Cosan to Buyback 2.6M Stock - Analyst Blog
November 07 2011 - 12:30PM
Zacks
Brazilian sugar and ethanol producer, Cosan
Limited (CZZ) recently received its Board of Directors’
approval for the renewal of its share buyback program. Pursuant to
the approval, Cosan can buyback roughly 2.6 million shares (or 0.6%
of the company’s outstanding shares) to be held in treasury for
future sale or cancellation. The buyback program remains valid till
November 3, 2012.
Of late, the company was granted approval for buyback of
approximately $100 million worth of shares from July 4, 2011 to
July 4, 2012.
Cosan is the largest sugar and ethanol producer in Brazil,
ranking third in sugar and fifth in ethanol production in the
world. The company, apart from its core operations, engages in
energy production from sugarcane bagasse and fuel distribution.
Evidently, Cosan, over time has been growing through
acquisitions and other expansion strategies. The company seems well
positioned to benefit from its Jataí mill, one of its Greenfield
projects and Raizen, the company’s joint venture with Shell.
Formation of Raizen would serve the purpose of enabling better
access to ethanol consumer market, ultimately leading to increased
competitiveness in biofuels and fuel distribution businesses. The
joint venture will be one of the largest ethanol producers in the
world with 2.2 billion litres of annual production capacity.
However, headwinds from a highly cyclical industry, intensive
competition and sensitiveness of Cosan to domestic and
international changes in supply and demand restrict the positive
momentum of the company. Cosan faces stiff competition from its
rivals like Archer Daniels Midland Company (ADM)
and privately-held Copersucar-Cooperativa de Produtores.
The current Zacks Consensus Estimates for the fiscal years 2012
and 2013 are 90 cents and 85 cents per ADR, respectively,
reflecting annual decline of 18.18% and 5.56%, respectively.
ARCHER DANIELS (ADM): Free Stock Analysis Report
COSAN LTD-A (CZZ): Free Stock Analysis Report
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