Sendas Distribuidora S.A. (ASAI-$13.26, NYSE). The “Costco” of Brazil, Without Membership Fees.

The model portfolio has added shares of Sendas to the portfolio today.

Sendas had 184 stores at the end of 2020. They intend to add 28 more stores in 2021 and grow the store count by a minimum of 25 new locations per annum for the next 3-5 years. This, should plans hold up, increase the store count from 184 to 312 by the end of 2026, or roughly a 69& store count increase. Total retail selling space was 8.71 million square feet. New stores are increasingly larger than older locations; averaging 58,000 sq. feet per location as compared to the overall size of 47,000 sq. feet for older stores. it is reasonable to assume that retail space will increase by up to 7.4 million square foot within the next five fiscal years, taking the total retail footprint to over 16.1
million square feet, a forecast increase of 85%.

https://www.sec.gov/Archives/edgar/data/0001834048/000129281421000537/asai20210223_6k.htm

Net sales were $6.47 billion for 2020, or roughly $35.2 million USD per store. Due to the rapid increase in the store count, which require some time to season up to normalized revenues, it looks as though established stores (open more than one year) average closer to $37 million in annual revenues. Therefore, 2021 revenues on the 184 existing stores could surpass $6.8 billion. The forecast revenues from the 28 to-be-opened locations in 2021 could generate an additional 400 million to that count. Add in an assumed food price inflation of 10%, below that of 2020, and overall revenues could touch $7.9 billion in 2021.

Average annual revenue per square foot of retail space was $742 for 2020. By year end 2021, total selling space could grow to 9.8 million square feet. Assuming that net profits per store surpass $1 million, which seems reasonable, overall profitability could touch $212 million for 2021.

EBITDA hit $432 million for 2020, an average of 6.67%. Assuming stability of the margin throughout 2021, overall EBITDA could touch $526 million USD. At $13.26 per share, Sendas is presently valued at 6.8X 2021 EBITDA.

By the end of 2026, EBITDA could reach $1.073 billion US. Assuming no expansion in the multiple, and further assuming all forecasts pan out, this would fairly price the shares of Sendas at $27.10 per share at the end of the 2026.