seekingvalue

4 Reasons to Like SBS

I agree that this is a compelling value play. There were two other issues I noticed when researching these guys that worried me a bit. 1) The state of Sao Paolo owns roughly 51%, which means that it may not be run in a way that maximizes broader shareholder value. For instance, the state has a huge overdue water & sewage bill with SBS, and SBS says in their annual report that they may not be able to collect. 2) The report also says that SBS gets a large amount of their water from a couple of state-owned reservoirs. Currently they get this water for free, but they say that if the state should start charging them it could be a problem.

Now, this report I read is almost a year old now, so things may have changed. And I don't know how things really work in Brazil... maybe these issues aren't such a big deal. I'd love to hear if anyone has new information or a Brazilian insiders perspective.

All that said, if it gets down to $25 or so, there would be enough margin for error that I'll be a buyer.