BrasilAgro July, 2012 Presentation 1
BrasilAgro Brazil competitive advantages Farmland Investment 2
BrasilAgro Farmland Investment 3
Short summary on BrasilAgro Company created to implement the Cresud’s successful business model in Brazil: capable of profiting from the commodities production and from the land appreciation BrasilAgro went public in 2006 at BMF&Bovespa Stock Exchange (“Novo Mercado”) as a business plan (BM&FBOVESPA: AGRO3) Launch of the Level I ADR Program in 2010 (Ticker: BRCPY) We have accumulated a portfolio of 180 thousand hectares until now, all in cerrado region faraway from Amazon biome. We have started our farming operations in 2007/08 crop , since then we have developed 61.8 thousand ha and we cultivated 58.1 thousand ha during 2010/11 crop representing a CAGR of 34%. Until now we have sold two farms; one with an appreciation of 112% and other with an appreciation of 156%. According to Delloite independent valuation (Dec/10), BrasilAgro’s properties had an appreciation of 111,1% since acquisition. 4
Shareholders structure Mercado Market Cresud was founded in 1935, went public in Buenos Aires stock exchange in 1960 and on Nasdaq in 1997 One of the largest holders of farmland in Argentina: over 650 thousand ha in 20 properties located in one of the most fertile areas in the world Over 850 thousand hectares under management in Argentina, Bolivia and Paraguay 30 plus years of track record in the agribusiness sector/rural real state. Sold 17 farms in the last 8 years averaging appreciation over 100% Producer of soybean, corn, wheat, sunflower, beef and milk Value drivers: agricultural activities and complementary rural real estate operations 5
Potential business models Main farmland related investments alternatives in Brasil: four different business models Land Acquire and Lease Lease and Plant Acquire and Plant Acquisition and Development Risk Return • Investor leases the • Investor buys a • Investor buys a • Investors buys a raw property from third productive land and productive land and land, develop and parties operates it lease it to third operates it High parties • Does not benefit from • Benefits from farmland • Benefits from farmland Low • Benefits from farmland price price appreciation price appreciation appreciation farmland price • Agricultural operational • Agricultural operational appreciation • Agricultural operational gains gains • Leasing incomes gains • High committed capital • Benefits from land • Low committed capital • High committed transformation capital • Medium committed capital 6
BrasilAgro business model The company has a unique business model that creates value through real state appreciation and agricultural production Raw Land Value generation 1 2 Land Transformation Cash flow operations The land development creates The state of art agriculture value by itself, regardless the allow us to generate a strong farmland price appreciation operational cash flow Land value Cattle Management Expertise Forestry Grains 3 Baseline appreciation Sugarcane Any farmland price appreciation should generate a positive impact 7
Farmland portfolio of 180 thousand ha BrasilAgro has a diversificated portfolio reducing operational and financial risks Grains and Cotton PRODUCTION CAPACITY (Ha) Total area (1) : 123,548 ha Potentially Production area (2) : 87,783 ha productive 73% Location: Piauí, Bahia and Environmental Maranhão reserve 27% Sugarcane Total area: 14,868 ha Production area (2) : 10,871 ha Location: Goiás, Mato Grosso Cattle 10% Sugarcane 8% Forestry Forestry 13% Total area: 24,247 ha Production area (2) : 19,004 ha Location: Minas Gerais 180,462 ha Grains Beef / Cattle 68% Total area: 17,799 ha Production area (2) : 14,237 ha Location: Bahia NOTE 1: 7.699 ha is a partnership for agriculture exploration with a purchase 8 option on properties in the state of Bahia NOTE 2: Potential production area for BrasilAgro as estimated by the Company
Asset Valuation Total area Acquisition Acquisition Delloite Capex valuation (1) Appreciation Acquisition value + capex Properties Location Project date ha R$ MM R$ MM R$ MM R$ MM % 1 Cremaq B. Gr. do Ribeiro/PI Out / 06 Grains 32.702 42,0 48,4 90,4 191,2 112% 2 Jatobá Barreiras/BA Mar / 07 Grains 31.606 33,0 25,7 58,7 156,5 167% 3 Alto Taquari Alto Taquari/MT Ago / 07 Sugarcane 5.186 33,2 0,1 33,3 64,1 92% 4 Araucária Mineiros/GO Abr / 07 Sugarcane 9.682 70,4 0,8 71,2 134,5 89% 5 1 8 Chaparral Correntina/BA Nov / 07 Grains 37.182 47,8 15,9 63,7 144,5 127% 6 Nova Buriti Januária/MG Dez / 07 Forestry 24.247 21,5 0,4 21,9 22,2 1% 5 7 2 9 7 Preferência Barreiras/BA Set / 08 Pasture 17.799 9,5 8,8 18,3 25,4 39% 6 3 4 11 8 Horizontina Tasso Fragoso/MA Abr / 10 Grains 14.359 37,7 5,8 43,5 53,5 23% 10 9 Partnership I (2) Jaborandi/BA set/11 Grains 7.699 - - - - - Total 180.462 295,1 105,9 401,0 791,9 97% 10 Engenho (3) Maracaju / MS Jan / 07 2.022 10,2 0 10,2 21,6 (4) 112% 11 São Pedro (3) Chap.do Céu/GO Set / 06 2.447 9,9 0,2 10,2 26,1 (4) 156% (1) As of 12/31/2010 BrasilAgro has purchase option in the “Partnership I Farm” with fixed price (2) (3) Engenho and São Pedro farms was already sold (4) Sale price . 9
Land acquisition/transformation 1 180,000 ha of land acquired and 61.8 ha transformed into grains, sugarcane and pasture areas. Developed area (ha) Land acquisition / transformation Land acquisition evolution (ha) 61.790 • High expertise to perform technical, 107,9 environmental and legal due diligence before the acquisition 41.079 • Enabled team to obtain environmental permits to clean the 23.107 area 37,2 • Well structured operational process 7.792 17,8 to clean and prepare the area to be 14,4 cultivated 0,0 2006 2007 2008 2009 2010 07/08 08/09 09/10 10/11 • Access to subsidized credit lines to finance the development capex 10
Operational capabilities 2 A unique combination of diversification, operational skills and commercialization capabilities… Diversification Operational Commercialization • State of the art producing 2011/12 crop planted area technology • Sophistication and efficiency in breakdown products commercialization • Strongly skilled team capable of making the best strategic decision • Benefits from gains of scale regarding the crop • Deep understanding of the • Management model based on a commodities markets gives us the strong leadership on site ability of developing pricing strategies capable of benefiting • We operate our farms by from market trends and volatility outsourcing all machinery processes • The monitoring of the hedging position and exposure is made • Access to subsidized credit lines through advanced controlling to finance the Company’s working tools capital 11
Operational capabilities 2 Our operational controlling toll comprehend all BrasilAgro management team consolidate agricultural operational process: (i) planting, (ii) soil sophistication, technology and field knowledge fertilizing, (iii) chemical spray and (iv) harvest Sample of controlled items: • Efficient cost control tool • Distance between planted seeds • Integrated process through SAP • Number of planted seeds per meter that reaches the farm level • Fertilizer portion per meter • Quarterly auditing procedure on • Chemical spray: number of accounting reports and drops per cm² process • Harvest: wasted grain per hectare • Among others 12
Deep knowledge of Brazilian farmland landscape 3 Undisputed leadership in the rural real estate scenario with a proven track record BrasilAgro’s rigorous acquisition process confers a unique competitive advantage to quickly deploy the capital 5 18,7 0 0 MM ha 6 6 6 38 38 42 Primary analysis 22.0 230 230 230 851 955 851 11 11 11 0 0 0 10 10 12 2,500 2,500 2,536 0 0 0 1 2 1 62 62 54 Site visit 2.5 0 0 0 1,300 1,510 1,300 0 0 0 14 21 14 87 126 126 9 4 4 Detailed due diligence 1.0 6 6 6 1,000 1,000 1,231 111 111 111 95 158 95 10 8 8 3 3 3 4 2 4 4,060 4,060 4,167 255 250 250 2 2 2 21 157 21 0 0 0 56 57 56 6,533 6,533 7,759 0 0 0 17 16 16 14 16 14 6 6 98 0 0 0 4 4 6 230 749 230 93 119 93 Number of farms for sale 0 1 0 1,190 1,261 1,190 0 0 0 23 20 20 5 8 5 2 2 2 Total area of the farms for sale (thousand ha) 128 128 128 2,6 2,6 2,6 44 44 44 1,000 1,000 1,020 0 0 0 156 156 156 12 12 12 0 0 0 2 2 2 4 3 3 1 1 1 Number of visited farms 0 0 0 2,2 2,2 2,2 0 0 0 0 0 0 1 1 Number of farms where we performed technical due diligence 1,8 1,8 0 0 0 0 Deep knowledge on Brazil ´ s farmland scenario Experienced team to select the best acquisition opportunities. 13
Case Study – Cremaq Farm At Acquisition Current PI Baixa Grande Ribeiro 19.7 thousand ha with grains (soybean, corn, rice and cotton) Storage facility for 1,2 million bags of soybean/corn 205 Km of roads, of which 37 km of gravel roads (suitable for heavy weight trucks) 120 - 180 direct employees 18.8 thousand ha in native vegetation 3.0 thousand ha with grains 5 workers houses (practically destroyed) 2 supplies warehouses (practically destroyed) 1 main house 1 lunch room In the same period, average Acquisition (Oct-06) Capex (to Dec-10) Valuation (Dec-10) land appreciation in Brazil was 61% Market Value: R$191.2 mm Land: R$42.0mm Capex: R$48.3 mm Appreciation: 112 % 14
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