Common Stock: Fabricato
Current Market Price: $ 4.80 COP
Market Capitalization: $ 44 billion COP
*All values in this article are expressed in Colombian Pesos (COP) 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.
Fabricato Stock – Summary of the Company
Fabricato is a Colombian textile manufacturer. They produce cotton, polyester and rayon clothing. The have two main clothing lines, leisure and uniforms. The company operates two factories in Antioquia, Colombia, with a total size of 216,000 square meters. Their production capacity is over 57 million meters of fabric per year. The company currently employs more than 2,400 people. Fabricato was founded in 1920 and is headquartered in Medellin, Colombia.
Revenue and Cost Analysis
Fabricato had total revenue of $ 343 billion in 2019, an increase compared to $ 330 billion in 2018. Their COGS was $ 324 billion in 2019, representing a gross margin of 5.4%, an improvement compared to 4.5% the previous year.
The company had a net loss of $ 17 billion in 2019, a significant deterioration compared to a profit of $ 4.7 billion in 2018. This deterioration is due mostly to changes in one time accounting items. The company had a loss before taxes (EBT) in both 2018 and 2019.
Balance Sheet Analysis
Fabricato has a decent balance sheet. They have a solid base of long term assets, mostly property, plant, and equipment, and sufficient near term liquidity. Their liability levels are reasonable and the company is not over leveraged.
It is worth noting that Fabricato has a pension obligation that was a significant drag on earnings in 2019. Investors should analyze this plan in detail before investing.
Fabricato – Debt Analysis
As of year-end 2019 Fabricato has total debt outstanding of $ 121.4 billion, $ 98.6 billion of which is classified as current.
Fabricato Stock – Share Dynamics and Capital Structure
As of year-end 2019 Fabricato has 9.2 billion common shares outstanding. The company’s 5 largest shareholders own around 32% of the company.
Fabricato Stock – Dividends
The company does not currently pay a dividend.
Fabricato Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$ 438 billion / $ 519 billion = .85
A debt to equity ratio of .85 indicates that Fabricato uses a mix of debt and equity in its capital structure, but relies slightly more on equity financing to fund itself.
Working Capital Ratio
Current Assets/Current Liabilities
$ 202 billion / $ 201 billion = 1
A working capital ratio of 1 indicates a sufficient, but not strong liquidity position. Investors should monitor the company’s liquidity closely for signs of deterioration.
Price to Book Ratio
Current Share Price/Book Value per Share.
$ 4.80 / $ 56.35 = .09
Fabricato has a book value per share of $ 56.35. At the current market price this implies a price to book ratio of .09, meaning Fabricato stock currently trades at an extreme discount to the book value of the company.
Fabricato Stock – Summary and Conclusions
Fabricato has an impressive history, having been in operation for over 100 years. They have significant production capacity and are a leader in the uniform segment in Colombia.
However the company’s financials are too weak for me to invest. They are currently operating at an operational and net loss. They have a significant pension obligation and their liquidity position is barely sufficient.
I would rank other Colombian textile manufacturers above Fabricato, for example Enka de Colombia stock.
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.
