Pescanova is dedicated to the exploitation of marine resources to catch fish frozen for distribution in markets. Result of the ever-increasing regulation of the catch along with increasing consumption, the company has diversified its business by entering the breeding of some species in the sea itself. It is therefore a totally integrated from production to catch up the process of distributing their products.
has recently published its 2009 results, which I should mention:
• Considering its capitalization to 26 / 2, the results represent a PER in the vicinity of 9.3 times.
• The EV / EBITDA multiple is slightly higher than 8 times. • Listed
slightly below its book value.
• Maintains its growth trend in sales, operating income and net income.
With these data all point to the company that holds value and that the market is punishing, but before conclusions, I would like to highlight some circumstances that must be taken into account before expressing a position.
1) The company presents a high-leverage its balance sheet, in fact, its net financial costs consume nearly 40% of its operating income. The average cost of these resources is also high and I think that is a consequence of the size of the company, which must be added that the situation is the capital market. The maturities are concentrated mostly between 2010 and 2013.
2) operates in a defensive sector where it is leading and Portuale SPAIN, although it has diversified and the balance of its sales outside the peninsula representing approximately 50% of their income. It is important to note that 12% of its sales are carried out in E. Together.
3) Continue with a policy of expansion and growth that makes you need funding to complete the generation of cash to bring operations.
4) Approximately 60% of the capital is in hands that can be considered stable, although it should be noted that the 60% to 25% belongs to 2 Savings and now may be tempted to sell to get cash. A sale of an important package presumably would involve a change in the spot price, although the prices quoted do not see too much risk for what I consider an attractive price input.
think it is important to note that the Company intends to issue convertible bonds amounting to 110 million / EUR with a coupon of 6.75% and 5-year period, the conversion would take place at 28 Euros. I've heard some analysts suggest that this may adversely affect the price for their dilutive effect. I do not attempt to guess and therefore if the issue does not affect the c / p or not, another thing is this is my opinion and should not affect that decision is correct since the p. of v. finance, including for the following reasons:
a) For the time managed to increase the period of repayment of liabilities.
b) may reduce the leverage provided that at maturity the holders exercised the conversion option.
c) I see no dilution when the company listed at this time in the environment 22 and the conversion price being proposed is 28. Should be analyzed in any case the income account for 2015 and the return of capital at that time, but with today it said.
UDS now I think they have some more information to reflect and think about whether the company at 22 euros is an investment option. What do I think I?, Because what this interesting choice of a history of business growth in a defensive and not likely to come down but with excessive leverage that managers should redirect it to the current situation of the markets are taking risks and possibly paying a premium in the financing. In any case I believe that the current price value and that there is scope for good returns, a hint ... think he pointed to the conversion price is well suited for minimally reflect the current value.
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