“s” : “sbs,ve”,”k” : “a00,a50,b00,b60,c10,g00,h00,l10,p20,t10,v00″,”o” : “”,”j” : “”
Zacks Equity Research, On Tuesday October 4, 2011, 5:50 pm EDT
The upgraded rating is backed by the long-term prospects of SABESP’s target of providing roughly 1.3 million new water connections and 1.7 million new sewage connections, while improving its sewage coverage to 90%, through 2019. Water loss ratio is also expected to go down to 14% by December 2014.
Moreover, the Sao Paulo State Sanitation and Energy Regulatory Agency (ARSESP) recently approved a tariff readjustment index of 6.83% for SABESP, which the company can apply linearly to all categories of water and sewage consumers as of September 9, 2011.
Currently, the company is one of the largest players in the industry distributing water to approximately 23.6 million people and providing sewage services to more than 20.2 million people.
However, during the second quarter of 2011, SABESP’s cost of sales and services, as a percentage of revenue, soared to 61.5% boosting the gross margin by 4%. This has dampened our outlook on the company.
Among the cost components, rise in electric power cost appears detrimental to the stock as the company relies heavily on electricity as a source of energy for its pumping stations. The cost rise lowers our outlook on the stock.
Furthermore, SABESP is exposed to the risk of political interference, which may directly influence the company’s future planning and growth prospects. Regulatory uncertainty or delay in pension payments on behalf of the government remains a major cause of concern.
On this backdrop, the company continues to make a constant effort to improve its services and keeps formulating plans for strategic investments. Investments over 2009-2013 period have been estimated to be roughly around R$ 8.6 billion, with R$ 1,753 million targeted for 2011 and R$ 1,748 million for 2012.
Moreover, the company operates in a non-cyclical regulated utility market in Brazil. Therefore, the stock appears to be a relatively low-risk investment future opportunity.
Follow Yahoo! Finance on ; become a fan on Facebook.
Yahoo! Finance: Waste Management Industry News
From our Blog
- Why You Need a Dumpster September 21, 2016
- Neighborhood Togetherness Matters & Clean Up Does, Too September 19, 2016
- What Waste Should You Recycle And Throw In The Trash? August 3, 2016
- Dumpster Rentals for Business Owners August 1, 2016
- Picking a Dumpster for Your Next Roofing Project July 19, 2016
- Consequences of Illegal Dumping and Littering July 13, 2016
- How To Dispose Of Debris? June 14, 2016
- When Is A Good Time To Clean Out Your Waste? June 13, 2016
- How to Dispose of Construction Waste May 2, 2016
- Why You Should Share Rental Dumpsters With Your Neighbors April 29, 2016
2011 2012 Announces best Call Clean Company Conference Connections Covanta diving dumpster dumpsters Energy Ewaste Garb garbage Harbors Holding Identity Inc. Industry Landfill Management Plant power Present Progressive Recycling Release Rental Reports Republic Second Services Solutions Stericycle stock Third TRASH TriTech Veolia Waste yard Year
- Dumpster Diving for Gourmet Pig Feed – Novella Carpenter July 10, 2011
- A Shout Out To Eating Garbage: Dumpster Diving on CBC September 17, 2011
- MythBusters – Dumpster Diving Trailer July 16, 2011
- Kris Kemp: Dumpster Diver August 21, 2011
- What should happen after my character gets beat up? June 6, 2011
- Frugal TV – Dumpster Diving for Coupons June 11, 2011
- Dumpster Dive (Director Commentary) September 24, 2011
- Dumpster Divers Spark Palin Probe September 11, 2011
- Can Opener? We don’t need no stinking can opener! June 19, 2011
- Auburn-Placer 1 yard dumpster June 8, 2011