November 30, 2021

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Ipiranga once again proved to be Ultrapar (UGPA3)'s weakness and the stock fell 8% after the balance sheet

Ipiranga once again proved to be Ultrapar (UGPA3)’s weakness and the stock fell 8% after the balance sheet

São Paulo – Ipiranga service station network continues to squeeze Ultrapar results (UGPA3), which is witnessing a sharp decline in its shares after outcome And also with a revision of estimates for 2021. In conclusion, the write-off was 8.09% at R$12.38.

The company had Net income of R$374.3 million on the balance sheet for the third quarter, which is a 35% higher performance compared to the same period last year, when it amounted to 277.3 million Brazilian riyals.

Recurring net income – which does not include the effects of an Extrafarma depreciation of R$395 million in the second quarter and an IR reversal on SELIC’s adjustment to tax credits of R$196 million in the third quarter—totaled R$178 million, in this benchmark a 36% decline in One year.

Adjusted and recurring earnings before interest, taxes, depreciation and amortization (Ebitda) totaled R$1.017 billion, down 2% from R$1.038 billion in the previous year. Bradesco BBI highlights that the number is in line with its estimates and with the consensus, citing a stronger-than-expected performance from Ultragaz and Oxiteno, partially offset by a slightly weaker result for Ipiranga and higher acquisition expenses. In the second quarter, the company’s numbers I have already been affected by Ipiranga.

But it notes that despite the quarterly improvement in Ebitda margin (Ebitda/net revenue) per cubic meter of Ipiranga to R$68 (R$64 excluding non-operating results, versus R$53 in the second quarter), the figure remains under severe pressure compared to Vibra levels (VBBR3) and root (RAIZ4).

“The prospects for sustainable margins for Ipiranga remain very uncertain at this point,” the BBI assesses.

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The company’s management also lowered its consolidated forecast for Ebitda to a range of R$3.75 billion –
R$ 4.13 billion, from R$ 3.8 billion – R$ 4.65 billion previously, which is a decrease of about 7% compared to the midpoint. The main driver was specifically Ipiranga, with a drop of about 17% compared to its average level.

For BBI, the perspective of what should be the recurring Ebitda margin in Ipiranga remains uncertain. The bank’s analysts remain with a neutral recommendation, while the target price has been reduced from R$21 to R$18 per share.

After the balance sheet, Credit Suisse reiterated a neutral recommendation to the newspaper, with a target price of R$16, noting that the numbers are quite disappointing.

The bank’s analysts indicated that Ebitda was on the same line, but after adjusting the special clauses, there will be a drop to R$940 million, 2% less than they expected. For them, the numbers themselves weren’t too bad, but the quality of the results was the downside, highlighting Ipiranga’s numbers 17% below the institution’s estimates.

On the other hand, even highlighting the result under pressure from Ipiranga, Bank of America maintained a buy recommendation for the asset, with a target price of R$23.15.

“Despite the poor performance of Ipiranga, we maintain our recommendation given the view that margins should benefit in the coming quarters at better prices. However, we expect the market to need clear signals that trends are improving before the stock gains,” he said. US Bank indicates.

For analysts at home, the general openness of the economy in Brazil may support a gradual improvement in general business trends in the coming quarters, contributing to a strong earnings performance in the coming quarters.

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