$BrasilAgro (LND.US)$It is a Brazilian company that went pub...

In the past 5 years, the gross margin has increased in fluctuations, rising from 28% to 55% and then dropping to 41%, and it increased again to 71% in 2021, showing obvious short-term periodicity. The return on net assets increased from 4% to 21.6% and then declined to 12%, and it increased again to 19.2% in 2021.

In the past 5 years, the revenue has maintained a rapid growth, except for a 13% decline in operating profit in 2020, rapid growth has been observed in the remaining 4 years, with an average growth rate of 55% in the recent 3 years. The net income curve is similar to that of operating profit, with an average growth rate of 36% in the recent 3 years, which is also quite fast. The average growth rate of earnings per share in the past 3 years is 24.7%.

The cumulative revenue and net income for the first three quarters of 2022 increased by 139% and 158% respectively, and the growth rate is still maintained. However, considering the cycle of about two years, the average should be taken into account when calculating.

The income statement shows that the company has no interest burden, but other expenses have been relatively high in the past two years, reaching 37% of operating profit, mainly due to selling securities expenses.

Interestingly, in the absence of interest burden, the company has undergone costly equity financing, increasing new shares by 0.871 billion, which is suspicious. Usually, companies with low interest burden tend to borrow rather than raise equity, I don't know if Brazil is an exception.

Over the past 5 years, the asset-liability ratio has increased from 24.4% to 45%, and after equity financing in 2021, it gradually decreased to 29.3%.

Over the past 5 years, both short-term and long-term borrowings have been increasing rapidly. After equity financing, short-term borrowings decreased by half, and long-term borrowings briefly decreased before returning to nearly the pre-financing level, indicating that the company has issues with generating cash internally.

In the first three quarters of 2022, accounts receivable increased by 0.27 billion, inventory increased by 0.21 billion, totaling 0.48 billion, while the cumulative net profit for the first three quarters was only 0.489 billion, which means that most of the profit went into accounts receivable and inventory, which also verifies the previous statement.

Over the past 5 years, operating net cash flow and investment net cash flow have basically offset each other, resulting in no shareholder surplus.

Currently, the P/E ratio is 5.53, and the P/E ratio TTM is 3.5, which is sufficiently low in terms of valuation. However, considering the abnormal performance of cash flow, it may be worth observing for a few more quarters.