Conduril reports twice a year, and today they released the interim results (in Portuguese) for the first half of 2013. Despite the low levels of construction activity in Portugal Conduril is doing just fine because of their foreign operations: in the period just 7% of their revenue originated from Portugal. New is the entry in Zambia where they won a contract to expand the Great East Road. I have updated the table below to include the latest results:
As is visible revenue was down a little bit while the more important metric: net income, went up a bit. I don’t think that the decline in revenue is signaling a trend: the order book actually went up from 610 million at the beginning of the year to 680 million at the end of the period. If we take book value as a proxy for intrinsic value we see that Conduril continues to grow at a healthy speed (while paying out dividends).
The interim report doesn’t include a statement of cash flows, but you don’t need to be a rocket scientist to figure out that the amount of free cash flow wasn’t a positive number the first half year. The amount of cash available dropped significantly while receivables went up. For Conduril this is simply the nature of the beast. Cash flows are lumpy because the company works on big projects that can take years to finish, and most of the cash is only received when the projects are completed.
I continue to view Conduril as a pretty solid business, but despite the fact that the share price has been going up significantly this year it’s still trading at 3.1x P/E, 0.45x P/B and 1.35x EV/EBITDA ratios. That’s just way too cheap in my opinion.