Investor asks for more to finance retailers’ debt

High interest rates, resistant inflation hurt companies whose sales depend on credit

27/07/2022

Much higher interest rates, resistant inflation and reduced consumption power make up the scenario that has punished retail companies in the stock market for some months. But, more recently, the warning sound has also started to blare in the local corporate debt market, where a good number of these companies have been financing themselves, either to continue their expansion plans, or to reinforce their cash flow, thinking of going through the turbulence that may still come given the macroeconomic risks that lie ahead.

Analysts heard by Valor are unanimous in saying that, unlike what one might think when looking at large retailers traded on the stock market – Magazine Luiza, Americanas C&A, Centauro, Guararapes, Renner and Via –, which have seen losses of up to 88% in 12 months, the situation in the credit market is not dramatic. Most companies have a leverage situation under control and can access the market.

The point is that investors are becoming more demanding, not willing to pay any price, and not even willing to finance companies for any length of time. And at a time when the supply of securities is abundant, you can choose who you want to give money to. And this is already reflected both in the trading of shares in the secondary market and in new issuances.

“What we see is a dispersion of performance among companies, typical of times when uncertainty about the sector as a whole grows,” says Alexandre Muller, a partner at the asset management company JGP.

Two recent operations by large retailers illustrate this environment well. Americanas raised R$2 billion in June issuing 11-year bonds. The rate paid was 2.75% above the CDI (the interbank short-term rate), in an operation considered very successful, even with such a long term. Similarly, Centauro raised R$500 million by issuing 5-year bonds, paying 2.1% above the CDI, in a placement that was fully absorbed by the market.

In July, Via concluded the issuance of R$400 million in five-year and seven-year Certificate of Real Estate Receivables (CRI). But given the low demand for the security, of only R$134 million, the banks that coordinated the offering had to keep a portion of R$266 million.

In this case, the assessment of the managers is that the term was too long given the risk of the company, which deals with macroeconomic issues but also operational and governance issues. It is enough to remember that during the book-building process, a disagreement between the partners about the company’s compensation plan became public.

Similarly, C&A tapped the market to raise R$600 million through bond issuance in April. At the time, Fitch had changed the company’s rating outlook to negative. The banks also had to exercise the firm commitment and were left with 69% and 28.65% of the two lots, maturing in 2025 and 2028, respectively.

When one looks at the secondary market, there are also some movements drawing attention. Magalu’s bond, which was issued last year at a rate of 1.25% above the CDI, for example, is now traded at 1.75%. In contrast, Guararapes’s bond maturing in 2024, which was issued with a spread of 2.95% above the CDI, had a reference rate of 2.0295%.

“There is a change in conditions for these companies, and the credit world also perceives this,” says Mr. Muller. He notes that, although the negative effect is not as intense as the one seen in 2020, when the pandemic strongly impacted some sectors, such as restaurants or tourism, investors now seem even more cautious.

“In 2020, it was easier to have a projection for the companies’ recovery because we knew things would normalize. Now, the call is more complex, because nobody knows when the interest rate will stop rising and not even for how long it will remain high,” he explains. In this context, says Mr. Muller, the fiscal scenario has an even greater weight on the market, once the definition of the fiscal framework for the next government will have a great influence on the interest rate projections.

Vivian Lee — Foto: Carol Carquejeiro/Valor

Vivian Lee — Foto: Carol Carquejeiro/Valor

Vivian Lee, a partner at Ibiúna Investimentos, says that the macroeconomic scenario of high interest rates and inflation affects income and cools consumption. And this has a direct impact on the companies’ revenues and especially punishes those who have a financial arm. Not to mention the immediate effect of the rise in the Selic policy interest rate on the debt, which, for the most part, is pegged to the CDI. “We haven’t seen any impact of the financial cost on the earning reports when looking at the 12-month horizon yet, but in the second half of the year this will start to appear,” she says.

What analysts observe, however, is that the impact of interest rates will have a different magnitude in each retail segment. The most sensitive is the white goods segment – represented by Via and Magalu – which has already benefited a lot during the pandemic, a period in which consumers directed their funds to this type of product.

On the other hand, fashion retail ends up gaining space at this moment. But for those who have a financial arm, the rise in interest rates has a double negative effect: on consumption and on portfolio default. This is the case with C&A, Renner, and Guararapes (owner of Riachuelo).

The need for working capital, the profile of the consumer public, and the level of leverage are also variables that are being closely observed by investors.

“Those who depend on the upper classes end up benefiting. Those who work more with the lower classes will lose more because inflation weighs more for these consumers,” says Luiz Sedrani, BV Asset’s chief investment officer. “The government’s [consumption stimulus] package tends to stimulate the economy, but we have to keep an eye on default rates.”

The market has observed since March a repricing of the shares, a movement that has not yet reached all the companies, says Ms. Lee, with Ibiúna. “How much this scenario will be reflected in the fees paid by the companies is hard to say, but it is clear that there will be a price correction, and this time it will be due to credit risk,” she says. This environment is likely to overlap the flow of investments, which remains strong for the corporate debt market. This has contributed to balancing the rates paid by companies. “Even if you have an appetite for corporate debt, investors will separate the wheat from the chaff, and at some point, prices will adjust.”

Leonardo Ono, Legacy’s corporate debt manager, says that many retailers are impacted because of factoring of receivables, an operation whose cost increased with the higher Selic. But, for him, this is not an exclusive situation for retail, but for companies that depend on the local economy. A good part of these companies are prepared to go through turbulent periods. “I don’t see an explosive situation,” he says.

In a note, Magalu said it ended the first quarter with an adjusted net cash flow of R$1.6 billion and a total cash flow of R$8.5 billion, considering cash and financial investments of R$2 billion and available credit card receivables of R$6.5 billion. Guararapes, Americanas, Renner and C&A declined to comment. Centauro and Via declined to comment, citing a quiet period before the release of their earnings reports.

*By Lucinda Pinto — São Paulo

Souarce: Valor International

https://valorinternational.globo.com/
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Stock analysts revise price targets amid high inflation, interest rates

They are having to work twice as hard to keep models up to date

27/07/2022

These are tough times for everyone, especially for those who make a living out of foreseeing the future. Investment analysts, who specialize in predicting how much a stock will cost and recommending or not its purchase, are having to work twice as hard to keep their models up to date in a game that is key for them to move before the market does.

In recent months, dramatic changes in the global economic environment, with all-time high levels of inflation and interest rates, have forced analysts to revise their projections for stocks. Last week, the European Central Bank adjusted rates for the first time since 2011, for instance. Here in Brazil, a survey carried out by Valor shows that in some industries more sensitive to price increases, there has been an 80% reduction in the target prices of companies covered by banks and asset management companies over the last three months.

As reports to clients show, analysts are rushing to update “macroeconomic assumptions” –inflation, interest rates, and higher cost of capital – which invariably changes the central mechanism in calculating a company’s value: the discount rate.

To determine the “fair price” of a company, typically for a 12-month term, analysts project its cash flow for the next few years and then bring it to present value using a discount rate, which tries to balance the expected return with the risks involved.

“The discount rate is the more artistic side of company analysis and asset management,” writes asset manager Alexandre Póvoa in the book “Valuation — Como precificar ações” (“Valuation – How to price stocks”). It is an art that involves “variables that interact with each other,” for which there is no “scientifically correct answer.”

The performance of companies – one of the most important variables – seems to resist well the macroeconomic instability, which is a great unknown at the moment. One example is the constant adjustments economists are making in their GDP growth projections: they went to 2% in the most recent round of revisions from zero at the beginning of the year. The very polarized election in October is not much of a help as analysts struggle to find fair prices compared with current prices.

Recent signs of cooling inflation in Brazil, which came in the mid-month inflation index IPCA-15 data released Tuesday, may force a fine adjustment upwards – the index is known as a reliable predictor for official inflation. If the global outlook worsens even more, another round of target price cuts may come, but this time because of another variable, which is profit growth potential.

This is because regardless of companies having “their homework done,” as analysts like to say, it is very difficult for them to have a surprising growth when everything is going badly abroad.

The survey conducted by Valor with reports from 16 banks and asset management companies that cover several industries shows that the three basic categories of recommendations – buy, sell and hold – have changed little since the beginning of the year, with a strong preponderance of buys. According to the analysis, 72% of 634 recommendations were buy, 25% hold, and 3% sell. In March, the ratio was 71%, 25% and 4%, respectively.

Yet, prices changed dramatically. Sectors linked to the so-called cyclical consumption are among the hardest hit by the general course correction. In retail, which includes large chains such as Americanas, Magazine Luiza and Via, the price target reduction reached 80% of the covered stocks. In segments with better performance, such as oil, upward adjustments predominate, albeit in a more modest proportion.

“Some industries are more resilient, more protected against inflation,” says Antonio Junqueira, head of Latin America research at Citi. “In industries like electricity, for example, it happened less [price target changes] because many companies are natural monopolists, which operate under regulations that define how much money they make. Lights are on in your house regardless of whether GDP grows 2% or falls 2%,” he says.

Gabriela Joubert — Foto: Divulgação

Gabriela Joubert — Foto: Divulgação

The reduction of a price target is not decided overnight. This work usually takes up to three weeks, says Gabriela Joubert, head of research at Inter, a Brazilian digital bank now traded on the Nasdaq. “An analysis of a large exporting company, for example, includes many variables. You have to get data, talk to the company, check information with clients, the network of contacts, distributors, and people in China, and only then change spreadsheets, update numbers, and write a report.”

Inter typically revises models once every six months, but the interval has been reduced to three months. “The macro team is revisiting its estimates more frequently, and as this happens, we need to change our models as well,” Ms. Joubert says.

In calmer times, analysts can push the macro scenario to the back burner and focus on companies and sectors, says Fernando Ferreira, the chief strategist of XP. Amid a turmoil, the work includes following closely and try to measure the impact of any news related to the zero covid policy in China or the signals from European central banks. “The staff ends up working a lot more,” Mr. Ferreira says.

Customer service work has also increased. “We started to hold more live-streaming talks and meetings with the commercial team to try and calm things down a bit,” says Ms. Joubert, with Inter.

“Many investors don’t understand why there are so many changes, so we explain the change in fundamentals,” says Mr. Ferreira, with XP. “Analysts don’t have a crystal ball. They update their assessments according to what is happening.”

The big challenge for the sell side – bank analysts who make recommendations to clients, while the buy side are the managers who manage portfolios – is to be able to change target prices before the stock market in general. “Sometimes this is very difficult, because the market usually moves first,” says Mr. Póvoa, who has worked in both sides and currently is head of analysis at Meta Asset. Besides this, changes must be approved by other departments, such as compliance, which makes the work a little slower than on the buy side.

Regardless of the side, what matters in times of high volatility such as this one is that analysts manage to keep a cool head. “It is very important not to get too excited during the good times of the cycle and not too depressed during the bad times,” says Mr. Junqueira.

*By Nelson Niero, Rita Azevedo — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Principal Financial Group picks CEO, plans expansion in Brazil

U.S. group has appointed first CEO in the country since debut in 1999

07/26/2022

Robert Van Dijk — Foto: Silvia Costanti/Valor

Robert Van Dijk — Foto: Silvia Costanti/Valor

Principal Financial Group, a U.S.-based conglomerate with $714 billion under management, has appointed a CEO in Brazil for the first time since its debut in the country in 1999. Robert van Dijk will be in charge of developing and executing the strategy and expansion in the country and making the connection between the local business and the international brand better known.

In Brazil, Principal owns Claritas, an asset management company with R$9 billion under management, and Brasilprev, a joint venture with Banco do Brasil with R$328.7 billion – considering its 25% stake. It has a similar stake in Ciclic, a digital insurance brokerage platform.

According to Barbara McKenzie, senior executive director at Principal Global Investors, the idea of having local leadership is aligned with what Principal has in other markets it considers key to its expansion. “We had one person taking care of each one of the brands, but it was necessary to have a more holistic approach to the business,” she told Valor. “Robert’s presence helps tie the operations of the three companies together better, bringing more traction to the growth as a whole.”

Mr. Van Dijk is a well-known name in the Brazilian capital and investment market. He was the head of Anbima, the association that represents the sector, led Banco Votorantim’s asset management business and spent more than a decade at Bradesco’s asset management company. He had been working recently at Hieron Family Office, a wealth management firm he co-founded in 2019. In his 40-year career, Mr. Van Dijk has previously worked as an adviser to Bovespa and BM&F, the former stock markets now reunited as B3.

The executive will report to Roberto Walker, CEO of Principal Latin America, and Pat Halter, CEO of Principal Global Investors, Principal’s asset management arm.

Despite the interest rate hike in the country, with the key interest rate Selic back to double-digit levels, and the currency depreciation, Brazilians investors are going global, which encouraged the company to strengthen local operations, Ms. McKenzie says. “The timing is never going to be perfect, but as the group looks at the importance of the market and the demand, in the long run [the adverse environment] gets diluted, so it makes sense.”

Principal started in Brazil through its partnership with BB in Brasilprev before buying a stake in Claritas in 2012. The remainder of its stake in the asset management company was acquired in 2016. “The expectation is to continue to see demand for international assets and increasingly be known as Principal,” the executive continues. The individual brands will co-exist but giving greater visibility to the global brand.

Some products from Principal’s international portfolio are already offered in the Brazilian market through third-party platforms. Ciclic can be a channel to deepen distribution, but this is not in the group’s immediate plans.

*By Adriana Cotias — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Broadband internet improves agricultural production, workers’ lives

Survey shows 71% of households in rural areas had internet access last year in Brazil

07/25/2022

Cristian Dalben — Foto: Divulgação

Cristian Dalben — Foto: Divulgação

The arrival of broadband internet to the Santo Antônio do Desejado farm, in Nova Ubiratã, a municipality in Mato Grosso with 11,000 inhabitants, spared farmer Cristian Dalben from a labor problem. “In the beginning, we didn’t have so much difficulty in hiring people because there was no internet. Today, I have 26-year-olds working with me,” he says, “and this younger generation doesn’t stay on a farm without a connection.”

Internet came to the property about 10 years ago, but via radio, with very low speed and limited to the farmhouse. “To shoot a video? No chance. Pictures were also difficult,” recalls the rural producer. Mr. Dalben managed to bring fiber optic connection to the farm three years ago, which, according to him, increased the satisfaction level of the workers. “Our employees are happy to be on the farm because they can have fun during their free time, watch Netflix or just surf the Internet,” he says.

The report on the benefits that the arrival of quality internet has brought to the workers of the Santo Antonio do Desejado farm shows that improved access represents more than just the possibility of using connected agricultural machinery or technologies of the so-called Internet of Things (IoT): it also changes the daily lives of all people involved in production. And this is no small matter.

According to a recent survey by the Regional Center for Studies on the Development of the Information Society (Cetic), 71% of households in rural areas had internet access last year in Brazil, an advance of 20 percentage points over 2019. Of this total, 58% had fixed broadband.

Mr. Dalben understands well the difference it makes to have internet access in the fields, and not only to streamline production. Thirteen years ago, when his father became ill and he had to leave Curitiba, where he was studying mechanical engineering, to take over the family business in Mato Grosso, the only means of contact with the world beyond the limits of the property was a landline phone. “I spent three years isolated,” he says.

Today, broadband keeps the farm connected to the world, which makes workers happier and allows farmers to extract the full potential of contracted digital technologies. The farm is connected to Bayer’s Climate FieldView platform and John Deere’s Operation Center. Before the connection reached the entire area of Santo Antônio do Desejado, the investment was underused, since the sending of data for analysis only happened when the machines returned to a point closer to the farm headquarters, where there was a connection.

“Recently, I was in the United States and the people were working on the harvest of the second yearly crop corn. I was able to observe the whole farm in real time,” says the farmer. “And days ago, a machine broke down. If this had happened in the past [when there was no internet], we would have had to run into town. This time, John Deere sent an online update that solved it.”

Connectivity improves business for equipment users and also for manufacturers. “Before, the technician would leave the city, go to the farm, come back, pick up the machine, and only then go to make the repair,” says Estela Dias, tactical marketing manager for precision technologies at John Deere in the country. “We have improved this service. Now, we can access the monitor of the equipment to understand the problem and go straight with the solution.”

Since 2020, a partnership between the U.S. agricultural machinery manufacturer and phone operator Claro has brought internet to an area of 2 million hectares. With ongoing negotiations, there is an expectation of coverage of more 3.5 million hectares. “Democratizing the connection in the fields also means connecting people. It helps retention [of workers in the fields], facilitates the arrival of content to them and allows advances such as telemedicine.”

Bayer, owner of the Clima FieldView platform, has been working to extend the reach of 4G technology in rural areas through ConectarAgro, an association it helped found. “Increasing connectivity in the field represents an opportunity for farmers to enjoy even more benefits and tools that help them make more accurate decisions,” says Thiago Bortoli, the platform’s head of marketing for Latin America.

The results of the farm in Nova Ubiratã are an example of the positive impacts of digital farming technology on crop productivity. Before the arrival of fast internet, Mr. Dalben produced 62 bags of soy and 100 bags of corn per hectare; now, the production is 75 bags of soy and 174 bags of corn per hectare, a performance well above the national average.

According to Marcos Ferrari, executive president of Conexis, association that represents telecoms operators in Brazil, the expansion of internet in farms has gained momentum since 2017. “This movement is expected to become even more accentuated after the auction of 5G coverage, in which companies have also committed to bring the 4G signal to thousands of municipalities,” he says.

*By José Florentino — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Telcos under pressure at regulators

Association of service providers complains at CADE, Anatel against Telefônica, TIM, Claro about sale of Oi Móvel, at CADE, Anatel

07/26/2022

The Brazilian Association of Competitive Telecommunications Service Providers (TelComp) will file this week a formal complaint with antitrust regulator CADE and telecoms regulator Anatel against Telefónica’s subsidiary in Brazil (Telefônica Brasil, owner of Vivo), Telecom Italia’s TIM, and América Móvil’s Claro about the sale of Oi Móvel.

Telefônica, TIM, and Claro appealed to the courts this month because they disagreed with the values imposed by Anatel for the offer of wholesale products to competitors. For data traffic, the regulator stipulated R$2.6 per gigabyte (GB). But the telcos’ proposals range from R$16 to R$48 per GB.

These offers are the compensation that the regulators imposed on the three telcos to give their approval to Oi Móvel’s purchase. They are remedies, or conditional measures, to ensure competition in the market with the elimination of a competitor.

The incumbents decided to challenge the prices in the approval phase. They asked Anatel to reexamine the case. In court, they obtained injunctions that suspended the obligation to submit offers.

TelComp “condemns the attitude of operators with significant market power that, before the closing of the acquisition of control of Oi Móvel, made a public commitment to society to fully comply with the remedies imposed by Anatel and CADE promptly.”

The entity will ask the courts for its inclusion in the case as a third interested party, Luiz Henrique Barbosa, head of TelComp, told Valor. Claro’s case is in the 1st Federal Civil Court of the Judiciary Section of the Federal District (Brasília); those of Vivo and TIM are in secrecy.

Mr. Barbosa pointed out that the telcos’ retail price is at R$2.8 per GB. “The price Anatel has set is not detached from reality, nor is it a subsidy to competitors. It is not below cost. If they [the three telcos] say this, it is because they are practicing predatory pricing.”

Anatel and CADE officials are studying measures, including undoing the sale if the telcos do not accept the fixed prices. “If it is not possible to undo the operation, they can be fined,” said Mr. Barbosa.

*By Ivone Santana — São Paulo

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Yara issues R$520m in agribusiness receivables certificates

Resources will be used to facilitate fertilizer purchases by 26 input dealers and cooperatives

07/25/2022

The Brazilian subsidiary of Norwegian Yara, one of the largest fertilizer suppliers in the world, has just announced the issuance of R$520 million in Agribusiness Receivables Certificates (CRA), the fourth operation of this kind in the country.

The resources of the issuance, structured by the securitization company Ecoagro, with the distribution of the fixed income bonds to investors coordinated by Banco Alfa, will finance the purchase of fertilizers by 26 input dealers and cooperatives. The multinational’s main purpose is to facilitate the acquisition of inputs from its client network, reinforcing its customer loyalty strategy in the Brazilian countryside.

This is the largest CRA operation that Yara has ever made in the country. The amount is higher than the total of the two operations conducted in 2021, when it raised, in total, R$ 335 million.

The demand for rural credit has increased this year, and money, like fertilizers, is more expensive in Brazil. “We understand that meeting our customers’ business needs goes beyond having the best solution in plant nutrition,” says Maicon Cossa, Yara’s commercial vice president in Brazil.

The focus is soybeans, but there are no restrictions related to crops. The movement ends up benefiting agricultural producers, who, in turn, get better payment conditions to buy inputs at the dealers. “Even though this is not Yara’s core business, and, for this reason, we seek partners for these operations, the idea is to contribute with the producer in seeking financial solutions to make cultivation feasible,” Mr. Cossa says.

According to him, Yara does not measure the universe of farmers that it reaches with the credit offer, since it does not control how resources are passed on in the distributor channel. The executive states, however, that the network of 26 dealers and cooperatives reaches mostly small and medium producers and that the action can reach “much more than 2.000 farmers”.

According to Milton Menten, CEO at Eco Securitizadora, the resource was taken by the borrower (input dealers) at interbank deposit rate (CDI) + 1.80%, which he considers a “very good rate at this moment of the market.” The deadline for repayment is one year, much longer than the one practiced by the fertilizer industry. According to the financial agents, the demand exceeded the offer.

“The engineering of the operation and the investor’s appetite offered credit under conditions that dealers would not have individually, says Augusto Martins, head of Corporate & Investment Banking at Alfa.

“The interest in agribusiness grows every semester because it reflects the advance in governance structures of the companies. To access the capital market, it is necessary to follow a rite and a series of conditions that the Securities and Exchange Comission (CVM) imposes,” Mr. Martins says.

Eco Securitizadora issued R$8.4 billion in CRA in the first semester, an amount three times higher than in the same period of 2021. Alfa, in turn, coordinated R$3 billion in operations in the electric, sanitation, and agricultural sectors in the first six months of this year, which represented an increase of 51%.

*By Érica Polo — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Nautical sector expands business with marinas, ‘Airbnb’ of boats

Favorable tide is helping both big players, such as BR Marinas, and newcomers, such as Fleetss

07/25/2022

Isabella Salomão — Foto: Leo Pinheiro/Valor

Isabella Salomão — Foto: Leo Pinheiro/Valor

The Brazilian journalist and advertising professional Isabella Salomão noticed one day that the winds were blowing in favor of the nautical sector and had an idea. She then developed an application that is intended to become, as she says, the “Airbnb of the seas”. Named Fleetss, the app focuses on the rental of boats, done safely for owners and users through a collaborative economy platform, with reviews of tours and boats.

The favorable tide is also helping the big players in the sector: BR Marinas plans to install its first unit outside Rio de Janeiro soon. The company had a revenue increase of 17% in 2021. It reported growth during the pandemic, which, unlike other sectors, stimulated the sector.

According to the Brazilian Association of Boat Builders and their Implements (Acobar), the segment closed the year 2021 with a growth of approximately 20% (the Brazilian GDP that year had a high of 4.6%, after a fall of 3.9% in 2020).

According to the creator of Fleetss, the application is already available for registration of boat owners and to be downloaded by users. “Initially, we gave priority to the prospection of boats and adjustments to the system. On July 10, we started to rent the boats”, says Ms. Salomão.

One of Fleetss’ goals is to serve a growing market and, at the same time, offer security to boat owners and users. The model adopted, and the inspiration for the application, is Airbnb. When closing the use of a boat, the client pays the rent — which is retained and released only at the end of the tour. This way, the user has the guarantee that he will not be the victim of a scam, while the owner of the boat knows that she will be paid for the service offered.

“We had a good surprise: we were aiming for 150 registrations, but we already have 290 boats in the system. The application with the largest number of boats and the only one with national coverage [17 states]. We are an Airbnb exclusively for boats, of various types, sizes, and capacities, such as catamarans, speedboats, yachts, and sailboats,” says Ms. Salomão.

Owners need to provide a sailor to navigate. But, in many cases, as the owners have a driving license, they prefer to be the tour guides. The rentals vary greatly in price, from R$600 to approximately R$25,000 in the case of yachts.

Fleetss has currently 2,000 users registered to rent the boats. Ms. Salomão explains that the idea is to use the concept of the collaborative economy: “The application has space for a description of the boat, with photos and comments from customers. After the tour, the owner receives an evaluation. The goal is to make something safe for both parties.”

The app receives 5% of the rent, while the fee for users is 10%. “What is left for Fleetss is 15%, a rate that we consider fair in the market, in which other companies have been charging more,” says the creator. In the future, the goal is to expand the service to other countries, starting with Mexico and the United States. In addition, Ms. Salomão is thinking about creating a project for the sale of boats.

*By Denis Kuck — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/
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Sírio-Libanês forms partnerships to create health plans

First contract was closed with lawyers’ association; another one is under negotiation with health insurance company

07/25/2022

Daniel Grecca — Foto: Silvia Zamboni/Valor

Daniel Grecca — Foto: Silvia Zamboni/Valor

The Sírio-Libanês Hospital is diversifying its operations by forming partnerships with health insurance companies in the creation of health plans in which the hospital’s entire network is accredited – a verticalization that has the credibility of the brand to its advantage. It is also expanding its primary medical care services to companies that hire Sírio to offer this type of care to their employees. This week, the fifth unit dedicated to primary health care was opened in São Paulo.

“I am a great believer in the primary care model, which focuses on prevention and not on disease. With digitalization, more people have access to private health care and access to quality care. With the growth of prevention actions there won’t be as many large hospital structures like ours, but high complexity hubs,” said Sírio-Libanês CEO Paulo Nigro.

The first contract of a group health insurance plan that includes just the doctors and laboratories from the Sírio-Libanês hospital was signed with the Lawyers’ Assistance Fund, from Brasília, where the hospital has a facility. The lawyers and their dependents also have the option of choosing health plans with an open network. The hospital is in final negotiations with a health insurance company to offer this same product format, which in general has a lower cost than health plans with a broad service network.

“In this model, there is a family doctor who accompanies the patient’s entire journey. The consultations with specialists, exams, and hospital procedures are done internally, with our own protocols,” said Daniel Grecca, head of population health at Sírio-Libanês, the area responsible for these partnerships.

Mr. Grecca’s department is responsible for a portfolio formed by 180,000 people, who are health plan users or employees whose companies or health insurance hire Sírio for certain services such as primary medical care, digital emergency care, and management of chronically ill patients, one of the segments that most increase the cost of the health plan.

“With digitalization, it is possible to offer a variety of services. Currently, 60% of the hospital’s consultations are digital, the resolution rates are 80%, and satisfaction rates reach 95%,” said Mr. Grecca. The online service will allow Sirio to serve other markets. Today, its operations are restricted to São Paulo and Brasília, but the idea is to partner with other establishments in case there is a need for face-to-face service.

The creation of health plans with specific hospitals began about three years ago in the market when Amil withdraw accreditation of hospitals from Rede D’Or. The measure affected Rio de Janeiro, where the main hospitals belong to Rede D’Or. To attend this niche and to be able to offer a product at a price like Amil’s, Bradesco developed a health insurance plan with a network of accredited doctors and hospitals composed of D’Or’s hospitals and doctors. Many Amil users migrated to this product, which had a great demand.

Besides, it is a way to compete with Hapvida/NotreDame Intermédica, which has a wide vertical network and a much lower cost.

*By Beth Koike — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Solar becomes third source in power generation mix

Large solar farms and small self-generation projects generate 16.6 GW, which surpasses natural gas and biomass

07/20/2022

There are a total of 16.4 gigawatts (GW) of solar power in large solar farms and small self-generation projects — Foto: Pixabay

There are a total of 16.4 gigawatts (GW) of solar power in large solar farms and small self-generation projects — Foto: Pixabay

Solar photovoltaic power has surpassed the installed capacity of natural gas and biomass thermoelectric plants and is now the third largest source in the national power generation mix, behind only hydroelectric plants and wind farms, according to a survey carried out by the Brazilian Association of Solar Power (Absolar), with data from the Brazilian Electricity Regulatory Agency (Aneel).

There are a total of 16.4 gigawatts (GW) of solar power in large solar farms and small self-generation projects, compared to 16.3 GW of natural gas and 16.3 GW of biomass. According to Absolar, since 2012 the solar source has brought Brazil more than R$ 86.2 billion in new investments, R$ 22.8 billion in revenue to the public coffers, and generated more than 479,800 jobs. This has also avoided the emission of 23.6 million tonnes of CO2 in electricity generation.

For Carlos Dornellas, director of the entity, the growth of solar power in Brazil, through large solar farms and self-generation in homes, small businesses, rural properties, and public buildings, is fundamental for the social, economic, and environmental development of Brazil.

“The solar source helps to diversify the supply of electrical energy in the country, reducing the pressure on water resources and the risk of even more increases in the population’s electricity bill,” says Mr. Dornellas. “The large-scale solar farms generate electricity at prices up to ten times lower than emergency fossil thermoelectric plants or electricity imported from neighboring countries, two of the main responsible for the tariff increases on consumers.”

A large photovoltaic farm becomes operational in less than 18 months, from auction to electricity generation. On the other hand, the source is intermittent and does not generate energy during the night.

Hydroelectric plants occupy the first position in the generation power mix, with more than 109 GW of installed capacity, and wind power follows in second place, with 21.9 GW of power.

*By Robson Rodrigues — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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“New” Eletrobras among ten most valuable companies on B3

Analysts are resuming coverage of electric company after privatization

07/20/2022

Eletrobras: the largest power utility in Latin America gained ten positions and overtook B3 giants — Foto: Ana Branco/Agência O Globo

Eletrobras: the largest power utility in Latin America gained ten positions and overtook B3 giants — Foto: Ana Branco/Agência O Globo

After a self-imposed quarantine, analysts are slowly resuming coverage of the “new” Eletrobras, now privatized. The company’s investor website reports that it is covered by 12 banks and brokerage firms. It turns out that all were directly or indirectly involved in the public offering that led to the privatization and therefore decided to suspend coverage.

There is talk on Faria Lima Avenue, São Paulo’s financial hub, that this was a ban by Brazil’s securities market authority CVM. This is not the case. “The CVM rules don’t prohibit reporting, but in practice that’s what happens,” said Lucy Sousa, president of the Association of Capital Market Investment Analysts and Professionals (Apimec).

It does not forbid it, but the regulator of the capital market has already suspended offers because of news in the press, including raids on brokerage houses. So, although there is a separation between the analysis segment and the sector that makes the public offers, the investment bank, nobody says or writes anything to avoid any suspicion of conflict of interest. The investor who depended on this information had to look for it in the smaller, so-called independent houses, which, in these circumstances, is still an appropriate identification.

Now freed from the shackles of conflict, analysts are talking wonders. At a time of widespread cuts in target prices in an environment of inflation and high interest rates, with valuation professionals in a frantic race to adjust their models to rapidly changing scenarios, Eletrobras shines among the few exceptions.

The company’s shares had already been rising with the prospect of the federal government’s exit, but it was a risky bet in a presidential election year in which one of the candidates is radically against privatization and even threatened to reverse it if elected. The bravado did not prevent the privatization, which put the power utility on a new level, reflected in the valuation of its shares.

At the end of June, both common and preferred (PNB) stocks hit nominal record highs of R$46.20 and R$46.70, valuations of 44% and 50%, respectively, in the semester, while benchmark stock index Ibovespa fell 5.18% and the IEE, the electric sector’s index, rose 5.48% in the period. In the public offering, in May, the common share was sold by the federal government for R$42.

The largest power utility in Latin America gained ten positions and overtook B3 giants such as Suzano, JBS and Banco do Brasil in the ranking of the largest publicly traded companies by market capitalization. On Wednesday, it was vying for seventh place with BTG Pactual, valued at around R$100 billion. Twelve months ago, the then state-owned company was worth R$68 billion.

Analysts expect more. With expectations of more cost cuts and efficiency gains, the projected prices for twelve months range from R$62 to R$67 for the common share and from R$62 to R$71 for the PNB, potential appreciations of about 50% in relation to this Tuesday’s prices.

Four banks resumed coverage, all with a buy recommendation – Bank of America (BofA), BTG Pactual, JP Morgan and Credit Suisse. As a consequence of the new private management, they are forecasting better results. With this, a new level of dividends, closer to what is usually expected from a company in the electricity sector. And a migration to Novo Mercado, a section of the B3 exchange with stricter governance rules, is also expected soon.

BofA’s target prices are R$62 (common shares) and R$67 (preferred stock, PNB). BTG analysts, with a price of R$62 (common stock), consider it one of the cheapest shares among those monitored by the bank. For JP Morgan, it is the main choice of the sector, at R$64 (common share). Credit Suisse sees a “bright future” and sets prices of R$67 (common stock) and R$71 for PNB.]

*By Nelson Niero — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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