Cosan S.A.

Large Brazilian conglomerate posting consecutive net losses with heavy leverage despite a sizable operating base.

Strengths

• Scaled, diversified operating business (fuel, sugar/ethanol, gas, rail) with operating margin at 100th pct and gross margin ~88th pct
• Strong cash balance (100th pct) and positive operating cash flow

Risks

• Net loss (-R$10.2bn), ROE -20.7%, ROA -5.8%; net income and revenue growth in ~5th-6th pct
• High debt/equity (1.69) with thin interest coverage (~1.0x) and recurring impairments
• Brazil macro/FX, controlling-shareholder and PFIC governance risks

Notable findings

• Net lossNet loss (net margin -18.6%)
• Insider buyingInsider buying — 2 open-market buy(s) by 1 insider(s) (~$24M, last 6mo) Form 4 ↗
• Revenue declineRevenue -12.6% YoY
• Insider sellingInsider selling — 4 open-market sale(s) by 2 insider(s) (cluster of 2 insiders, ~$869,890, last 6mo) Form 4 ↗