RNI Negócios Imobiliários S.A. develops and constructs real estate properties in Brazil. The company has approximately 190 residential projects in 56 cities in 12 Brazilian states. It also develops land subdivision projects and planned districts. The company was founded in 1991 and is headquartered in São José do Rio Preto, Brazil.

Brazil

RNI Negócios Imobiliários S.A.

Real Estate

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly 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 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 nearly all its peers. On average, the company pays dividends annually. 

RDNI3.SA reported revenue of BRL 541mn in the last 12 months, up 35% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 27% from FY23 to BRL -3.37.

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 6ppts over six months and grown 11ppts 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 very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -13.1% in the last 12 months, up from -26.9% in FY23. 

Historically, RDNI3.SA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -26.2%, a growth from -48.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -10.6%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to -8.0% in the last 12 months, an increase from -9.4% in FY23. 

RNI Negócios Imobiliários S.A. reported a return on equity (RoE) of -39.8% in the last 12 months, down from -35.7% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -2.1 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.

RDNI3.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 unstable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. 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, bleak profitability, negligible return on capital, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure.

In highly turbulent market conditions, RDNI3.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, RDNI3.SA is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to average. We would also like to highlight the average intraday volatility of the instrument. 

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

RNI Negócios Imobiliários S.A.

R$ 2.58

4

RNI Negócios Imobiliários S.A.

R$ 2.58

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 2.58

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