As I work my way through the South American ag giants, I now turn my attention to BrasilAgro (LND).
BrasilAgro has done a pretty remarkable job of getting "potentially"
arable land under cultivation, having nearly doubled its land under
cultivation since 2010 and nearly quadrupled it since 2008. Moreover,
management appears pretty smart about putting that land to best use,
adjusting the planting of soy, corn, sugarcane, and cotton in response
to market conditions.
All of this sounds great, but for the sizable stake that Argentina's Cresud (CRESY)
and other foreign investors hold in the company. Brazilian law is
stacked against the acquisition of land by foreigners, and that would
seem to limit BrasilAgro's ability to further expand its land
development operations. Though I do believe BrasilAgro's land is worth
quite a lot, I have serious concerns about the long-term model and the
company's virtual "pure play" vulnerability to Brazilian land values.
With those risks, I'd prefer the potential offered by other South
American ag companies like SLC Agricola (SLCJY.PK) and Adecoagro (AGRO), and perhaps Cresud as well.
To read more, please continue here:
BrasilAgro Has Valuable Land, But An Uncertain Model
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