May 28, 2024

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David Velez: We're still a little ant, and our strategy is long-term, says David Velez of Davos - Money Times

IRB (IRBR3) Loses R$1.70 Off Safra Target Price With Increasingly Late Recovery – Money Times

a crop target price cut IRB (IRBR3) from $4.8 to BRL 3.10, including a more severe macroeconomic scenario and a tighter discount rate. The recommendation is neutral.

According to analysts, the results were disappointing, indicating that the company’s recovery is taking longer than expected.

Despite increased revenue estimates, high claims still affect crop.

“Therefore, we have sharply reduced our earnings estimates for this year and lowered them slightly for 2023.”

In addition, the crop An estimated 71% of the company’s net profit IRB in 2022.

“We have increased the cost of equity in IRB to 13.3%, following a 50 basis point (basic point) increase in our risk-free rate assumption, reflecting the overall higher risk environment in Brazil,” he adds.

According to analyst calculations, the reinsurance company is trading at 0.9x P/VP (price above book value) for 2022, in line with global players in the sector with local operations in Brazil.

“Given the operating results that are still under pressure, the capital requirements of IRB It has deteriorated in recent quarters. a IRB He analyzes some alternatives to raising capital, such as selling assets, issuing debt, or even raising capital,” he recalls.

In another report, the BB Investimentos also show concern with a company.

“The level of the loss ratio, which is crucial for us to understand the sustainability of the business itself, remains at punitive levels for the company’s results, and even when the effects of stalled contracts (runoff) are erased, the prediction of this dynamic is not encouraging,” say analysts Rafael Reis and Luann. Calimero.

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The main risks of the Immigration and Refugee Board

a crop Reiterates that concerns about the pace of the company’s operational recovery remain the main short-term risks for the thesis IRB.

In addition, the bank raises four risks that the company is exposed to. a look:

  1. A sharp fall in interest rates should lead to a decrease in the financial result;
  2. competitive environment;
  3. increased claims rate;
  4. Political risks involving the golden stake.

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