Ultrapar Participações
(UGP:NYSE) is a Brazilian holding
company with subsidiaries that dis-
tribute liquefied petroleum gas (LPG),
produce chemicals and petrochemi-
cals, and provide storage and trans-
portation services.       Given the eternal Middle East
conflict and recent threats to oil sup-
ply, oil prices have gone through the
roof. Oil is over US$50 a barrel. It
recently cost me over US$40 to fill
my tank!       Countries like India and China are
already using liquefied petroleum gas
to power their vehicles. LPG burns
well and pollutes less than gasoline.
But it requires a lot of tank space for a
car to travel long distances.       LPG could be used for larger appli-
cations, like cruise ships, industrial
facilities, homes, etc. A petrochemical
pioneer since 1937 Ultragaz is the LPG distribution arm of Ultrapar. Since 1937, it has
helped pioneer the development of
the petrochemical industry in Brazil.
And it introduced LPG for home cook-
ing in Brazil.       Ultragaz has built its business
serving Brazil’s residential, commer-
cial and industrial segments. It’s the
largest LPG distributor in Brazil and
the sixth largest in the world.       In 2000, Ultragaz started the con-
struction of four new plants to cover
the entire Brazilian territory. The first
of the four new plants, located in
Goiânia, started operations in August
2000. In 2001 Ultragaz started two
new plants in Fortaleza, in the state of
Ceará, and in Duque de Caxias, in the
state of Rio de Janeiro. In 2002, the
company started operations in the new plant of Betim, in the state of
Minas Gerais.       In 4Q 2001, sales volume in the
non-residential segment was 5%
higher than 4Q 2000. Electric energy
rationing in Brazil has raised aware-
ness among the population about
the importance of using alternative
energy sources.       Ultragaz’s net sales and services
increased 13% in 2004 compared to
2003. Sole provider Ultrapar’s second subsidiary, Oxiteno, is the sole Brazilian producer
of ethylene oxide and its main deriva-
tives, as well as a large producer of
specialty chemicals. Oxiteno’s prod-
ucts, which include polyethylene
terephthalate (PET) packaging, paints,
cosmetics and detergents, are used
throughout the industrial sector. From $17 to $27 in one year? Three dynamic
subsidiaries powering Brazilian growth... and
your portfolio By Siu-Yee Ng Next page… boasts a cheap labor supply and
grade-A technological advances.
Best of all, its steel is cheaper.
Brazilian steel makers actually pro-
duce steel 40% cheaper than the US.
China’s insatiable appetite for steel
continues to fuel the industry.        Though volatile steel prices have
sent many steel stocks down over
the past few months, we’re still
holding a 10% gain on SID since our
US$15.45 entry. And you’ve got a
big dividend payment due very
soon—a US$2.96 dividend was
announced on May 2 for all share-
holders of record as of May 4. The
payable date has yet to be declared,
so continue to hold your shares.        This month, we’ve discovered
another Brazilian gem whose annual
sales have grown 30.5%, with net
income up 88.4%. And with a divi- dend payment to boot, you might
not expect to pick it up as a bargain.
But with a PEG ratio of 0.57, it’s
definitely undervalued.        Erin Beale is an editor at the Red
Zone Profits investment group and
daily American Capitalist e-letter. ¦ G L O B A L   W E A L T H 7 www.taipanonline.com