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ILG Logistics Stock – Investment Analysis

Common Stock: ILG Logistics

Current Market Price: $10.02 CRC

Market Capitalization: $6.5 Billion CRC ($10.5 Million USD)

*All values in this article are expressed in Costa Rican Colones (CRC) 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.

ILG Logistics Stock – Summary of the Company

ILG Logistics is a Costa Rican logistics company. Their main business lines are steamship line representation and brokerage, bonded warehousing and inventory logistics, and transportation. The company operates in 8 Latin American countries; Costa Rica, Panama, Nicaragua, El Salvador, Honduras, Guatemala, Colombia, and The Dominican Republic. They have their own office and warehouse in each country.

The company was founded in 1977 and is headquartered in San Jose, Costa Rica. They employ over 850 people.

ILG Logistics - Office Map
ILG Logistics – Office Map

Revenue and Cost Analysis

The company has had relatively steady revenue for the past 5 years. Due to the corona virus lockdowns, 2020 was a difficult year. ILG had total revenue of $23.4 billion in 2020, a decrease from $25.4 billion the previous year. Their COGS in 2020 was $21.2 billion, representing a gross margin of 9.2%, an improvement compared to 8.5% in 2019.

ILG has an ownership stake which I a financial services and real estate company that pays a relevant amount of income to the company. In 2020 income from associates totaled $1.5 billion, significantly increasing the company’s profitability and causing its net income margin to be higher than its profit margin.

For this reason the company had significant profits in both 2020 and 2019. In 2020 ILG Logistics had net income of $2.8 billion, representing a profit margin of 11.9%, and increase from 8.2% I 2019.

Balance Sheet Analysis

The company has a sound balance sheet. They have sufficient liquidity in the near, a sound base of long term assets, and reasonable liability levels, including low debt.

Debt Analysis

As of year-end 2020 the company has $160.2 million in total debt outstanding, $54.5 million of which is classified as current. The debt carries interest rates ranging from 5% to 11.5%.

ILG Logistics Stock – Share Dynamics and Capital Structure

As of year-end 2020 the company has 647.6 million common shares outstanding.

Dividends

In 2020 the company paid total dividends of $0.93 cents per share. At the current price this implies a dividend yield of 9.3%

ILG Logistics Stock – 3 Metrics to Consider

Debt to Equity Ratio

Total Liabilities/Total Share Holder Equity

$17.4 billion / $21.9 billion = .79

A debt to equity ratio of .79 indicates the ILG Logistics uses a mix of debt and equity in its capital structure, but is not leveraged, and relies more heavily on equity financing.

Working Capital Ratio

Current Assets/Current Liabilities

$18.5 billion / $13 billion = 1.4

A working capital ratio of 1.4 indicates a sound liquidity position. ILG Logistics should not have problems meeting its near term obligations.

Price to Book Ratio

Current Share Price/Book Value per Share.

$10.02 / $33.74 = .3

ILG Logistics has a book value per share of $33.74. Based on the year end 2020 price per share, this implies a price to book ratio of .3, meaning the company’s stock currently trades at a significant discount to the book value of the company.

ILG Logistics Stock – Summary and Conclusions

ILG Logistics is a decent business. They have had steady revenues for the past 5 years and are currently in a sound financial position. The company is profitable, with sufficient liquidity in the near term and very low debt. Management returns capital to shareholders via a dividend.

However due to the corona virus lockdowns, global shipping is increasingly complicated, and I am not familiar with the industry. Although ILG Logistics is clearly a solid business for its shareholders, I don’t see anything exceptional that would compel me to invest. The company has good financial disclosures and I am interested in learning more about their business, so I will add them to my watchlist and revisit their 2021 results when available.

Investors can also consider Costa Rican beverage company Florida Ice and Farm Company.

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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