ADVFN News | Log Commercial (LOGG3): net income of R$111.7 million in 3Q22, up 18%

THE Apply for commercial real estatelogistics company for condominiums, registered net profit of R$ 111.7 million in the third quarter, which is an increase of 18% compared to the same period last year.

THE Net income reached R$59 million in the third quarter, representing an increase of 60% compared to the same period in 2021. In the year, revenue reached R$154 million, a growth of 39% compared to 9M21.

Significant growth in the year is the result of new asset deliveries with different levels of average rental price, new leases and contract adjustments 1.4% above inflation on an annual basis, in the existing portfolio.

ON obtained – earnings before interest, taxes, depreciation and amortization – reached R$130 million in the third quarter, representing a 35% increase compared to the same period in 2021. The Ebitda margin in the quarter was 78%, in line with historical levels. Year-to-date Ebitda reached R$405 million, which is a growth of 28% compared to 9M21.

Director of Finance and Investor Relations, André Luiz Vitória, noted that the last quarter was marked by a record delivery of gross leasable area (GLA) by the company. During that period, 174.5 thousand m² were made available in three projects in Minas Gerais and Espírito Santo. From January to September, 415 thousand m² were delivered.

Vitória points out that the result is considered positive and shows the strength of the company in its growth theses, especially in offering warehouses with a better structure – the so-called “class A” – outside the more traditional areas. In all, the company operates in 40 Brazilian cities, in all regions, but with a greater concentration in the Southeast (47.5%) and the Northeast (27.2%).

“We are working on diversification, geographical distribution and modulation of the operation. We have a very vertical operation, from the purchase of land to condominiums. In addition, we have virtually no competition in our segment outside the Rio-São Paulo axis,” the CEO tells InfoMoney.

Currently, Log CP has 1.37 million m² of GLA in its land bank, with at least 430 thousand m² under construction at the moment. The group’s goal is to reach 1.5 million m² in GLA.

Cash flow from operations (FFO), an important metric for the rental segment, was BRL 21 million (-32.4%), with a margin of 35.5% (-48.5 percentage points). The financial director claims that the decline in indicators is the result of the current macroeconomic scenario, with the increase in the Selic rate, which increased financial expenses, such as loan payments and other financial business needs. “But these are still very positive numbers,” confirms Vitória.

The company had a track record of delivery with a high level of leasing. 3 assets delivered, a total of 174.5 thousand m², the largest asset delivery in the Company’s history in one quarter (32.3% log, after the sale of LOG Betim II assets) in the states of Minas Gerais and Espírito Santo. In the past year, we have already delivered more than 415,000 m² in 7 different cities (59.8% Log, after the sale of LOG Betim II assets). We have a high level of leasing of assets delivered in 2022: almost 90%. We are currently developing 7 projects with a total area of ​​430,000 m².

Since the beginning of the year, LOG has delivered 415,000 square meters of new warehouses, which is almost 70% more than that recorded in the whole of 2021, which was a record for the company.

Total company vacancy ended September at 4.28%, slightly below 4.4% in September 2021. Stabilized vacancy recorded 1.73%, well below the national average. Total gross absorption from year to date amounts to 320.7 thousand m².

Rental income for the quarter showed significant growth of 58% compared to the same period last year, due to new asset deliveries, new leases and contractual adjustments 1.4% above inflation year-on-year, totaling R60.2m $.

Diary and FIIs

Another impact on the result comes from the strategy of recycling (selling) part or even all warehouses to real estate investment trusts (FIIs). This quarter, the company is part of the sale of two assets in Minas Gerais for R$429 million to the CSHG Logística (HGLG11) fund, in a transaction announced in July. Gross operating margin was 32.6% above invested and 3.2% above net asset value (NAV).

“We see recycling as one of the most important sources of financing for our business, it is a place where we can create more value. We have healthy leverage [de 2,1 vezes o Ebitda] and we do not intend to increase it”, emphasizes André Luiz Vitória. By the end of September, Log CP’s net debt was R$1.06 billion, compared to R$983 million in June (+8.12%).

e-commerce

Brazilian e-commerce reached sales of R$118.6 billion in the first half of 2022¹. The value corresponds to an increase of 6% compared to the same period in 2021. The category of food and beverages and fast products stands out.

The volume reflects the change in the consumption habits of Brazilians. There are currently 49.8 million online shoppers in Brazil, which represents an increase of 18% compared to the first half of 2022 with the same period of the previous year.

The food and beverage category continues to stand out. According to the research, the variation in orders between the first half of 2022 and the same period in 2021 was 128%.

André Luiz Vitória says that although the growth of the e-commerce sector has slowed down this year, it is still very strong – the segment recorded a growth of 6% in the first half of the year, according to data from the “Webshoppers” survey, prepared by NielsenIQ.

“The activity has not stopped requiring sheds. The pace has not been the same as in previous years, companies are more selective, but our type of Class A structure is still the difference.”

Another observed demand is in the transition of companies that want to adopt a “light asset” strategy (reduction of fixed assets), which have to abandon their old warehouses to offer Log CP.

“We call this strategy ‘flight to quality’ [busca por qualidade]. Our figures show that only 15% of the existing warehouse supply is of high quality. There is a huge market potential,” he continues.

In order to fulfill the planned investments, we concluded the sale of two properties in July. Total sales amounted to R$ 429 million, and financial settlements were made in September (LOG Betim II) and early October (Parque Torino). In this sense, it is important to emphasize that part of the funds were not paid at the end of this quarter.

The company’s net debt is 2.1 times Ebitda, stable compared to the second quarter, but much higher than the 0.7 times reported in September 2021. For Fischer, the leverage, which today stands at close to R$1 billion, is necessary for the plan growth of the company, but no growth is expected next year. “By recycling, we will keep it stable [vendas de ativos]the cycle works with a very robust investment and the rent follows,” he says.

The results of Log Commercial (BOV:LOGG3) related to operations for the third quarter of 2022 were published on October 26, 2022. See the full press release!

* With information from ADVFN, IR company, Valor, Infomoney, Estadão, Reuters

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