In recent years, the commitment to capex of infrastructure companies has become one of the main concerns of investors — especially after the brutal increase in the cost of raw materials.
In this context, BTG Pactual believes that the company with the greatest potential to surf the scenario is Santos Brasil, which operates three container terminals, the largest of which is in the Port of Santos.
“In times of high commitment to capex and high inflation, we prefer companies with more controlled leverage and good earnings growth,” wrote analysts Lucas Marquiori and Fernanda Recchia.
Santos Brasil closed the second quarter with a net cash position of R$ 670 million.
According to BTG, the company combines a valuation discounted, an expressive expansion of EBITDA this year and in 2023, and a healthy balance sheet.
The comments were made in a comprehensive report in which the bank reviewed the entire infrastructure sector, increased the target price of three companies (Santos Brasil, CCR and Wilson Sons), lowered two (Ecorodovias and Hidrovias do Brasil), and kept the price of the stable course.
At Santos Brasil, the target price for 2023 rose from R$11 to R$13 per share, an upside of 61% from the screen price. (Analysts increased the cost of capital in the model, but also tweaked the revenue and EBITDA estimates for this year and 2023. The revenue forecast was raised by 4% and 6%, respectively; EBITDA by 30% and 36% .)
BTG said that Santos Brasil is a case of high conviction by three factors: one momentum strong for short-term earnings spurred by an environment of rebounding volumes and prices; a solid balance that gives firepower to new opportunities; and the fact that the regulatory environment in the ports sector has improved in recent years, with a vast pipeline of auctions for new ports ahead.
On the downside, BTG said that the auction of STS10 (another container terminal at the Port of Santos, and potentially a competition for Santos Brasil) is still a overhang in the stock — even though the current valuation of 6.5x 2023 EBITDA “already priced in this risk.” (The multiple is an almost 50% discount from the company’s historical average.)
The companies with the highest capex commitment in the infrastructure sector are Ecorodovias (R$32 billion) and CCR (R$35 billion); while Santos Brasil (only R$2.2 billion) and Wilson Sons (less than R$400 million) have the lowest projected capex.
In terms of leverage, Santos Brasil is the only one with negative leverage (-1.2x). The most leveraged is Hidrovias do Brasil (5.7x), followed by Ecorodovias (4.1x).