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AllPark Stock (ALPK3) – Investment Analysis

Common Stock:  AllPark (ALPK3)

Current Market Price: R$ 9.00

Market Capitalization: R$ 1.7 billion

*All values in this article are expressed in Brazilian Reais (BRL) unless otherwise noted.

**The bulk of this analysis is based on the company’s most recent audited financial report, which can be found by following this link.

AllPark (ALPK3) - Stock Chart
AllPark (ALPK3) – Stock Chart

AllPark Stock – Summary of the Company

AllPark is a parking lot management company. They are engaged in all aspects of parking lot services such as managing, operating, planning, and advisory services related to parking lots. As of year-end 2019 they manage 684 parking lots and have an additional 65 franchises. They are present throughout most of Brazil. AllPark was founded din 1982 and is headquartered in Sao Paulo Brazil.

Revenue and Cost Analysis

AllPark had Revenue of R$ 1.1 billion in 2019, an increase from R$ 979 million in 2018. Their COGS in 2019 was R$ 761 million, representing a gross margin of 29.5%, an improvement compared to 28.2% in 2018.

The company has significant financing expenses which have caused them to run a net loss in each of the last two years. AllPark had a net loss of R$ 42.6 million and R$ 50.4 million in 2019 and 2018 respectively.

Balance Sheet Analysis

AllPark has a weak balance sheet. There liquidity position is poor and they have high levels of debt.

AllPark – Debt Analysis

As of year-end 2019 the company has R$ 478 million in total debt outstanding, R$ 119 million of which is classified as current.

AllPark - Debt Table
AllPark – Debt Table

AllPark Stock – Share Dynamics and Capital Structure

As of May 2020 the company has 193.7 million common shares outstanding. Insiders and institutional investors own around 83% of the company’s outstanding shares . The remaining 17% is owned by smaller shareholders with an ownership position of less than 5%.

AllPark Stock (ALPK3) - Share Structure
AllPark Stock (ALPK3) – Share Structure

AllPark Stock – Dividends

The company has not paid a dividend to shareholders in any of the past three years.

AllPark Stock – 3 Metrics to Consider

Debt to Equity Ratio

Total Liabilities/Total Share Holder Equity

R$ 1.8 billion / R$ 581 million = 3.2

A debt to equity ratio of 3.2 indicates that AllPark has a levered balance sheet and relies heavily on debt financing to fund itself. Generally speaking, this increases potential risk to shareholders.

Working Capital Ratio

Current Assets/Current Liabilities

R$ 249 million / R$ 497 million = .5

A working capital ratio of .5 indicates a weak liquidity position. AllPark’s current liabilities exceed its current assets, meaning the company may have issues meeting its near term obligations. Investors should carefully monitor the company’s liquidity position moving forward.

Price to Book Ratio

Current Share Price/Book Value per Share.

R$ 9.00 / R$ 3.00 = 3

AllPark has a book value per share of R$ 3.00. At the current market price this implies a price to book ratio of 3, meaning the company’s stock currently trades at a premium to the book value of the company.

AllPark Stock – Summary and Conclusions

AllPark is a unique company. There aren’t many publicly trades parking lot companies in the world. They have an impressive asset base with almost 700 parking lots and a presence throughout Brazil.

However the company is in poor financial health. Their liquidity position is weak and their balance sheet is leveraged, with high levels of debt. The cost of carrying this debt has been a burden on the company’s results, causing them to have a net loss in both 2018 and 2019.

Due to the company’s weak financials, I would not invest in AllPark stock. Especially considering that the company likely suffered due to the coronavirus crisis, worsening its already weak financial position. In my opinion there are much more compelling investment opportunities in Brazil, such as Alpargatas, just to name one.

Disclaimer

This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.

This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.

Patrick Flood, CFA

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