Companhia Tecidos Santanense Ltda. engages in textile business in Brazil. The company manufactures and sells clothing products, including professional uniforms, as well as accessories and personal protective equipment for work safety; and sportwear and workwear products. It also exports its products. The company was founded in 1891 and is headquartered in Montes Claros, Brazil. Companhia Tecidos Santanense Ltda. is a subsidiary of Oxford Comércio e Participações S.A.

Brazil

Companhia Tecidos Santanense Ltda.

Consumer Cyclical

The company pays dividends irregularly. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. At the same time, the average five-year yield has been significantly higher and exceeded most of its peers. 

CTSA4.SA reported revenue of BRL 98mn in the last 12 months, down 2% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS grew 2% from FY23 to BRL -3.46.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 146ppts and its growth accelerated by 281ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -68.9% in the last 12 months, a decline from 10.8% in FY22. 

Historically, CTSA4.SA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -124.6%, down from 1.5% in FY22. 

In the last 12 months, the return on capital employed (RoCE) declined to -35.7%, below the peers. 

Companhia Tecidos Santanense Ltda. reported a return on equity (RoE) of -55.4% in the last 12 months, down from 2.0% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to -20.2% in the last 12 months, a decrease from 1.0% in FY22. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.0 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

CTSA4.SA has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note low margin volatility, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, negligible return on capital, and inadequate interest coverage.

In highly turbulent market conditions, CTSA4.SA is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, CTSA4.SA is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Considering past and projected metrics, the stock is distinctly 'cheaper' than its peers. 

Companhia Tecidos Santanense Ltda.

R$ 2.51

3

Companhia Tecidos Santanense Ltda.

R$ 2.51

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 2.51

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