 0.0
Dividends paid (76.3) (87.5) (84.2) (178.7) (212.3) (285.6)
Cash flow from financing activities (107.0) (8.9) (125.4) (185.0) (210.4) (284.5)
Total cash flow (75.9) 33.5 97.1 188.5 302.0 346.7
Initial cash 54.4 54.4 95.3 200.4 388.9 691.0
Final cash 95.3 95.3 200.4 388.9 691.0 1,037.7
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Cash-Flow Statement 2016E-2022E
Cash flow statemennt (BRL mn) 2016 2017 2018 2019 2020 2021 2022
EBIT 978.1 1,055.1 1,134.3 1,255.8 1,339.7 1,425.7 1,389.5 Depriciation and amortization 125.8 129.1 132.9 137.2 142.0 147.3 153.0
(+/-) Working capital need (68.7) (73.8) (72.1) (103.0) (73.5) (82.8) (95.8)
Cash flow from activity 1,035.1 1,110.4 1,195.1 1,290.0 1,408.2 1,490.1 1,446.7 Financial result 33.7 65.5 99.3 135.4 173.7 213.7 252.3
Other non-cash expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net change in other current
liabilities and assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Income tax (159.1) (176.2) (194.3) (219.2) (239.3) (259.3) (396.3)
Cash flow from operating activities
909.7 999.7 1,100.1 1,206.2 1,342.6 1,444.5 1,302.7
Capital expenditure (170.1) (182.5) (194.9) (207.6) (220.8) (234.4) (337.8)
Cash flow from investing activities (170.1) (182.5) (194.9) (207.6) (220.8) (234.4) (337.8)
Net changes in debt 0.7 (2.2) (1.2) 1.4 0.6 (0.5) 0.2 Net common stock issued 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Dividends paid (371.9) (437.9) (513.0) (596.0) (708.7) (809.2) (918.1)
Cash flow from financing activities (371.2) (440.0) (514.2) (594.7) (708.1) (809.7) (917.9)
Total cash flow 368.4 377.2 391.1 404.0 413.7 400.4 46.9
Initial cash 1,037.8 1,406.2 1,783.4 2,174.5 2,578.5 2,992.2 3,392.6 Final cash 1,406.2 1,783.4 2,174.5 2,578.5 2,992.2 3,392.6 3,439.6
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FCFF
FCFF 31/12/2012 31/12/2013 31/12/2014 31/12/2015 31/12/2016
EBIT 547,990 626,225 763,248 903,804 978,067
Tax -85,098 -94,069 -118,281 -144,558 -160,380
EBIAT 462,892 532,156 644,966 759,246 817,687
Depreciation & Amortization 95,079 115,010 120,827 123,088 125,794
Change in Working Capital -111,138 -45,775 -91,526 -101,621 -68,736
Capex (net of assets sale) -208,700 -200,000 -147,023 -157,168 -170,073
Free Cash Flow 238,133 401,392 527,245 623,545 704,672
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FCFF
FCFF 31/12/2017 31/12/2018 31/12/2019 31/12/2020 31/12/2021 31/12/2022
EBIT 1,055,120 1,134,313 1,255,839 1,339,689 1,425,677 1,389,526
Tax -177,667 -195,741 -221,298 -240,826 -261,022 -408,442
EBIAT 877,453 938,572 1,034,541 1,098,863 1,164,656 981,084
Depreciation & Amortization
129,086 132,899 137,202 141,986 147,253 152,998
Change in Working Capital
-73,771 -72,126 -102,993 -73,509 -82,845 -95,834
Capex (net of assets sale)
-182,475 -194,851 -207,571 -220,779 -234,376 -337,834
Free Cash Flow 750,293 804,494 861,179 946,561 994,687 700,413
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Vertical Integration
61.7% 64.5% 73.1%
81.4%
100% 38.3% 35.5% 26.9% 18.6%
10 11 12E 13E 14E
Own Wheat flour Third party Wheat flour
Wheat flour Vertical integration – Year End estimates
Company City EBITDA Margin
Moinhos Cruzeiro do Sul (Rosa Branca) São Paulo/SP 6%
Moinho Paulista (Nita) São Paulo/SP 7%
Moinho do Nordeste Antônio Prado/RS 7%
EBITDA Margin - % Depreciation –Tax rate
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Source: Company data and Team’s estimates.
Creditors in BRL - 2011
Source: Company data
121.4 41%
21.9 7%
95.3 32%
57.70 20%
BNDES State funding BNB Others
Excluding Acquisitions contracts
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Debt in details - 1 Debt in BRL (millions) 2009 2010 2011
Index BRL BRL Interest YoY BRL
BNDES – FINAME TJLP 29.0 16.0 1.97% 11.8
BNDES- PSI BRL 3.0 46.3 4.52% 94.8
BNDES - PSI URTJLP - - 6.11% 1.5
State funding (CE) TJLP 2.8 3.0 - 17.9
State funding (BA) TJLP 2.8 3.0 - 4.0
BNB - FNE - 91.9 95.6 10.0% 95.3
MODERMAQ - 0.2 - - -
MODERMAQ (Pós) TJLP 4.0 2.7 1.03% 1.7
BNB – FNE – Working Capital - 2.9 1.2 - -
Working Capital – Fixed rate - - - 18.49% 18.5
Working Capital - CDI - - - 4.49% 27.7
Source: Company data
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Debt in details - 2
Debt in BRL (millions) 2009 2010 2011
Index BRL BRL Interest YoY BRL
PEC - BNDES - - - 6.47% 10.9
Guaranteed – Fixed rate - - - 23.46% 1.5
Guranteed - CDI - - - 4.58% 10.0
BNDES - Automatic TJLP 0.5 0.7 2.49% 0.5
BNDES – Automatic Floating 0.2 0.3 2.49% 0.2
Vitarella’s quotes instrument 100% CDI 293.1 90.1 - 100.4
Pilar’s quotes instrument 100% CDI - - - 22.7
Estrela’s quotes/stocks instrument 100% CDI - - - 140.3
TOTAL 444.3 271.8 559.7
Source: Company data
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Debt in details - 3
FX (millions) 2009 2010 2011
Index BRL BRL Interest YoY BRL
Inputs imports USD 56.3 - 2.52% 11.3
Machinery and equipments USD - - 4.96% 0.6
Machinery and equipments CHF 5.3 4.4 LIBOR + 1.50%
3.7
TOTAL 61.6 4.4 15.6
Source: Company data
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Competition – Cookies Market Cookies Market
Company Brands
M. Dias Branco Vitarella, Adria, Fortaleza, Isabela, Zabet, Pilar, Richester, Estrela
Nestlé Bono, Calipso, Classic, Negresco, Passatempo, Tostines
Kraft Foods Amandita, Oreo, Trakinas
Pepsico Mirabel, Mabel
J. Macêdo Águia
Bauducco Bauducco, Torradas, Maxi, Gulosos
Itamaraty Itamaraty, Fioretto, Saltita, Jumbolino
Marilan Marilan, Max, Pit Stop, Teens, Vitallitá
A.C. - Alimentos & Condimentos Leve Supreme, Todeschini, Pica-Pau
Piraquê Piraquê
Arcor Aymoré, Danix, Triunfo
Different Positioning in market 1. Chocolates 2. Dairy and
Powdered Drink
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Source: Company data.
Competition – Pasta Market Pasta Market
Company Brands
M. Dias Branco Vitarella, Adria, Fortaleza, Isabela, Basilar, Pilar, Richester
Vilma Vilma, Bendita Terra, Oregon
Santa Amália Santa Amália
Selmi Renata, Galo
J. Macêdo Dona Benta, Petybon, Brandini
Barilla Barilla
Piraquê Piraquê
Cadore Cadore
A.C. - Alimentos & Condimentos Leve Supreme, Todeschini
Parati Grano Duro
Emegê Alimentos Emegê
Strong Brands in MG
Main Menu
Source: Company data.
Cookies Producers in Brazil
State Units State Units
AC 1 PB 51
AL 24 PR 125
AP 1 PE 94
AM 2 PI 13
BA 127 RJ 60
CE 51 RN 91
DF 26 RS 186
ES 29 RO 9
GO 63 RR 1
MA 12 SC 139
MT 15 SP 225
MS 10 SE 13
MG 328 TO 3
PA 15 Total 1714
Source: ANIB
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Cookie Consumption in Brazil
BA 6% CE
7%
ES 2% MA
3%
MG 11%
PA 2%
PR 4%
PE 3%
RJ 13%
RS 4%
SC 6%
SP 27%
Others 12%
3rd Largest Market in Brazil
Source: ANIB
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M. Dias Branco vs. Cookies Market
COOKIES MARKET 2007 2008 2009 2010 2011 CAGR
2007-2011
Production (1000 tonnes) 1,131 1,177 1,206 1,242 1,220 1.9%
Growth rate 1.70% 4.10% 2.50% 3% -1.77%
Per capita consumption (annual) 6 6.1 6.3 6.22 6.09 0.4%
Sales (billions) 5.19 5.65 5.96 6.47 6.8 7.0%
M. DIAS BRANCO 2007 2008 2009 2010 2011 CAGR
2007-2011
Cookies vol 203.2 301.1 363.3 383.9 423.4 20.1%
Cookies Gross revenue 939 1416.2 1506.3 1594.6 1883.6 19.0%
Source: ANIB and Company Data
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M. Dias Branco vs. Pasta Market
Pasta Market (1000 tones)
2007 2008 2009 2010 2011 CAGR 2007-
2011
Pasta vol 1275 1231 1227 1232 1195 -1.6%
Sales (billions) 5157 5650 5879 5915 6119 4.4%
M. Dias Branco 2007 2008 2009 2010 2011 CAGR 2007-
2011
Pasta vol 194 232.6 256.9 244.8 277.4 9.4%
Gross revenue 473.2 662.3 685.7 630.4 728.6 11.4%
Consumption of pasta (1000 tones) 2007 2008 2009 2010 2011 CAGR
2007-2011
Dry Pasta 5.7 5.4 5.3 5.2 5 -3.2%
Instant Pasta 0.8 0.9 0.9 0.9 1 5.7%
Fresh Pasta 0.2 0.2 0.2 0.2 0.3 10.7%
Total Pasta 6.7 6.5 6.4 6.4 6.2 -1.9%
Population 188 190 191 191 192 0.5%
Source: ABIMA, A.C. Nielsen and Company Data
Source: ABIMA and A.C. Nielsen
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Valuation: Wheat Costs • Wheat prices spikes: 2007-2008; 2011’; mid-2012’. • Wheat Futures contract prices until 2015. • Inflation adjusted by 2016.
100
150
200
250
300
350
400
450
ma
r-0
6
jul-
06
no
v-0
6
ma
r-0
7
jul-
07
no
v-0
7
ma
r-0
8
jul-
08
no
v-0
8
ma
r-0
9
jul-
09
no
v-0
9
ma
r-1
0
jul-
10
no
v-1
0
ma
r-1
1
jul-
11
no
v-1
1
ma
r-1
2
jul-
12
no
v-1
2
ma
r-1
3
jul-
13
no
v-1
3
ma
r-1
4
jul-
14
no
v-1
4
ma
r-1
5
jul-
15
no
v-1
5
Wheat Prices
Source: CBOT & Team’s estimates
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Valuation: CAPEX • Company guidance • Facilities built already considering further expansion • Vertical Integration & maintenance. • Construction of Mills for full integraton.
Pernambuco Mill Other Mills
33
70
120 135 143 140
200
147 157
2007A 2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E
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Source: Company data and Team’s estimates
Valuation: Inflation and Currency • IPCA index from Futures contract.
• Inflation target of 4.5% by 2016. • Currency from Futures contract.
Target: 4.5%
1,92
1,94
1,96
1,98
2,00
2,02
2,04
2,06
2012E 2013E 2014E 2015E 2016E 2017E
Currency
4,0%
4,1%
4,2%
4,3%
4,4%
4,5%
4,6%
4,7%
4,8%
4,9%
5,0%
20
12
E
20
13
E
20
14
E
20
15
E
20
16
E
20
17
E
20
18
E
20
19
E
20
20
E
Inflation
Source: Central Bank of Brazil and BMF Bovespa.
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Valuation: Margins – Gross Margin
37,2% 37,4%
42,4% 41,7%
37,7%
41,7%
2007A 2008A 2009A 2010A 2011A 2S-2012A
Historical
37,4%
42,4% 41,7%
37,7%
40,7% 41,7%
42,6% 42,9% 42,9%
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E
Historical and Projection
Source: Company data and Team’s estimates
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Valuation: Margins – EBITDA Margin
13,5%
17,2% 20,0% 18,8%
16,3% 18,6%
2007A 2008A 2009A 2010A 2011A 2S-2012A
Historical
17,2% 20,0% 18,8%
16,3% 18,3% 18,4% 19,3% 19,9% 19,8%
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E
Historical and Projection
Source: Company data and Team’s estimates
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Valuation: Margins – Net Profit Margin
5,3%
9,8%
15,0% 14,1% 12,4%
13,3%
2007A 2008A 2009A 2010A 2011A 2S-2012A
Historical
9,8%
15,0% 14,1% 12,4% 12,7% 12,3%
13,6% 14,7% 15,1%
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E
Historical and Projection
Source: Company data and Team’s estimates
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Valuation: Profitability – ROIC
4,4%
12,2%
18,3% 17,8%
14,4% 15,3%
2007A 2008A 2009A 2010A 2011A 2S-2012A
Historical
12,2%
18,3% 17,8%
14,4% 12,7% 12,3%
13,6% 14,7% 15,1%
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E
Historical and Projection
Source: Company data and Team’s estimates
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Valuation: Profitability – ROE
8,4%
17,8%
23,6%
19,6% 17,9% 19,1%
2007A 2008A 2009A 2010A 2011A 2S-2012A
Historical
17,8%
23,6%
19,6% 17,9%
19,6% 19,3% 21,5%
23,2% 22,9%
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E
Historical and Projection
Source: Company data and Team’s estimates
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ROE Improvements – DuPont Analysis
2011A 2012E 2013E 2014E 2015E 2016E
Operational Margin
14.1% 15.6% 15.6% 16.7% 17.5% 17.5%
Asset Turnover
0.95 1.00 1.04 1.06 1.07 1.05
Financial Leverage
1.52 1.54 1.51 1.49 1.47 1.45
Tax Burden 0.91 0.84 0.84 0.84 0.84 0.84
Interest Burden
0.97 0.97 0.94 0.97 1.00 1.02
ROE 17.9% 19.6% 19.3% 21.5% 23.2% 22.9%
Source: Company data and Team’s estimates
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Valuation: Profitability – ROA
3,9%
11,0%
16,2% 15,3%
12,2% 13,2%
2007A 2008A 2009A 2010A 2011A 2S-2012A
Historical
11,0%
16,2% 15,3%
12,2% 12,7% 12,8% 14,4%
15,7% 15,8%
2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E
Historical and Projection
Source: Company data and Team’s estimates
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Valuation: Debt
1,0
0,6
0,3
-0,1
-0,4
-0,7
2011A 2012E 2013E 2014E 2015E 2016E
Net Debt/EBITDA ratio
Source: Company data and Team’s estimates
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Valuation: EPS
Source: Company data and Team’s estimates
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0,70
1,87
3,10 3,05 3,17
2007A 2008A 2009A 2010A 2011A
Valuation: EPS
Source: Company data and Team’s estimates
Main Menu
0,70
1,87
3,10 3,05 3,17
2007A 2008A 2009A 2010A 2011A
3,94 4,35
5,47
6,69 7,42
2012E 2013E 2014E 2015E 2016E
WACC Assumptions
WACC Assumptions:
Cost of Equity:
• Risk free rate (2.5%): geometric average of 1929-2011 returns of 10-years-T-Bond.
• Expected market return (5.0%): geometric average returns of S&P 500 since 1929.
• Beta: we use the average unleveraged beta of MDB's peers in the global market and leveraged by the company capital structure.
• Country risk premium (2.5%): historical geometric average of Credit Default Swap of Brazil.
• Inflation Differential (2.5%): BRL inflation (IPCA YoY%) over US$ inflation (CPI YoY%).
• Cost of Debt: We took the weighted average rate paid on MDIAS most recent debt issued.
• Tax rate: 16%, which is the current average tax rate of M. Dias in the last 4 years.
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WACC Calculation
Beta 0.7
Risk-Free Rate 2.5%
Market Risk Premium 5.0%
Country Risk Premium 2.5%
Inflation Rate US 2.0%
Inflation Rate BR 4.5%
Cost of Equity 11.0%
After-tax Cost of Debt 6.0%
E/D+E (%) 85.0%
D/D+E (%) 15.0%
Perpetual Growth (%) 5.0%
WACC (%) 10.4%
Beta Calculation
From Comparable Peers:
Unleveraged Beta from Industry 0,61
M DIAS BRANCO Debt/Equity LF Tax Burden LF Beta:Y-2
17,65% 84,00% 0,7
Source: Bloomberg
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Tax Shield Assuming 16% in tax shield, we are being more conservative, because any number higher than 16% would increase our target price. Also, if we consider the low financial leverage of MDB, the changes in tax shield it wouldn’t affect our target price too much. Considering this question, we did a sensitive analysis for tax shield.
Tax Shield Target Price
16% BRL 81.42
25% BRL 83.04
34% BRL 84.73
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Valuation: Expenses Sales Expenses
• Economy of Scale: expansion and consolidation of acquisitions. • Branding: promotion and other expenses.
G&A Expenses • Economy of Scale: expansion and consolidation of acquisitions. • Vertical Integration: expenses from operations of mills.
18,4%
19,4%
18,5% 18,1%
18,6% 18,6%
2008A 2009A 2010A 2011A 2012E 2013E
4,6% 4,8% 6,1%
5,2% 5,5% 5,5%
2008A 2009A 2010A 2011A 2012E 2013E
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Why P/E? EV/EBITDA P/E
No tax benefits Tax Benefits and Net profits
Be Careful! Tax Benefits cannot be distributed as dividends
Reinvestment ROIC2012 = 14.6% > Cost of Equity = 11%
In our Investment case, Tax benefits are considered a competitive advantage of MDB, given its strategic position in the NE. Therefore, Tax benefits should be taken into account when comparing to peers.
More than a Benefit
Net Profit More relevant than EBITDA for shareholders’ return.
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P/E Multiples
MDB’s Fair Value2012
LTM EPS
MDB’s Fair Multiple
19.7x
Source: Bloomberg
EPS EPS EPS EPS
Company LTM 2012E 2013E Target E13
M. Dias Branco 16.8x 16.5x 15.0x 18.2x
Kraft Foods 16.5x 16.3x 17.1x 18.1x
Nestlé 18.2x 18.1x 16.8x 17.2x
BR Foods 49.9x 34.0x 18.5x 19.9x
Bimbo 33.6x 28.4x 21.3x 23.0x
Kellogg Company 16.1x 15.8x 14.6x 15.2x
General Mills 15.5x 15.1x 13.9x 14.6x
H.J. Heinz 16.8x 16.4x 15.2x 15.1x
Average 23.8x 20.6x 16.8x 17.6x
Median 16.8x 16.4x 16.8x 17.2x
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Comparables P/E
LTM*
M. Dias Branco 16.8x
Kraft 16.5x
Nestlé 18.2x
BR Foods** 34.0x
Bimbo** 28.4x
Kellogg Company 16.1x
H.J. Heinz 16.8x
General Mills 15.5x
Average 20.8x
** P/E F12
P/E Multiples (2012)
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Comparables P/E
LTM*
M. Dias Branco 16.8x
Kraft 16.5x
Nestlé 18.2x
BR Foods** 18.6x
Bimbo** 21.3x
Kellogg Company 16.1x
H.J. Heinz 16.8x
General Mills 15.5x
Average 17.5x
** P/E F13
P/E Multiples (2013)
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Comparables
Target Price (BRL)
EPS Target P/E
Dec - 13 2013 2013
M. Dias Branco 81.4 4.48 18.2x
Kraft 48.6 2.69 18.1x
Nestlé 63.2 3.67 17.2x
BR Foods** 40.1 2.01 19.9x
Bimbo** 33.4 1.45 23.0x
Kellogg Company 55.7 3.65 15.2x
H.J. Heinz 57.1 3.79 15.1x
General Mills 42.2 2.89 14.6
Average
17.6x
P/E Target Multiples
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EV Multiples
Sales Sales Sales EBITDA EBITDA EBITDA EBIT EBIT EBIT
Company LTM 2012E 2013E LTM 2012E 2013E LTM 2012E 2013E
M. Dias Branco 2.4x 2.2x 1.7x 13.6x 12.2x 10.6x 16.5x 14.8x 12.6x
Kraft Foods 1.5x 1.5x 1.4x 8.4x 8.0x 8.1x 9.4x 9.3x 9.3x
Nestlé 2.4x 2.3x 2.2x 13.5x 12.3x 11.3x 15.0x 15.4x 14.1x
BR Foods 1.5x 1.4x 1.3x 16.2x 14.5x 10.3x 26.2x 23.8x 14.8x
Bimbo 1.3x 1.1x 1.1x 12.4x 12.7x 10.4x 17.9x 18.9x 14.6x
Kellogg Company 2.0x 1.9x 1.8x 11.9x 11.4x 10.5x 14.3x 13.7x 12.6x
General Mills 2.0x 1.9x 1.8x 9.9x 9.6x 9.1x 11.9x 10.4x 10.8x
H.J. Heinz 2.0x 1.9x 1.9x 12.3x 10.9x 10.3x 15.2x 13.0x 12.2x
Average 1.8x 1.7x 1.6x 12.1x 11.3x 10.0x 15.7x 14.9x 12.6x
Median 2.0x 1.9x 1.8x 12.3x 11.4x 10.3x 15.0x 13.7x 12.6x
Source: Bloomberg
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Target Price
40,00 50,00 60,00 70,00 80,00 90,00 100,00 110,00
Kraft Nestlé BR Foods Bimbo Kellogg Company H.J. Heinz General Mills Average
MDB’s Current Price
P/E
Target P/E
EV/Sales
EV/EBITDA
EV/EBIT
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Currency Risk
Debt in BRL 591.2 93%
Inputs in USD 41
6%
Equipments in CHF 3.3
1%
Debt in FX 44.3 7%
Debt (millions) in BRL and FX
Source: Company’s Latest Press-release (3Q12)
Commodities are imported mostly from United States, Argentina and Canada
Company commonly finances these imports for a 1 year period
Credit constraint risk and FX-Debt risk
FX Debt due to Inputs imports fully hedged with Swap Contracts (Currency for CDI)
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2011
BRL 4.03
1.8 0.9 1.5
23.2
4 3.3 4.1 5 4.1 4.9 5.9
2.2 4.4
3.3 2.7 4.3 4.1 3.2
7.4 7
10.9 11.6 11.6
19.2
13.8
8.7
Au
g-1
0
Se
p-1
0
Oct
-10
No
v-1
0
De
c-1
0
Jan
-11
Fe
b-1
1
Ma
r-1
1
Ap
r-1
1
Ma
y-1
1
Jun
-11
Jul-
11
Au
g-1
1
Se
p-1
1
Oct
-11
No
v-1
1
De
c-1
1
Jan
-12
Fe
b-1
2
Ma
r-1
2
Ap
r-1
2
Ma
y-1
2
Jun
-12
Jul-
12
Au
g-1
2
Se
p-1
2
2012
BRL 10.38 +58%
Average Daily Treaded Volume (BRL mn)
* Block Trade
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Corporate Governance – Stockholders
Dibra Fundo de Investimentos
63%
Others 12%
Free Float – Novo Mercado
25%
MDB's Stockholders
Source: Company Data
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Corporate Governance – Board of Directors
Name Position Short Bio Years at MDB
Francisco Ivens de Sá Dias Branco
President - Son of Manuel Dias Branco, founder of MDB. Director of MBD since April 2006.
60
Maria Das Graças Dias Branco
Counselor - Director of MDB since 2006. 12
Maria Regina Dias Branco
Counselor - Vice President of Adm. & Development of MDB
32
Fabio Alperowitch
Independent Counselor
- Independent member of the board (CFA) 13
Affonso Celso Pastore
Independent Counselor
- In post since April 2011. A former President of Central Bank of Brazil.
1
BOARD OF DIRECTORS
Source: Company Data
Main Menu
Commodities – Historical Wheat Prices
100
150
200
250
300
350
400
450
500
jan
/06
abr/
06
jul/
06
ou
t/0
6
jan
/07
abr/
07
jul/
07
ou
t/0
7
jan
/08
abr/
08
jul/
08
ou
t/0
8
jan
/09
abr/
09
jul/
09
ou
t/0
9
jan
/10
abr/
10
jul/
10
ou
t/1
0
jan
/11
abr/
11
jul/
11
ou
t/1
1
jan
/12
abr/
12
jul/
12
ou
t/1
2
Wheat Prices (USD/ton)
Worst US drought in last 25 years
Climatic problems in Russia, U.S. and Western Europe
Drought in China, Western Europe (Ukraine), European Union, Canada and Australia
Source: CBOT
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Inventories Management 1. MDB operates with 4 months of storage capacity 2. Average MDB price reduction: 6.32% for wheat and 9.37% for oils
1.000
1.500
2.000
2.500
3.000
3.500
Ma
r-0
6
Oct
-06
Ma
y-0
7
De
c-0
7
Jul-
08
Fe
b-0
9
Se
p-0
9
Ap
r-1
0
No
v-1
0
Jun
-11
Jan
-12
Au
g-1
2
Soy oil - BRL/ton
Market Price
MDB's average inventory acquisition price
100
150
200
250
300
350
400
450
Ma
r-0
6
Oct
-06
Ma
y-0
7
De
c-0
7
Jul-
08
Fe
b-0
9
Se
p-0
9
Ap
r-1
0
No
v-1
0
Jun
-11
Jan
-12
Au
g-1
2
Wheat - US$/ton
Source: Company Data
Wheat (%) Gross Margin
1Q06-2Q08 112% -4.1%
2Q11-4Q09 39% -4.9%
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Commodities Risk – Wheat Plantation/Harvest
Country Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
United States
Winter o o x x
Spring x x o o
Canada x x o o
European Union
o o x x
Russia Winter o o x x
Spring x x o o
China Winter o o x x
Spring x x o o
India o o o x x x
Australia x x x o o o
Argentina o x x x o o
Brazil x x x o o o o
o: Harvest x: Plantation Source: Company Data
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Market Price
BRL65.10
Bullish Case
BRL101.96
Bearish Case
BRL49.96
Target Price
BRL81.42
Bullish Case: Result
UPSIDE
+56.6%
Market Price
BRL65.10
Bullish Case
BRL101.96
BUY
0
20
40
60
80
100
Oct-06 Dec-07 Mar-09 May-10 Jul-11 Oct-12 Dec-13
BRL
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Bullish Case: Variables
Bullish Case (Bull)
Bull Target Price (BRL)
101.96
Bull Upside 56.6%
Assumptions Impact
Tax Benefits contracts are fully renewed
Maintenance
of margins
Well executed
acquisitions
Increase in
earnings
• Company which will be acquired has the same Margin
EBITDA of average industry and in four years will be at the same level of MDIAS.
• Size of the future acquisitions: cash available, past
acquisitions and potential targets.
• Four companies , BRL330mn on average
• Acquisitions offer an upside of 10% of our base case fair value.
• MDB will continue to have the tax benefits that it is receiving today, and this assumption offers additional 21.5% of upside.
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Bullish Case – Acquisition Assumptions
Impact of Revenue per year (R$ M)
Vitarella 369,30
Pilar 107,50
Estrela 190,60
Moinho Santa Lúcia 88,10
Cost of Acquisition (R$ M)
Vitarella 595,50
Pilar 69,90
Estrela 240,00
Moinho Santa Lúcia 90,00
Impact of Revenue per Cost of Acquisition per year
Vitarella 0,62
Pilar 1,54
Estrela 0,79
Moinho Santa Lúcia 0,98
Average Weighted by Value 0,76
• Multiple of the impact of acquisition in net revenue, based on the acquisitions since IPO.
• Net Revenue of each company /Cost of acquisition.
• Weighted average of this multiple,
considering the size of the company.
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Market Price
BRL65.10
Bullish Case
BRL101.96
Bearish Case
BRL49.96
Target Price
BRL81.42
Bearish Case: Result
DOWNSIDE
-23.2%
Market Price
BRL65.10
Bearish Case
BRL49.96
SELL
0
20
40
60
80
100
Oct-06 Dec-07 Mar-09 May-10 Jul-11 Oct-12 Dec-13
BRL
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Bearish Case: Variables
Bearish Case (Bear)
Bear Target Price (BRL)
49.96
Bear Downside 23.2%
Assumptions Impact
Tax Benefits contracts are not renewed
Decrease in margin and increase in
income tax Fiercer competition scenario
Decrease in margins
Bearish Case. • Complete end of tax benefits in
the perpetuity and as they expired throughout the first ten years of our model.
• We also consider the incapacity of
MDB, due the competition, in pass-through the prices to consumer in cookies and pasta, penalizing margins.
• BRL49.96, with 23.2% downside
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Sensitivity Analysis – g and WACC
TARGET PRICE
Perpetual Growth (%)
WA
CC
(%
)
4.0% 4.5% 5.0% 5.5% 6.0%
9.6% 84.2 89.0 94.7 101.9 111.1
10.0% 78.9 82.8 87.5 93.3 100.6
10.4% 74.2 77.5 81.4 86.2 92.0
10.8% 70.2 73.1 76.4 80.4 85.2
11.2% 66.7 69.2 72.0 75.4 79.4
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Bearish Case vs. Base Case
Bearish Case. The difference of 25.1% of upside and 23.1% of downside is explain by 24% due to the end of renews in contracts of tax benefits and 24.2% due to the deterioration in the margins of MDB.
Average Margins of 2013-2021
Base Case
Bearish Case
Gross Margin 42.7% 40.5%
EBITDA Margin 19.6% 17.6%
Net Profit Margin 15.3% 11.3%
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Monte Carlo simulation
0
200
400
600
800
1000
1200
42 50 57 65 72 80 88 95 103 110 118 126 133
Fre
qu
en
cy (
x)
Target Price (BRL)
Distribution of estimated Target Prices
HOLD: 23.7% SELL: 9.3% BUY: 67%
Variables •Inflation rate (Normal)
• Wheat prices (Lognormal)
• GDP growth (Normal)
• Exchange rate (Lognormal)
Source: Company data, Central Bank of Brazil and Team’s estimates.
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Monte Carlo simulation
Probab.
Time
P0
Price
t σ t
2 -
0T
2
eS S
i
Geometric Brownian Motion (GBM) Normal and Lognormal distributions
Variables Distribution
Wheat Prices Lognormal
Inflation rate Normal
GDP growth Normal
Exchange rate Lognormal
• 10,000 iterations • Mean: BRL84.27 • St. Dev: BRL15.85 • Median: BRL82.85 • Interval (95%): [57.30;114.20]
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Tax Benefits ICMS
Fiscal Incentive Tax Reduction
(ICMS) Expiration
DESENVOLVE – Bahia 81% over all operations Nov/2015
PROVIN – Ceara 63,75% over wheat
operations and 56,25% over M&F operations
Nov/2024
PROADI – Rio Grande do Norte 74,25% over wheat
operations Aug/2020
FAIN – Paraíba 81% over wheat operations Dec/2032 PRODEPE – Pernambuco 75% over wheat operations Mar/2024
Source: Company Data
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Tax Benefits: Income Tax
Industrial Units Income Tax
Reduction (%) Expiration
Cookie and Pasta Factory (Eusébio - CE) 75% Dec. 2016
Wheat Mill (Fortaleza – CE) 75% Dec. 2019
Shortening and Margarine Factory (Fortaleza – CE) 75% Dec. 2012
Wheat Mill and Pasta Factory (Natal – RN) 12.5% Dec. 2013
Wheat Mill (Salvador - BA) 75% Dec. 2013
Cookie and Pasta Factory (Salvador - BA) 75% Dec. 2016
Wheat Mill and Pasta Factory (Cabedelo – PB) 75% Dec. 2016
Wheat Mill and Pasta Factory (Cabedelo - PB) 75% Dec. 2020
Pasta Factory (Recife - PE ) 12.5% Dec. 2013
Cookies Factory (Recife – PE) 75% Dec. 2012
Cookies and Pasta Factory (Jabotao dos Guararapes – PE) 75% Dec. 2018
Cakes and Snaks Factory (Maracanau – CE)) 75% Dec. 2013
Cakes Factory (Maracanau – CE) 75% Dec. 2016
Cookies Factory ( Maracanau - CE) 12.5% Dec. 2016
Pasta Factory (Maracanau - CE) 37.5% to 12.5% Dec. 2013
Pasta Factory (Maracanau - CE) 75% Dec. 2015
Source: Company Data
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Tax Benefits: Reasons to maintain 1. The NE region has been improving, but we do not expect it to match SE and S in the
coming two decades. Therefore, there might be socioeconomic reasons to sustain further tax benefits.
2. Companies would invest less in the NE, eventually, would even leave the region. 3. Political Cost in changing food industry policies: Inflation
BRL 443.05
BRL 847.57
Household Per capita Income: BRL/Month ?
SE NE
Very unlikely to happen during our projected horizon
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Tax Benefits: Reasons to remove
1. Risk of non-renewal of some of the existing contracts must be considered. 2. NE socioeconomic scenario which justifies such benefits, could improve beyond our expectations. This would finish some of these benefits (ICMS depending on state)
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Tax Benefits: ICMS debate
Unification of ICMS: Currently under debate on the Senate
- Federal Government suggests 4% national ICMS rate to avoid “fiscal war”
between states. The current ICMS is 7% or 12% depending on the state - Existing socioeconomic disparities justify different ICMS per state.
- Notably, the Ceará Governor, Cid Gomes (PSB), is against unification in 4%.
- Even with ICMS unification, there might be room for industrial incentives in
underdeveloped regions, such as the NE.
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Tax Benefits: Sensitivity Analysis
TARGET PRICE (in BRL)
Reduction in Income Tax Benefits in Perpetuity
Reduction in
ICMS Benefits in Perpetuity
0% 50% 100%
0% 99,22 88,62 78,03
50% 91,27 81,42 74,26
100% 83,33 74,23 67,4
Upside Reduction in Income
Tax Benefits in Perpetuity
Reduction in
ICMS Benefits in Perpetuity
0% 50% 100%
0% 52,4% 36,1% 19,9%
50% 40,2% 25,1% 14,1%
100% 28,0% 14,0% 3,5%
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0
20
40
60
80
100
Oct-06 Dec-07 Mar-09 May-10 Jul-11 Oct-12 Dec-13
BRL
UPSIDE
25.1%
Reference Date 19-oct
Ticker MDIA3
Market Cap. BRL7,362 mn
Avg. Daily Traded Volume
BRL19.7 mn
Governance Level
Novo Mercado
Recommendation
Market Price
BRL65.10
Target Price
BRL81.42
Source: Bloomberg and Team’s estimates.
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
BUY
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MDB: Leading producer of Cookies and Pasta in Brazil
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Net Revenue breakdown
56%
21%
18%
4% 1%
Wheat Flour and
Bran
Margarine and Fats
Pasta
Snacks and Cakes
Source: Company data.
Cookies market share in volume
MDB 26.3%
Nestlé 8.9%
Nabisco 7.2% Source: Company data.
Cookies
Pasta market share in volume
MDB 25.1%
Selmi 11.7%
J.Macêdo 9.5%
Main Menu
72%
16%
6% 4%
2%
MDB: Leading producer of Cookies and Pasta in Brazil
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Net Revenue breakdown
South
Middlewest North
Southeast
Northeast
Main Menu
1,507
2,193 2,348 2,444 2,911
2007A 2008A 2009A 2010A 2011A
Net Revenue
Market Leadership
Vertical
Integration
New Products
Organic & Acquisition
Growth
SUCCESSFUL STRATEGY EXCELLENT RESULTS
18% CAGR2007-2011
204
378 469 461 475
2007A 2008A 2009A 2010A 2011A
EBITDA 23% CAGR2007-2011
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
*International data Source: Company data and Bloomberg.
Source: Company data.
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Market Leadership
Vertical
Integration
New Products
Organic & Acquisition
Growth
SUCCESSFUL STRATEGY EXCELLENT RESULTS
204
378 469 461 475
2007A 2008A 2009A 2010A 2011A
EBITDA 23% CAGR2007-2011
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
*International data Source: Company data and Bloomberg.
Source: Company data.
MDB Kraft* Nestlé* Selmi J.Macêdo
EBITDA Margin
18.0% 17.6%
7.6% 5.5%
18.4%
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Distribution Center (DC)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Innovation
Vertical integration
Sales strategy
Branding Distribution
Model
Main Menu
36%
3% 1%
16%
44%
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Innovation
Vertical integration
Sales strategy Direct Sales
(40% of sales)
Indirect Sales
(60% of sales)
Small Retailers
Industry
Others
Large Chains
Whole Sale and
Intermediate CLIENT
MIX
Main Menu
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data.
Innovation
Vertical integration
Sales strategy Power of Brands
Distribution
Model Cross-selling
Brand-streching
ENTRY
BARRIERS
Main Menu
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Innovation
Vertical integration
Sales strategy Sales
Strategy
Strong
Brands
Main Menu
Adding value in current portfolio…
BRL7.68/kg BRL21.30/kg
BRL2.48/kg BRL36.35/kg
+1,365%
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
+177%
Innovation
Vertical integration
Sales strategy
Main Menu
... and entering new higher margins segments
2012 FUTURE
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Innovation
Vertical integration
Sales strategy
MDB Avg. Ticket
BRL2.26/kg
BRL22.25/kg
BRL16.00/kg
Sales
Margins
Main Menu
Mills Shortening Division
Wheat Flour
72%
Shortening
67%
Fully integrated by 2015
100bps gain in Gross Margin
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Vertical Integration
Level
Cost reduction & Quality control
Innovation
Vertical integration
Sales strategy
Main Menu
Monthly In BRL terms
Above 4,000 2,000 to 3,000 400 to 1,200 Below 400
6.000
7.000
8.000
9.000
10.000
11.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
As income per capita increases…
11,000
10,000
9,000
8,000
7,000
6,000
100 125
104 86 100
139 146
187
100 135
165
271 … families spend more with Cookies and Pasta
Rice Pasta Cookie
Income per capitaannual-USD
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: IBGE.
Source: IBGE.
Northeast presence
New markets
Consumer preference
Main Menu
9.2 9 8.8 8.5 8.4 8.4 8 8 7.3 7.2 6.7 6.6 6.6 6
Brazilian cookies consumption has potential...
13 11.9 10.4 9.7 9 8.8 8.4 8.3 8
6.6 6.4
...the same for pasta consumption
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: International Pasta Organization (2011).
Source: Lafis/Simabesp (2011).
Northeast presence
New markets
Consumer preference Per capita consumption kg/year
Per capita consumption kg/year
Main Menu
1.5%
58.6% 2.5%
37.2%
Others
4.3%
0.8%
52.2% 0.6%
30.1% 16.3%
Others
Cookies Market-share
Pasta Market-share
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: IBGE.
Source: Company data.
Northeast presence
New markets
Consumer preference
2008 2011 2011 2012
Past acquisitions in the Northeast
Northeast
2nd largest market in
Brazil
2nd largest market in
Brazil
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Household income/capita (BRL)
250
350
450
550
650
750
850
2003 2004 2005 2006 2007 2008 2009
Northeast Other regions Southeast
CAGR 6.9%
CAGR 3.9% CAGR 5.2%
1.5%
58.6% 2.5%
37.2%
Others
4.3%
0.8%
52.2% 0.6%
30.1% 16.3%
Others
Cookies Market-share
Pasta Market-share
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: IBGE.
Source: Company data.
Northeast presence
New markets
Consumer preference
Northeast
2nd largest market in
Brazil
2nd largest market in
Brazil
Main Menu
Income tax ICMS (VAT)
300bps of Gross Margin
Effective I.T. of 16% (from 34%)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Northeast presence
New markets
Consumer preference
Tax Benefits
Main Menu
Southeast – Largest market in Brazil
10.5% 9.4% 8.6%
52.4%
Others
10.1%
15.2% 17.2% 15.9% 41.7% 10.0%
Others
Cookies Market-share
Pasta Market-share
NE MG Population2012E mn 55.5 20.6
Est. Population CAGR2012E-2022E
0.63% 0.60%
Household Per capita Income2009
(in BRL) 443.05 703.74
MG Targets: 328
MG
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Copany data.
Source: IBGE and Team’s estimates.
Northeast presence
New markets
Consumer preference
Main Menu
Revenue
Regional
National
Cookies & Pasta
Other Products
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Valuation: 10y projected FCFF + Terminal Value
Main Menu
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Net Revenu
e
Revenue
Consumer preference Northeast dominance
Vertical integration Consolidation of past acquisitions
EBITDA
Net Profit
Deleverage Tax benefits
CAGR2012E-2016E: 12.2%
CAGR2012E-2016E: 14.5%
CAGR2012E-2016E: 17.2%
Source: Team’s estimates.
Source: Team’s estimates.
643 741
884 1,027
1,104
447 494 621
759 842
2012E 2013E 2014E 2015E 2016E
EBITDA
Net Profit
3,521 4,018
4,570 5,170
5,580
2012E 2013E 2014E 2015E 2016E
Net Revenue
Debt: 15% Equity: 85%
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Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Net Revenu
e
Revenue
Consumer preference Northeast dominance
Vertical integration Consolidation of past acquisitions
EBITDA
Net Profit
Deleverage Tax benefits
CAGR2012E-2016E: 12.2%
CAGR2012E-2016E: 14.5%
CAGR2012E-2016E: 17.2%
Source: Team’s estimates.
Source: Team’s estimates.
18.3% 18.4% 19.3% 19.9% 19.8%
12.7% 12.3% 13.6%
14.7% 15.1%
2012E 2013E 2014E 2015E 2016E
EBITDA Margin Net Profit Margin
ROIC 2012E → 2016E 14.6% → 19.0%
ROE 2012E → 2016E 19.6% → 22.9%
Debt: 15% Equity: 85%
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238
401 527
624 705 750 804 861
947 995
700
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E
Free Cash Flow to the Firm
BRL44.37
Assumptions (nominal terms)
WACC 10.4%
g 5.0%
Tax Benefits cut by half
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Team’s estimates.
CAGR2012E-2022E: 11.3%
Market Price
BRL65.10
Target Price
BRL81.42
BUY UPSIDE
25.1%
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238
401 527
624 705 750 804 861
947 995
700
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E
Free Cash Flow to the Firm
10Y DCF
Terminal Value
BRL37.05
BRL44.37
BRL81.42
Assumptions (nominal terms)
WACC 10.4%
g 5.0%
Tax Benefits cut by half
Tax Benefits
30% of Target Price (BRL24.2)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Target Price
Source: Team’s estimates.
CAGR2012E-2022E: 11.3%
Main Menu
Comparables P/E
LTM*
M. Dias Branco 16.8x
Kraft 16.5x
Nestlé 18.2x
BR Foods 49.9x
Bimbo 33.6x
Kellogg Company 16.1x
H.J. Heinz 16.8x
General Mills 15.5x
Average 23.8x
Multiples
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
*LTM: Last 12-months Source: Bloomberg.
Current 16.8x
Historical average
20.1x
10
15
20
25
30
35
40
Trading below peer’s average and historical average
Source: Bloomberg.
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Market Price
BRL65.10
Avg Peer Target P/E
17.6x Target Price
BRL78.82 EPS E13
BRL4.48
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UPSIDE
21.1%
Multiples
Considering peer’s target price…
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Investment risks
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Tax Benefits
Governance
Stocks Liquidity
M&A Execution
CADE Regulation
Source: Team’s estimates.
Commodities
Competition
Currency
Main Menu
Commodities
Raw Materials: 66% of COGS
Wheat V. Shortening Others
32% 11% 23%
WHEAT HEDGE
INVENTORIES
OTHER
PRODUCTS
ICMS DISCOUNT
0
100
200
300
400
500
600
700
0%
10%
20%
30%
40%
50%
60%Gross Margin Wheat Price (BRL/ton)
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
Source: Company data and Team’s estimates.
Source: Company data and Team’s estimates.
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Tax Benefits
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
END OF TAX BENEFITS?
Partial Tax benefits maintenance (50% tax cut in terminal value)
NE’s socioeconomic perspectives
Contracts effective in the long run
Main Menu
Reasons to BUY
Valuation & Financials
Risk Analysis
Conclusion Company Overview
UNMATCHED BUSINESS MODEL
GROWTH OPPORTUNITIES
CONFIRMATIVE VALUATION
BUY
“A high quality stock with great growth potential”
Upside 25.1%
Sales Strategy Innovation Vertical Integration
Consumer preferences Northeast presence New markets
DCF Multiples
Main Menu
28/11/2012 134
Bernardo Calvente Danilo Kamiji Danton Koga Guilherme Barros Renan Criscio
Thank You