Rating B
68 / 100
The Latvian Forest Development Fund is a company specializing in forest asset trading in Latvia. Its principal activities include the purchase and resale of forest properties and timber harvesting rights. The company acquires forests and logging sites, holds them temporarily in inventory, and subsequently resells them.
SIA “Latvijas Meža Attīstības Fonds” was established in April 2023 under registration number 40203475516 with share capital of 1.5M€. Its founder is Jānis Upenieks, a former member of the Latvian Parliament (Saeima) and current Parliamentary Secretary to the Ministry of Finance. The company is listed on the Debitum Investments platform.
For this analysis, I have relied upon their two annual reports (2023 and 2024), which have been duly audited in accordance with International Standards on Auditing (ISA). This is a technical assessment based on standard credit analysis methodologies and does not constitute investment advice.
👉 Financial Metrics and Ratio Calculations
Growth : A+
The company shows exceptional growth. Revenue increased by 3.1 times (+211%) to reach 3.9 million €. Gross margin grew by 6 times (+494%). This growth brought a net profit of 70,304 € in 2024 and assets grew by 79%.
Operating costs increased at a controlled rate (89% of revenue growth rate), which creates good operating leverage. These numbers show an ambitious acquisition strategy that works well, with fast and profitable growth.
Profitability : B+
Profitability is improving significantly with strong ROCE (return on capital employed) at 8.1% and RoE (return on equity) at 10.1%, showing efficient capital use. The ROIC (return on invested capital) of 8.1% and operating margin of 11.4% confirm the effectiveness of the growth strategy.
Although net margin is currently 1.8%, economies of scale should improve it significantly over time. After just 20 months of operations, the company has achieved profitability while maintaining strong growth – a notable success in this sector.
Liquidity : E
Short-term debt coverage (1.19) and financial balance ratio (0.70) are satisfactory. However, cash reserves and financial autonomy are limited. This reflects tight but coherent management during the intensive growth phase, where cash is quickly reinvested in forest asset purchases.
Operational Efficiency : B
Asset turnover (0.42) and the cash conversion cycle are remarkable, demonstrating excellent efficiency of invested capital. A cycle of -199 days means the company partially finances its growth through supplier payment terms – a major competitive advantage in the forestry sector.
The DSO (Days Sales Outstanding) of 67 days remains reasonable for complex forestry transactions. The DPO (Days Payable Outstanding) of 266 days, though elevated, reflects the company’s strong negotiating power. These metrics confirm optimized operational management that maximizes capital utilization.
Solvency : C
The solvency ratio (18.9%) and debt-to-EBITDA ratio (9 years) remain acceptable for a company experiencing strong growth. Although interest coverage (1.19x) is tight and equity is limited (15.9%), these ratios should improve naturally as EBITDA continues to grow.
Strenghts
✅ Exceptional growth (+211% revenue)
✅ Competitive cash conversion cycle (-199 days)
✅ Excellent asset turnover (0.42)
✅ Profitability achieved in 20 months
Weaknesses
⚠️ Tight cash position (1 day)
⚠️ High debt burden (5.3x leverage)
Review 2025 LFDF
The company shows exceptional growth with revenue multiplied by 3.1 (+211%) reaching €3.9 million and gross margin multiplied by 6 (+494%). This expansion comes with a positive net result of €70K (2024) and asset growth of 79%. Expenses grow at a controlled pace (89% of revenue growth), enabling favorable operating leverage. The ambitious acquisition strategy is perfectly executed with rapid and profitable scaling.
