Companhia Habitasul de Participações, together with its subsidiaries, develops real estate properties in Brazil. The company develops leisure and entertainment facilities, as well as residential condominiums. It also operates hotels and resorts under the IL Campanario Villaggio Resort, Jurerê Beach Village, Stone Slab, and Mountain Village Stone Slab names. In addition, the company manufactures and sells packaging paper and corrugated cardboard products. Companhia Habitasul de Participações was founded in 1967 and is headquartered in Porto Alegre, Brazil.

Brazil

Companhia Habitasul de Participações

Real Estate

The company pays dividends most of the time. It has paid dividends in almost every one of 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. On average, the company pays dividends annually. 

HBTS5.SA reported revenue of BRL 53mn in the last 12 months, down 83% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 100% from FY23 to BRL 1.71.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 5ppts over past six months and grown 3ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 20.0% in the last 12 months, a decline from 91.7% in FY23. 

Historically, HBTS5.SA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 28.2%, down from 88.5% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 0.9% in the last 12 months, a decrease from 18.7% in FY23. 

Companhia Habitasul de Participações reported a return on equity (RoE) of 2.3% in the last 12 months, down from 48.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 1.0%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.5 in the past several years. This ratio implies a average 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.

HBTS5.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. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. 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 robust profitability, solid return on capital, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, excessive margin volatility, poor working capital management, inadequate interest coverage, and poor cash flow generation.

In highly turbulent market conditions, HBTS5.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, HBTS5.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 'expensive' compared to its peers. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITD. 

Companhia Habitasul de Participações

R$ 30.01

2

Companhia Habitasul de Participações

R$ 30.01

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 30.01

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