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Uniao de Bancos Brasileiros ( Portuguese for Brazilian Banks Union ), or Unibanco ( NYSE:UBB ) is Brazil's third largest banking company, headquartered in Sao Paulo. It is currently undergoing very strong growth due to Brazil's strength on the world trading markets. Its current P/E is very high at 216.96, but this is because of high revenue growth estimates by analysts, and is unlikely to be overvalued. Analysts estimate that next year, based on current prices, the P/E will have dropped to 11.76. ( http://finance.yahoo.com/q?s=UBB ).
Unibanco is well positioned to enjoy strong future growth, due to its position in a high-growth developing economy. Brazil currently has less than a quarter of the number of homes per capita compared to Mexico. It is anticipated that over the next few years, fueled by government subsidization, many more housing units will be built in former shanty towns, therefore increasing the amount of mortgages UBB sells, and increasing profits. Since Oct 14th 2002, the Brazillian bank's share price has rocketed from US$8.15 to US$139.07.
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Update 01/07:
Uniao de Bancos Brasileiros ( Portuguese for Brazilian Banks Union ), or Unibanco ( NYSE:UBB ) is Brazil's third largest banking company, headquartered in Sao Paulo. It is currently undergoing very strong growth due to Brazil's strength on the world trading markets. Its current P/E is very high at 216.96, but this is because of high revenue growth estimates by analysts, and is unlikely to be overvalued. Analysts estimate that next year, based on current prices, the P/E will have dropped to 11.76. ( http://finance.yahoo.com/q?s=UBB ).
Unibanco is well positioned to enjoy strong future growth, due to its position in a high-growth developing economy. Brazil currently has less than a quarter of the number of homes per capita compared to Mexico. It is anticipated that over the next few years, fueled by government subsidization, many more housing units will be built in former shanty towns, therefore increasing the amount of mortgages UBB sells, and increasing profits. Since Oct 14th 2002, the Brazillian bank's share price has rocketed from US$8.15 to US$139.07.
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Update 01/11:
UPDATE 11TH OF JAN: Uniao de Bancos Brasileiros ( Portuguese for Brazilian Banks Union ), or Unibanco ( NYSE:UBB ) is Brazil's third largest banking company, headquartered in Sao Paulo. It is currently undergoing very strong growth due to Brazil's increasing strength on the world trading markets. Its current P/E is very high at 216.96, but this is because of high revenue growth estimates by analysts, and is unlikely to be overvalued. Analysts estimate that next year, based on current prices, the P/E will have dropped to 11.76. ( http://finance.yahoo.com/q?s=UBB ).
Unibanco is well positioned to enjoy strong future growth, due to its position in a high-growth developing economy. Brazil currently has less than a quarter of the number of homes per capita compared to Mexico. It is anticipated that over the next few years, fueled by government subsidization, many more housing units will be built in former shanty towns, therefore increasing the amount of mortgages UBB sells, and increasing profits. Since Oct 14th 2002, the Brazillian bank's share price has rocketed from US$8.15 to US$141.27. Dividend payouts are also increasing rapidly: the recent January '08 payout of $2.64 per share is over twice last year's payment of $0.96.
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Update 01/16:
Brazil is currently the slowest growing BRIC (Brazil Russia India China) country. This is mainly due to very restrictive reguations on setting up and operating businesses. For example it takes 150 days to set up a business in Brazil, due to paperwork. Brazil is also one of the most eco-friendly countries on the earth, which could help its tourist and international relations credentials. Brazil has so far not been hit by any SARS/Bird-flu pandemic, as chicken breeding is less common than in Asia. The huge mass of Brazillian bureacuracy is currently putting the 'brick' on the brake pedal.
On the other hand, the Chinese government has removed all regulations stopping economic growth, including safety, quality and workers rights regulations (think lead-poisoned childrens toys). Even in government run projects, such as the Three Gorges Dam, cheap, low-quality materials have been used to save on construction costs. Also, Chinese industry dumps millions of tonnes of raw industrial waste into rivers every year. Air pollution, especially in Hong Kong, is endangering health, and the country takes only halphhazard measures to contain the SARS/Bird-flu virus mutations, putting financial concerns before everything else.
Obviously, neither of these two situations can continue forever. China's growth rate is artificially inflated by a money-centered government, whereas the Brazillian economy is yet to unlock its full potential. When Brazil's government abolishes its restrictive practices (its already starting: it will soon take only two weeks to set up a business), we will see Brazil's growth rate rocket. At the same time, due to European and American pressure, safety, employment and merchandise quality regulations will be put on Chinese goods. This could slow down significantly the Chinese economy.
Also, Brazillian stocks are very cheap compared to Chinese ones, so you may as well snap them up while you can: some Chinese companies have P/Es of 35+, while Itau Bank's P/E is sensible at just 13.
Good brazilian stocks include ERJ, ITU and UBB.
Good Luck,
~~~~Shane Halloran.
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Update 02/20:
UBB:
This call was made
on 12/30/07
@ $27.51
| Rating: |
$27.51 (12/30/07)
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| Closed: |
01/06/2008
@ $25.86
(-6.00%
in
7 days)
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| Target: |
in > one year
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