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12 DE OCTUBRE - ANÁLISIS FUNDAMENTAL DE INVERSIONES CON SOFTWARES
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12 DE OCTUBRE - ANÁLISIS FUNDAMENTAL DE INVERSIONES CON SOFTWARES

Session Initiation and Overview

Introduction to the Session

  • The session begins with a brief introduction, indicating the importance of the topics to be discussed.
  • The speaker prepares to share their screen for a presentation, emphasizing the need for visual aids in understanding the material.

Discussion on Capital Cost

  • The focus shifts to discussing capital costs, referencing a previously used spreadsheet from an earlier session. This continuity is crucial for building upon prior knowledge.
  • The speaker attempts to clarify details about capital costs and weighted average cost of capital (WACC), highlighting its significance in financial analysis.

Technical Difficulties in Presentation

Screen Sharing Issues

  • There are technical difficulties with screen sharing; participants report that they cannot see the shared content, prompting troubleshooting efforts by the speaker.
  • After several attempts, the speaker successfully shares their screen, allowing participants to view the relevant spreadsheet. This moment underscores common challenges faced during virtual presentations.

Global Capital Cost Considerations

Importance of Global Capital Costs

  • A new tab titled "Global Capital Cost" is introduced in the spreadsheet, which is essential for analyzing companies operating across multiple countries. This reflects real-world business complexities beyond single-market operations.
  • The discussion emphasizes that many companies have international operations and must account for risks associated with different countries when calculating capital costs. This highlights global market dynamics affecting financial strategies.

Example Company: Sencosut

  • Sencosut is chosen as a case study due to its presence in various Latin American countries, making it an ideal example for illustrating global capital cost calculations. Understanding this company's structure will aid in grasping broader concepts of international finance.
  • The company operates in Chile (its headquarters), Argentina, Brazil, Peru, Colombia, and the United States—demonstrating its extensive geographical footprint and diverse market exposure which impacts its financial assessments significantly.

Analyzing Country-Specific Risks

Constructing Discount Rates

  • As Sencosut operates across multiple nations, constructing a discount rate that reflects each country's risk profile becomes necessary; this step is critical for accurate financial modeling and investment decisions.
  • Participants are guided through creating a table listing all countries where Sencosut has operations while considering factors like sales impact from each region on overall company performance—this quantifies regional contributions effectively within financial analyses.

Financial Analysis and Revenue Distribution

Overview of Financial Information Access

  • The speaker emphasizes the need for recurrent financial information from the company to analyze sales or revenue effectively.
  • A link to the chat is provided for participants to follow along with the presentation, indicating a collaborative environment.

Financial Reports and Data Retrieval

  • The speaker mentions that quarterly reports will be made available in the investor section, highlighting the importance of recent data (second quarter of the current year).
  • Instructions are given on how to download the results report, which contains crucial financial performance data.

Revenue Participation by Country

  • The focus shifts to analyzing revenue distribution across different countries where the company operates, specifically looking at consolidated performance metrics.
  • Key insights into relative weights of revenues from various countries are discussed, with Argentina noted as having significant weight relative to others.

Relative Weights Calculation

  • The speaker outlines a method for calculating each country's contribution to total sales without using monetary amounts directly.
  • Argentina is identified as having the highest relative weight in terms of revenue participation, followed by the United States and Brazil.

Implications of Revenue Performance

  • A copy-paste method is used for visual representation while calculating relative weights; this aids in understanding country-specific contributions.
  • The analysis indicates that if Argentina faces economic challenges, it could significantly impact Sencosut's stock price due to its substantial revenue share.

EBITDA Analysis Across Countries

EBITDA Contribution Breakdown

  • Chile's EBITDA contribution is calculated at 56%, showcasing its dominance in profitability among other countries.
  • Argentina follows with a 13% contribution to EBITDA, emphasizing its role in overall financial health despite being lower than Chile’s percentage.

Economic Contributions of Latin American Countries

Overview of Economic Contributions

  • The United States accounts for 13% of the ECTA, while Brazil contributes approximately 6% with a population figure of around 20.99 million.
  • Peru's contribution stands at 10%, with a population estimate of about 38.15 million, making it significant in terms of economic output.
  • Colombia's representation is minimal at only 1.3%, highlighting disparities in economic contributions among these countries.

Relative Weights and Sales Insights

  • Argentina emerges as the most representative country in terms of sales, followed closely by the United States and Peru regarding generation metrics.
  • Understanding these relative weights allows for inferring discount rates based on each country's economic input.

Risk Assessment and Financial Metrics

  • The discussion shifts to calculating the risk-free rate, incorporating country-specific risks into financial assessments.
  • Key components include determining beta without debt and considering company-specific beta alongside tax rates to construct accurate financial models.

Constructing Financial Models

  • The process involves calculating weighted average cost of capital (WACC), requiring inputs like debt-to-equity ratios and costs associated with both equity and debt.
  • A structured approach is emphasized for building financial models that reflect true market conditions.

Gathering Data for Analysis

  • Participants are encouraged to contribute data points such as risk-free rates; U.S. sovereign bonds are suggested as a baseline for analysis.
  • The importance of using high-quality instruments like U.S. Treasury bonds is highlighted when assessing risk-free rates across different countries.

Country-Specific Risk Factors

  • Each country's specific risk factors must be added to the base risk-free rate; this includes gathering data from reliable sources like central banks or specialized websites.
  • Chile's country risk is noted at 0.98%, while Argentina has a significantly higher risk factor at 9.02%. Other countries' risks are also detailed: Brazil (1.96%), Peru (1.21%), and Colombia (2.60%).

Risk Assessment and Financial Analysis of Sencosut

Country Risk Overview

  • Argentina has a country risk rate of 5.05%, with a risk-free rate of 13% noted for the country.
  • The discussion highlights that Argentina and Brazil are significant contributors to the overall risk associated with Senkos, particularly emphasizing Argentina's impact.

Beta Calculation Process

  • The speaker instructs students to access Damodaran's website to find the unlevered beta for Sencosut, indicating its importance in financial analysis.
  • Students are guided through navigating the site, specifically looking for data on industry betas, which is crucial for understanding market risks related to Sencosut.

Industry Beta Selection

  • Upon accessing the relevant data section, students are directed to select "levered and unlevered betas by industry," focusing on retail as the sector for Sencosut.
  • The selected industry beta is confirmed as one (1), which will be used in further calculations regarding debt ratios and financial assessments.

Debt-to-Equity Ratio Analysis

  • Students are tasked with finding the debt-to-equity ratio from Sencosut’s financial information, highlighting its significance in evaluating company leverage.
  • A student mentions using Coifi as a resource but encounters difficulties loading it; this reflects common challenges faced during financial research processes.

Financial Data Extraction

  • The instructor shares insights from a report detailing total equity figures for June, amounting to 5,220 million, which is essential for calculating ratios accurately.
  • Emphasis is placed on obtaining detailed debt and equity figures per country within Sencosut’s consolidated reports to ensure precise analysis of financial health across regions.

Investment Analysis and Financial Reporting

Overview of Financial Assets and Liabilities

  • Discussion on investment policies, focusing on the categorization of financial assets and liabilities.
  • Examination of tax losses and obligations with banks, highlighting the need for detailed breakdowns by currency and country.
  • Mention of financial statements segmented by country or business unit to locate specific information regarding assets.

Consolidated Financial Results

  • Review of consolidated financial status, emphasizing the importance of understanding results from a comprehensive perspective.
  • Focus on asset activities and income segmentation to analyze performance across different regions.

Country-Specific Financial Insights

  • Identification of financial data per country, including equity details for various nations such as Brazil, Peru, Colombia, and the United States.
  • Clarification that both consolidated information and individual country data can be utilized for analysis.

Debt-to-Equity Ratio Calculation

  • Introduction to calculating debt in relation to equity; emphasis on understanding this ratio's significance in assessing financial health.
  • Confirmation that reported figures are in Chilean pesos; preparation for further calculations using these values.

Detailed Analysis of Liabilities

  • Calculation process outlined for determining the debt-to-equity ratio at a consolidated level (0.93).
  • Breakdown of liabilities specific to Chile; discussion about converting figures into millions for clarity in analysis.

Addressing Discrepancies in Financial Data

  • Interaction between students regarding discrepancies found in reported liabilities; clarification sought on whether figures pertain to consolidated reports.
  • Student shares insights gained from AI tools regarding debt distribution across countries based on provided balance sheets.

Understanding Consolidated Reports

  • Inquiry into differences observed in total liabilities within consolidated reports; focus on ensuring accurate interpretation among students.
  • Presentation of detailed liability breakdown from Sencosut’s report, emphasizing net financial debts reported by the company.

Financial Analysis and Debt Ratios Discussion

Overview of Financial Data

  • The speaker refers to financial statements, indicating a detailed analysis is underway. They mention returning to the beginning of the data for clarity.
  • Chile's debt-to-equity ratio is presented as 0.27, with total debt at 1,925,627 and equity at 7,194,403. The speaker plans to explain discrepancies in their calculations later.
  • Argentina's figures are shared: debt of 1,303,443 and equity of 307,342 results in a debt-to-equity ratio of 4.24.
  • Brazil's data shows a debt of 2,335,345 against an equity of 2,122,092 leading to a ratio of 1.10.
  • Colombia’s figures indicate a debt of 1,686,398 and equity at 1,281,774 resulting in a ratio of approximately 1.32.

Clarification on Debt Calculations

  • The speaker confirms that the reported equity values for each country are accurate as per company reports dated June 30th, 2025.
  • A potential error arises from considering all liabilities without distinguishing between financial and non-financial liabilities; this could inflate calculated ratios significantly.
  • It is emphasized that only financial liabilities should be considered when calculating true debt levels for accuracy in ratios.
  • The discussion highlights that using ChatGPT or similar systems can yield more reasonable values by differentiating between types of debts accurately.

Addressing Questions on Debt Ratios

  • A participant asks if it’s correct to consider only the portion of actual debt rather than total liabilities; the response affirms this approach as correct.
  • Two methods for calculating ratios are discussed: one using specific country distributions and another using consolidated totals when disaggregated data isn't available.

Tax Rates by Country

  • The next step involves extracting tax rates for each country from Damoarán; this will aid further calculations regarding effective tax impacts on financial metrics.
  • Instructions are given on how to filter relevant countries' tax information from spreadsheets effectively.

Summary of Tax Rates

  • Tax rates identified include:
  • Chile: 27%
  • Argentina: 35%
  • United States: 25.77%
  • Brazil: 34%
  • Peru: 29.5%
  • Colombia: 35%

Calculating Beta and Cost of Capital

Understanding Beta with Debt

  • The beta with debt for each country is calculated using the formula: beta without debt multiplied by (1 + (1 - tax rate)) times the debt-to-equity ratio.
  • After calculating the beta values, the next step involves determining the opportunity cost based on available data.

Opportunity Cost Calculation

  • The opportunity cost is derived from the risk-free rate plus beta; it will be sourced from Dama Arán's data.
  • As of October 1st, the opportunity cost is noted as 3.77%, which reflects a developed market's perspective.

Capital Cost Analysis

  • The capital cost combines the risk-free rate and beta with debt multiplied by the opportunity cost to yield a percentage figure.
  • Argentina shows an exceptionally high capital cost at 27%, indicating significant investment risk compared to other countries.

Risk Assessment Among Countries

  • Argentina presents the highest risk in terms of capital structure, followed by Colombia and Brazil; economic downturn in Argentina could severely impact Sencosut.

Debt-to-Equity Ratio Insights

  • A higher capital cost indicates greater risk; for every dollar invested in Argentina, a return of 27% is expected due to its elevated beta value.

Debt Weighting and Financial Analysis

Calculating Debt Weighting

  • The debt weight is inferred as 0.27, while equity is calculated as one plus this debt value, resulting in a total weight of 21.3%.

Equity Weight Calculation

  • For each country, equity weight can be determined as one minus the calculated debt weight, yielding approximately 78%.

Constructing Cost of Debt

  • To establish costs associated with debt for each country requires detailed financial statements; this process may take additional time but is essential for accurate analysis.

Analyzing Financial Data from Sencosut

Accessing Financial Information

  • The focus shifts back to Sencosut’s financial information regarding fixed income and current debts to derive relevant metrics.

Coupon Rate Consideration

  • The highest coupon rate associated with Sencosut’s bond maturing in 2045 amounts to 6.63%, which will be used for further calculations.

Average Rate Discussion

  • There’s consideration about averaging financial costs over periods; however, given multi-country analysis in dollars, focusing on maximum rates simplifies understanding while maintaining accuracy.

Financial Analysis and Cost Calculation

Overview of Financial Debt and Costs

  • The speaker discusses the need to consider financial expenses related to debt, referencing specific financial statements for clarity.
  • They locate the reported adjustments in the annexes, focusing on financial costs for the second quarter, which amount to 173.935 million.

Calculating Financial Costs

  • The speaker calculates the financial cost as a percentage of debt, arriving at a figure of 3.5%. This is based on dividing the financial expense by total debt.
  • They mention that annualizing this semiannual rate would yield approximately 7%, emphasizing the importance of converting rates correctly for accurate analysis.

Inflation Considerations

  • The discussion shifts to inflation rates from various sources, including Chile's Central Bank, noting an annualized IPC (Consumer Price Index) of 4% in Chile and around 2.90% in the U.S.
  • The speaker explains how these inflation rates affect dollar-denominated interest rates, indicating that local inflation leads to lower effective dollar rates due to comparative analysis between countries' inflation levels.

Adjusting Interest Rates Based on Inflation

  • A formula is presented for adjusting interest rates considering both local and foreign inflation: textEffective Rate = frac(1 + textLocal Rate)(1 + textForeign Inflation) - 1 . This results in a calculated dollar rate of approximately 5.70%.
  • The speaker clarifies previous miscalculations regarding interest rates by highlighting how local inflation impacts expected returns when converting between currencies.

Weighted Average Cost of Capital (WACC) Calculation

  • Moving forward, they outline how to calculate WACC using weights from debt and equity alongside their respective costs while factoring in tax implications across different countries.
  • The final calculation aims to determine Sencosut's global cost of capital by applying weighted averages based on sales distribution across various markets, resulting in an estimated WACC of about 13.85% when expressed in dollars.

Valuation Techniques and Cost of Capital

Understanding Weighted Average Cost of Capital (WACC)

  • The WACC is calculated to be 8.44% in dollars, which reflects the capital costs for a company operating in multiple countries.
  • It is crucial to incorporate risks associated with each country when determining discount rates, leading to more accurate valuations.
  • For valuation purposes, only global information is needed rather than focusing on a single country's rate; this approach enhances accuracy.

Valuation Process

  • The valuation process includes considering EBITDA, perpetuity rates, and financial debt while adjusting the discount rate based on global presence.
  • If a company operates solely in one country (e.g., Chile), the specific local rate would be used instead of a global average.

Adjusting for Different Metrics

  • When estimating WACC, it can also be based on income or EBITDA; both methods yield similar results but may differ slightly in calculations.
  • Some valuations consider net operating profit after tax (NOPAT), aligning closer to EBITDA values while accounting for varying tax rates across countries.

Financial Modeling Insights

  • A comparison between using sales versus EBITDA shows that both approaches yield similar WACC figures; however, using EBITDA is often preferred due to cash generation considerations.
  • In cases where EBITDA is negative, sales should be used as an alternative metric for calculating WACC.

Key Variables in Financial Models

  • The financial model for Cemento Pacasmayo incorporates various factors affecting company performance, including demand elasticity related to cement sales.
  • Historical data indicates that cement sales account for approximately 96% of total revenues; thus, other revenue streams are less significant in modeling efforts.

Conclusion of Financial Model Construction

  • After establishing key variables and historical averages, the financial model calculates essential metrics such as cash flow and present value assessments.

Financial Model Upload Process

Overview of the Financial Model

  • The speaker discusses a financial model that yields a 30% return, valuing the company at 5.52 soles. This highlights the importance of understanding financial metrics in business evaluations.

Google Drive Usage

  • The speaker explains how to upload files to Google Drive, indicating a step-by-step process for sharing important documents with students. This emphasizes digital literacy in managing educational resources.

File Sharing Steps

  • A detailed description is provided on how to share files from Google Drive, including removing restrictions and copying links for easy access by others. This showcases effective communication methods in an educational setting.

Finalizing Document Sharing

  • The speaker confirms that both documents discussed during the session are now available on Google Drive, ensuring all participants have access to necessary materials for their learning. This reinforces collaborative learning practices.

Session Conclusion

  • The session wraps up with gratitude expressed towards participants for their time and engagement, highlighting the importance of appreciation in educational environments. This fosters a positive learning atmosphere among students and instructors alike.