Sequoia Logística e Transportes S.A. provides logistics, warehouse operation management, inland transportation, and urban delivery services. It serves e-commerce, retail fashion, and teaching and education sectors, as well as for retail banks. The company was founded in 1996 and is headquartered in Embu das Artes, Brazil.

Brazil

Sequoia Logística e Transportes S.A.

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

SEQL3.SA reported revenue of BRL 699mn in the last 12 months, down 6% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 364% from FY23 to BRL -20.11. Market expects EPS to reach BRL -11.80 in FY24.

Over the past six months, the stock has consistently fallen, resulting in a 49% total decrease. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 43ppts and its growth accelerated by 1ppts in the past month. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 40ppts and its growth decelerated by 3ppts in the previous month. 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 -95.3% in the last 12 months, a decline from 9.3% in FY22. 

Historically, SEQL3.SA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -123.8%, down from -5.9% in FY22. 

Sequoia Logística e Transportes S.A. reported a return on equity (RoE) of -215.1% in the last 12 months, down from -19.4% in FY22. The market consensus projects an RoE of -19.4% in FY23, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -70.8%, below the peers. The consensus estimate for FY23 for RoCE is 0.7%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to -44.5% in the last 12 months, a decrease from -5.4% in FY22. The market analysts predict that RoA will be -4.9% in FY23, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -2.2 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.

SEQL3.SA has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is relatively stable and remains extremely favourable 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, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure.

In highly turbulent market conditions, SEQL3.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, SEQL3.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. In particular, the stock is underpriced on P/E. 

Sequoia Logística e Transportes S.A.

R$ 2.02

3

Sequoia Logística e Transportes S.A.

R$ 2.02

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 2.02

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