BRMalls - Top Pick within the sector

Although this blog is not a stock research service, it is my obligation to post my view on Brazilian players. BRMalls is my stock pick within the sector and the only company on which I have done the math (valuation), and I can offer a bag of reasons as to why I picked it.

Growth and Value Coupled:
At current levels (BRML3 @ 11,9, MULT3 @ 16,4 and IGTA3 @ 15,5), BRMalls poses a 110% up-side in our view, derived from a sum of the parts valuation that consists of i) the mall portfolio of the company in the end of 2Q08, discounted using the USFI curve and a beta of 0,5, that reflects the low risk profile of the industry (minimum rents represent more than 85% of rent revenues) and ii) growth, which consists of a cash flow projection of the expansion of the company in green and brownfields, as described in the company reports and with very conservative inputs in rent per sqm and SSR, and the assumption that the company will acquire 50% of the remaining participations of the company in its current malls (250 th sqm in 4 years). It is important to note that these acquisitions are an intrinsic part of their growth strategy.

We will continue with this as time allows us...