Companhia Sanea (SBS)

[flatlander_60048]

Saw that several of the major reservoirs received about 50mm and are approaching the normal mean rainfall for the entire month of Sept, already. With the El Nino being as strong as it is, I think the next several months will generate above normal precipitation. I look at it as if SBS can generate enough reservoir reserves this rainy season and squeek through next year, the situation should improve in 2017 when the 5m3/s diversion project comes on-line.

I think the currency and drought have created a buying opportunity where the cyclically adjusted PE is 2.5 only 1/10th of the 25 average in the US market.


The bigger influence on SBS share price this morning appears to be the strengthening Real v the dollar (see Chart)

http://www.xe.com/currencycharts/?from=BRL&to=USD&view=1W

The IMF has once again called on the FED to hold off on rate increases. Perhaps that is helping the currency situation.

FL