Tuesday, May 8, 2018

Analysis of Avtovaz 2018


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: -6.9

Here you can find the previous analysis of Avtovaz 2016... missed last year.

Contrarian analysis of Avtovaz 2018 with P/E, P/B, ROE as well as dividend.

The P/E is bad with -6.9 due to losses and the P/B is equally bad with -1 which gives a clear no go from Graham. Earnings to sales, ROE and book to debt ratio due to losses as well as having negative equity.
In the last five years they have however shown an excellent yearly revenue growth rate of 5% which gives us a motivated P/E of 13 to 18. I am unable to make a statement since they are making losses.
They spend money on R&D which is good but what is crucial for Avtovaz moving forward is of course increased sales and cost control.
They, correctly so, pay out no dividends.

Conclusion: Graham says no and so do I. Is there a future for Avtovaz? I tend to think so but without any earnings it is very difficult to give them a reasonable valuation today. I will remain as a grumpy shareholder due to the loss of Bo Inge Anderson.

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