LPS Brasil - Consultoria de Imóveis S.A. provides real estate brokerage services in Brazil. It engages in the provision of brokerage services for the sale and purchase of third-party and land subdivision properties, as well as consulting, technical real estate advisory, franchising, correspondent bank, and other related activities. The company was founded in 1935 and is headquartered in São Paulo, Brazil.

Brazil

LPS Brasil - Consultoria de Imóveis S.A.

Real Estate

The company pays dividends from time to time. It has paid dividends in less than half 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 been good and slightly above its peers. On average, the company pays dividends annually. 

LPSB3.SA reported revenue of BRL 193mn in the last 12 months, up 6% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 21% from FY23 to BRL 0.14. Market expects EPS to reach BRL 0.70 in FY25.

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). It has underperformed this peer group by 7ppts over six months and grown 4ppts faster 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 good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 36.5% in the last 12 months, up from 21.9% in FY23. 

Historically, LPSB3.SA has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 9.6%, down from 12.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 5.6%, above the peers. The consensus estimate for FY24 for RoCE is 9.5%, again ahead of the peers. 

Another important profitability metric, return on assets (RoA), amounted to 4.6% in the last 12 months, a decrease from 5.9% in FY23. The market analysts predict that RoA will be 8.1% in FY24, again stronger than its peers. 

LPS Brasil - Consultoria de Imóveis S.A. reported a return on equity (RoE) of 8.5% in the last 12 months, down from 11.7% in FY23. The market consensus projects an RoE of 15.3% in FY24, this time above its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.1 in the past several years. This ratio implies a excellent 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.

LPSB3.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 relatively stable and is somewhat 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 robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, 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, and excessive margin volatility.

In highly turbulent market conditions, LPSB3.SA is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, LPSB3.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 large to immense. We would also like to highlight the immense intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is considerably underpriced compared to similar stocks. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITDA, undervalued on P/FCF. 

LPS Brasil - Consultoria de Imóveis S.A.

R$ 1.41

3

LPS Brasil - Consultoria de Imóveis S.A.

R$ 1.41

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 1.41

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