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SÃO PAULO – After three days of earnings, the Ibovespa registers a significant drop, amid external bad humor with worse than expected data on unemployment insurance claims in the US. USA And euro zone activity data showing the impact of the coronavirus on the economy
Corporate news here is also busy, with an emphasis on Bradesco’s sharp drop in shares of up to 7%, after the bank posted a drop in earnings of nearly 40% amid the multi-billion dollar provision for the coronavirus (see more by clicking here) Other banks, such as Itaú, Santander and Banco do Brasil registered a significant drop, between 3% and 4%, after the balance sheet.
Petrobras shares, on the other hand, opened in a drop of approximately 2%, but reduced losses to zero in a session of strong oil growth, both brent and WTI, with gains of approximately 10%, amid production cuts and preliminary signs of recovery in demand. Vale also posts losses of around 2%.
On the recommendation radar, Bradesco BBI lowered the recommendation for BRF to neutral, and BRFS3 shares fell about 3%.
On the other hand, in a scenario of return of the rise of the dollar, which increases more than 1% and exceeds R $ 5.40, the shares of exporting companies, such as Suzano (SUZB3), which advanced more than 2% Take a look at the highlights:
Bradesco recorded a recurring net income of R $ 3,753 billion in the first quarter of 2020, a decrease of 39.8% compared to the same period last year, amid the provision of R $ 2.7 billion for absorb losses with the increase in defaults expected with the coronavirus crisis. The accounting profit was R $ 3,382 billion, 41.9% less.
With this drop in earnings, the return on capital fell from 20.5% in the first quarter of 2019 to 11.7% in the first three months of this year.
Bradesco says that it also recognized R $ 2.7 billion in the quarter, in addition to the pre-existing portion of R $ 2.4 billion, reserved for possible losses in an adverse economic scenario,
totaling a provision of R $ 5.1 billion.
According to the institution, the provisions were reinforced as a result of the adverse economic scenario that may result in an increase in the level of defaults amid the bankruptcy of companies, increased unemployment and the degradation of the value of guarantees.
Bradesco registered R $ 6,708 billion in net expenses with bad debt reserve (PDD), in the expanded criteria, including amortizations of financial securities, to protect itself from the impact of the coronavirus on customers, an increase of 86.1% compared with the same period. 2019 and 68.5% above the fourth quarter of that year.
The bank’s financial margin, in turn, increased by 2.9% compared to the first quarter of last year and totaled R $ 14.5 billion. Total assets, on the other hand, totaled R $ 1.49 trillion, an increase of 7.1% in the annual comparison base.
The expanded loan portfolio was R $ 655.09 billion, an increase of 17% annually. The increase was led by operations with legal entities with an increase in demand from large companies at the beginning of the pandemic, of R $ 415,880 billion, a growth of 6.6% in three months and 15.6% in 12 months. The personal portfolio totaled R $ 239,214 billion, an increase of 2.6% compared to December 2019 and 19.5% in the annual comparison.
Revenue from services rendered totaled R $ 8,283 billion in the period, an increase of 2.6% compared to the same period of the previous year. Operating expenses fell 0.4% to R $ 11,757 billion.
The default of the credit portfolio: the ratio of operations over 90 days past due was from 3.3% in December 2019 to 3.7% in March 2020. In annual terms, there was an increase of 0.4 points percentage.
Morgan Stanley Bank assessed that Bradesco had a “tough” first quarter in 2020. However, it was not as negative as it might seem at first glance.
The US bank mentions that Bradesco’s results were affected by the fall in Selic’s basic interest rate, by the fewer number of business days in the period and, finally, by the sharp increase in provisions for non-compliant clients. , which was R $ 7.3 billion in the first quarter, “46% more than our projection of R $ 5.03 billion,” said Morgan Stanley.
As the US bank points out, Bradesco anticipated and reserved other provisions of R $ 2.7 billion, anticipating difficult days ahead with the coronavirus epidemic. Bradesco suspended the guidance for 2020 this morning. “Excluding the provisions, the results do not look too bad, with a drop of only 4% compared to the fourth quarter of last year, a very normal effect in the transition from the last quarter of the year to the first of a new year”, Morgan Stanley comments.
Banco Itaú BBA rated Bradesco’s balance sheet published this morning as negative. In addition to provisions, BBA also noted that there was a drop in insurance sales and trade overall. As a positive factor, BBA noted that Bradesco managed to reduce costs in the period.
Credit Suisse bank also rated Bradesco’s result as negative. “We see the result as negative due to the faster than expected deterioration in the asset quality indicators. Insurance results were also disappointing. Management profit reached 38% below market expectations. On the positive side, there was growth in loans to companies ”, evaluates Credit Suisse. The CS maintains a performance rating above the average of Bradesco’s shares, with a target price of R $ 41.82 for 2020.
Companhia Energética de São Paulo reported last night that it had a net income of R $ 53.8 million in the first quarter of 2020, reversing a loss of R $ 158.2 million in the same period of 2019. Cesp attributed the return to profitability a 63% drop in the cost of purchased energy, equivalent to R $ 141 million. According to the company, this saving was possible thanks to “better management and analysis of the energy balance”.
Cesp’s results really showed improvement. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) were R $ 336 million, compared to R $ 41.5 million in the first quarter of last year. The adjusted Ebitda margin increased from 12% in the first quarter of 2019 to 73% in the first quarter of 2020.
Cesp’s net income increased 30% during the first quarter of last year, to R $ 460.5 million in the same period this year. The company generated 1,105 MW of energy on average, 3% above the 1,077 MW generated in the first quarter of 2019.
It is worth noting that Cesp made virtually no investments in the first quarter and its generation capacity is concentrated almost entirely at the Porto Primavera (SP) plant. Thus, the highlight in the first quarter was the entry into operation of an energy purchase and sale unit, called Cesp Comercializadora.
“Cesp entered the energy commercialization market to obtain results through the variation of energy prices, within the pre-established risk limits,” explains the company. Cesp reported that it ended the first quarter with R $ 950 million in cash, a better situation than at the end of March 2019, when the cash was R $ 741 million. The company reported that its net debt was R $ 1 billion at the end of March this year, less than the R $ 1.4 billion in the first quarter of last year. The net debt / Ebitda ratio had a drastic reduction, from 4.0 times (4x) to 1.0 times (1x) in the first quarter of 2020.
Multiplane (MULT3)
Multiplan, one of the largest shopping center management companies in Brazil, published its balance for the first quarter of 2020 yesterday.
The company reported that it had a net profit of R $ 177.7 million, an expansion of 93.3% over the net profit of the same period last year. The profit before taxes, interests, depreciation and amortization (Ebitda) was R $ 343.6 million in the first quarter of this year, an increase of 49.1% compared to the same period in 2019.
The company’s net income advanced less, 5.9% during the first quarter of 2019, to R $ 325.9 million in the first quarter of 2020. Multiplan’s results were affected by the arrival of the coronavirus epidemic in Brazil, since March, and the closing of shopping centers to prevent the spread of infections and diseases. The 19 company-controlled shopping malls closed on March 18. Merchants felt the impact on first quarter results, with an 11.8% drop in same-store sales. The company says it has taken steps to mitigate the impact at more than 5,000 retailers.
“All tenants who paid their rent on time received a 50% reduction on their rent in March. The company also cut costs at shopping malls, to offer tenants a 50% reduction in condo fees and a 100% reduction in the rate of promotional funds, “Multiplan reported.
According to the company, for the April rent, to be paid in May, tenants who do not have rent and past due rates will receive a 100% reduction in the monthly rent, in the case of shopping centers that could not operate in April, some they reopened in the last week of the month. “Until April, Multiplan granted approximately R $ 300 million in reductions to its tenants,” said the company. Multiplan reported that it reduced its investments between R $ 150 million and R $ 250 million for 2020 and postponed the payment of interest on net worth, in the amount of R $ 148.4 million, from May 29 to December 31. 2020.
The company says it closed the first quarter with a cash position of R $ 1.14 billion. In March, Multiplan withdrew R $ 250 million under a line of credit. “Multiplan’s net debt, at the end of the first quarter, was R $ 2.6 billion, and the net debt / Ebitda ratio was 2.55 times (2.55x),” said Multiplan. By the end of 2020, the company will have to pay debts and fulfill the commitments in the amount of R $ 755.6 million. “The company has not changed its long-term strategy,” he said on the balance sheet.
Banks Itaú BBA and Bradesco BBI evaluated Multiplan’s first quarter results. Although it was affected by the Covid-19 epidemic since mid-March, which led to the closure of 19 shopping centers, Multiplan generated a strong net profit of R $ 177 million. As Bradesco BBI pointed out, this result was partially achieved by reducing expenses. Bradesco BBI projects that Multiplan’s recovery “due to the quality of its assets” will be faster than that of most shopping center companies, when shopping centers can reopen, which is still unknown. “Despite the non-recurring effects, Multiplan delivered a stronger than expected result in the first quarter. However, it must be remembered that the effects of the epidemic will affect the sector more in the second quarter. As the consumer in Multiplan shopping centers has higher incomes, the recovery of the company tends to be faster ”, evaluates BBI, which maintains the neutral recommendation and the price target of R $ 25.00 for the MULT3 share in 2020.
Banco Itaú BBA defined the results as “weak, but decent”. In BBA’s evaluation, the company delivered a constant net profit and tenant sales growth was good, 5.5% in the same store concept in January and February, but the coronavirus epidemic reached full operation in March . a -11% drop in sales at the same store at the end of the first quarter. “Multiplan has taken several measures to mitigate the impact of the crash caused by the coronavirus epidemic on store owners,” said the BBA. According to the bank, uncertainty prevails over the shopping center sector, which depends on the cooling of the epidemic for a safe reopening. BBA maintains the above-average, above-performance recommendation for MULT3 shares, with a target price of R $ 25.50 in 2020, 14% more than yesterday’s close in B3.
Commercial Registry (LOGG3)
Log Commercial Properties, a Belo Horizonte (MG) company specialized in the rental and management of commercial and industrial buildings, reported that it had an adjusted net profit of R $ 17.1 million in the first quarter of 2020, an expansion of 33, 3% during the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) were R $ 26.6 million in the first quarter of this year, an increase of 9% compared to the same period in 2019.
Log’s net income grew 13% during the first quarter of last year, to R $ 34 million in the first quarter of this year. As a highlight, the company that operates in nine Brazilian states states that it delivered industrial warehouses and commercial properties with a gross rental area (GLA) of 876.5 thousand square meters in the first quarter of this year, an increase of 7.3% compared to the first quarter of last year.
Banco Itaú BBA defined Log Commercial Properties’ first quarter results as “slightly positive”. BBA estimates that Log reported “modest growth in the period with the expansion of the portfolio. The operating data was healthy.” According to the bank, the company’s prospects are good, with new projects for industrial warehouses and three acquisitions of land in the project called “all for 1.” Log reported in the balance sheet that he acquired a large parcel of land in Betim (MG) and began construction of a warehouse for a steel company.
BBA noted that net profits advanced 36% in the first quarter, another positive fact. According to BBA, the coronavirus epidemic may even fuel Log’s business, because more e-commerce companies will have to rent or buy industrial warehouses and distribution centers in metropolitan regions. BBA maintains the recommendation of superior performance, above the market average, with a target price of R $ 24.00 for the share in 2020.
OdontoPrev (ODPV3)
Odontoprev had a net profit attributable to shareholders of R $ 75.2 million in the first quarter of 2020, 22.8% less compared to the R $ 97.4 million registered in the same period in 2019. Revenue from The company increased 0.3%, from R $ 453.6 million to R $ 455 million.
Ebitda fell 21.2% to R $ 111.5 million. In adjusted terms, it was R $ 112.2 million, a decrease of 7.6%. The adjusted Ebitda margin was 24.7%.
The company had 7.4 million beneficiaries in the period, with another 64,000 clients in the quarter. The accident rate was 45.8% compared to the rate of 44.6% in the fourth quarter.
Banco Itaú BBA evaluated the results of the first quarter of 2020 published by Odontoprev as Neutral. According to BBA, although net income has exceeded expectations, plan sales to individual clients were weak, with the loss of 5.8 thousand clients.
BBA noted that there was an advance in sales of corporate plans, with 77,000 clients joining. BBA noted that the company increased its provisions by R $ 24 million, possibly anticipating a worsening of the scenario in the second quarter, due to the impacts of the epidemic on the economy. BBA preferred to maintain the average market performance, with a target price of R $ 17.00 for the ODPV3 share in 2020, an increase of 6.3% over yesterday’s price in B3.
Banco Itaú BBA evaluated as positive the balance of the first quarter of 2020 published by the Companhia de Transmissão de Energia Eletrica Paulista (CTEEP). According to BBA, both the profit before interest, taxes, depreciation and amortization (Ebitda) of R $ 600 million, and the net profit of R $ 308 million, exceeded the bank’s projections. According to BBA, CTEEP reduced financial expenses and took advantage of the fiscal advantages of the regulatory framework, factors that contributed to the good performance of the São Paulo issuer. However, BBA maintains the underperforming rating, below the market average, for CTEEP. The 2020 share price target is R $ 22.00, an increase of 13.3% over yesterday’s price in B3.
Banco Bradesco BBI downgraded the BRF rating to neutral. BBI claims that BRF’s shares performed above average, but now the scenario has changed, with the challenges of the Covid-19 epidemic, which have already led to the temporary closure of the company’s plants. BBI also notes that poultry farms tend to reduce chicken production, even with the reduction in the price of grains used as animal feed. “The reduction in grain prices should start to take effect only in early 2021. We are also concerned about the potential impact of the epidemic on the supply chain,” says BBI. However, the bank kept the BRFS3 share price target at R $ 22.00, an 8% increase over yesterday’s price at B3.
Eneva (ENEV3) and AES Tietê (TIET11)
Eneva reported that it is continuing to study, together with its advisers, the possibility of formulating a new proposal for AES Tietê, the company reported in response to a request for clarification from B3. “To date, however, no recommendation has been made to be presented to Eneva’s board of directors.”
Embraer was downgraded to Ba2 by Moody’s. The downgrade follows the end of the joint venture agreement with Boeing, which was expected to significantly improve the credit quality of the unsecured notes that would be transferred to the joint venture and, consequently, leave Embraer virtually debt-free and in a position still strong liquidity, Moody’s says in
report
But the downgrades also reflect the expected additional strain on Embraer’s financial performance and balance sheet in the coming years due to the strong impact that the pandemic caused by the new coronavirus will have on the demand for new commercial and commercial aircraft, with a period of multi-year recovery. predicted, the report says.
The negative outlook captures the high-level uncertainty surrounding the final duration and severity of the impact of the COVID-19 pandemic on global economic activity and demand for aircraft, and the likelihood of burning material in cash during the subsequent period, the agency said. .
(With Bloomberg)
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