I was long Concha y Toro back when it was listed in New York. The bull case here is they own a bunch of valuable real estate including some prime parcels around the Santiago urban area which would be worth way more than they are carrying at. Instead of sharing this wealth with shareholders, however, they delisted the company from New York and have done nothing else to market the stock.
I have reallocated my funds there to CCU, the Chilean monopoly (60% market share) brewer that also operates Gato Negro, the large mass market Chilean wine brand.
They still pay a decent dividend to shareholders, no?
I hear you on the land value. But for a tightly held/controlled company, what is the incentive to write up the land value? Would there be negative tax implications (I'm asking, I have no idea)?
Also, Chilean companies delisting from the U.S. seems to be more and more common. I threw a write up in the trash last month because the company delisted while I was writing it....
Back in 2017 they launched a dedicated real estate subsidiary and it appeared they were going to convert some of the land and vineyards around Santiago into housing. Based on the first set of land sales, assuming the Santiago land was developed and market rates for the rural vineyards, the company was worth at least 3x book value. Instead of continuing down this path, however, they instead suddenly delisted from New York and stopped doing anything to market the opportunity to investors.
Wouldn't surprise me at all if these sorts of companies try to go private at very low valuations and then IPO again at a far higher price in the next South American bull market.
As for the dividend, I think they pay about 2% now which is fine but nothing remarkable for a LatAm equity at the moment. CCU by contrast is paying approx. 5%.
In their defense, development demand dropped following the start of the protests and political uncertainty in 2019. And then the pandemic hit Chile pretty hard as well. Perhaps the land development story returns once Chile's economy and sentiment finally pick up. Something to consider if the economy really gets sizzling again though. Probably not a 2024 story though.
Sounds like what Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (NASDAQ: CRESY) which has farming operations in Brazil, Paraguay, and Bolivia did as they have a subsidiary for RE development: IRSA Inversiones y Representaciones SA (NYSE: IRS)
WHAT I HAVE ON MY CHIE ADR PAGE: In 1994, winery Vina Concha y Toro SA (NYSE: VCO) had listed its ADRs on the NYSE in order to facilitate investment by overseas investors to diversify its shareholders base and to increase the Company’s capital raising options. However and in 2018, the Company filed https://www.sec.gov/Archives/edgar/data/930543/000101905618000818/ex99_2.htm with the SEC its intention to delist its ADRs and noted the following issues concerning US traded ADRs:
"Today, the Chilean capital markets, have achieved a higher level of sophistication and global integration, attracting international investors. ADRs currently comprise approximately 3% of the total shares of common stock of the Company. In addition, given the increased administrative costs that it implies for the Company to remain a NYSE-listed company, Viña Concha y Toro has decided to file an application for voluntary delisting from the NYSE as part of its effort to reduce operational expenses.
Viña Concha y Toro will maintain its listings on the Santiago Stock Exchange, the Chile Electronic Stock Exchange and the Valparaíso Stock Exchange."
I was long Concha y Toro back when it was listed in New York. The bull case here is they own a bunch of valuable real estate including some prime parcels around the Santiago urban area which would be worth way more than they are carrying at. Instead of sharing this wealth with shareholders, however, they delisted the company from New York and have done nothing else to market the stock.
I have reallocated my funds there to CCU, the Chilean monopoly (60% market share) brewer that also operates Gato Negro, the large mass market Chilean wine brand.
They still pay a decent dividend to shareholders, no?
I hear you on the land value. But for a tightly held/controlled company, what is the incentive to write up the land value? Would there be negative tax implications (I'm asking, I have no idea)?
Also, Chilean companies delisting from the U.S. seems to be more and more common. I threw a write up in the trash last month because the company delisted while I was writing it....
Back in 2017 they launched a dedicated real estate subsidiary and it appeared they were going to convert some of the land and vineyards around Santiago into housing. Based on the first set of land sales, assuming the Santiago land was developed and market rates for the rural vineyards, the company was worth at least 3x book value. Instead of continuing down this path, however, they instead suddenly delisted from New York and stopped doing anything to market the opportunity to investors.
Wouldn't surprise me at all if these sorts of companies try to go private at very low valuations and then IPO again at a far higher price in the next South American bull market.
As for the dividend, I think they pay about 2% now which is fine but nothing remarkable for a LatAm equity at the moment. CCU by contrast is paying approx. 5%.
The land development story is interesting, I didn't know about it.
Not really sure what to make of it. But definitely doesn't seem like it was a shareholder friendly...
In their defense, development demand dropped following the start of the protests and political uncertainty in 2019. And then the pandemic hit Chile pretty hard as well. Perhaps the land development story returns once Chile's economy and sentiment finally pick up. Something to consider if the economy really gets sizzling again though. Probably not a 2024 story though.
Will be interesting to follow! Thanks for the intel!!
Sounds like what Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (NASDAQ: CRESY) which has farming operations in Brazil, Paraguay, and Bolivia did as they have a subsidiary for RE development: IRSA Inversiones y Representaciones SA (NYSE: IRS)
Thanks for the tickers, I haven't looked at these!
WHAT I HAVE ON MY CHIE ADR PAGE: In 1994, winery Vina Concha y Toro SA (NYSE: VCO) had listed its ADRs on the NYSE in order to facilitate investment by overseas investors to diversify its shareholders base and to increase the Company’s capital raising options. However and in 2018, the Company filed https://www.sec.gov/Archives/edgar/data/930543/000101905618000818/ex99_2.htm with the SEC its intention to delist its ADRs and noted the following issues concerning US traded ADRs:
"Today, the Chilean capital markets, have achieved a higher level of sophistication and global integration, attracting international investors. ADRs currently comprise approximately 3% of the total shares of common stock of the Company. In addition, given the increased administrative costs that it implies for the Company to remain a NYSE-listed company, Viña Concha y Toro has decided to file an application for voluntary delisting from the NYSE as part of its effort to reduce operational expenses.
Viña Concha y Toro will maintain its listings on the Santiago Stock Exchange, the Chile Electronic Stock Exchange and the Valparaíso Stock Exchange."
http://www.emergingmarketskeptic.com/emerging-market-adrs/latin-america-adrs/south-america-adrs/investing-chile-adrs-chile-stocks/