Monday, February 29, 2016

Analysis of Avtovaz 2016


Avtovaz, a Russian car producer

Company: Avtovaz 

ISIN US05453R1014 | WKN 576848

Business: A Russian automotive company. They are the biggest personal car producer in Russia with their own brand, Lada, as well as having production for, for instance, Renault and Nissan which are their largest shareholders. Today they have almost 20% of the Russian market and they hope to increase that as well as increasing export.

Active: In 46 countries with the biggest market being Russia.

P/E: -0.3


Here you can find the previous analysis of Avtovaz.

contrarian values of P/E, P/B, ROE as well as dividend for Avtovaz

The P/E of Avtovaz and all other figures are simply bad due to the massive losses and even worse due to negative equity. So the P/E is at -0.3 and the P/B is at -0.6 which gives a clear no go from Graham. Earnings to sales are running at -42% so they should consider to stop all sales and the ROE just comes out as yet another silly value. The book to debt ratio is of course also negative with -0.2.
In the last five years they have had a yearly revenue increase of 0.2% which is not very good considering that the other car producers have accomplished and this would then give us a motivated P/E of around 8 and since Avtovaz is actually bankrupt unless more shares are issued I would say that it is highly overvalued by the market today.
The do spend some money on R&D and it has increased over the years which I hope will do them good for the future.
They pay, of course, no dividends and should remain not doing that for a very long time.

Conclusion: Graham still says no to Avtovaz and so do I. The company have taken one step further away from being healthy and Mr. Andersson made the "classical" impairment write-down, in this case, which is not very normal, he made the company bankrupt and in great need of fresh capital. As I mentioned also last time the safe approach would be to buy shares in Renault or Nissan which would give some exposure to Avtovaz and Mr. Andersson. I will remain as a grumpy shareholder.

If this analysis is outdated then you can request a new one.

1 comment:

Fredrik von Oberhausen said...

Grrrrr... most likely they will kick out Bo Inge Andersson. What will I then do with my investment? Has he now managed to do so much that going forward will be a piece of cake or will it all break apart?

I do not know what to do.