THE Multilaser (MLAS3) is a multifunctional company: it manufactures TVs, office accessories, notebooks, household items and even oximeters. Despite all the potential, the company’s papers accumulate 26% drop.
So much for the XP how much for the Bank of America, which started hedging the company’s shares, this represents more of an opportunity than a risk. Both analysis houses indicated purchases for the paper, with a target price of R$ 15 and R$ 16, respectively, a potential increase of around 60%.
In XP’s assessment, the fall was caused more by a macro movement that penalized all recent IPOs due to the lower liquidity of these shares and, therefore, is unjustified.
For Bank of America, Multilaser enjoys a rich set of opportunities in terms of brand extensions, new categories and licensing agreements, acquisitions, geographic expansion and market share growth.
The bank expects the company to generate more than R$7.8 billion in incremental sales opportunities over the next five years.
“Bigger elements include the joint venture of smartphones like Nokia, Toshiba smart TVs and ZTE Internet service infrastructure. Recent changes in the law that mandate broadband access in public schools can significantly increase this potential”, he adds.
In addition, the company should benefit from technological improvements, broader connectivity and innovations, he says.
scale and diversification
In XP’s view, Multilaser brings together the best of both worlds: scale and diversification. The company has a distribution network with more than 1.5 thousand sales representatives spread across Brazil, which allows the company to reach from small local retailers to the biggest brands in the country.
“We see Multilaser’s scale and distribution network as important barriers to entry, since the company is capable of being one of the most competitive players in each category in which it operates since the 1st day of operation”, he argues.
Also according to the broker, there are two important catalysts that can materialize in the short term:
- new partnership and licensing agreements, which will be accelerated given the current macro/political uncertainty;
- mergers and acquisitions, both of which would strengthen and complement its current portfolio.
Is it cheap?
Last but not least, analysts say the stock is cheap and offers a good entry point.
XP calculates the company’s price-to-earnings (P/E) at 8.5x, a 36% discount from its peers. As for BofA, this number is at 13x for 2023, which is also a nice difference in relation to the main players in the sector.
Despite this, the recent exit of the market of ZTE Corp, Sony and LG highlights the biggest challenges of operating in Brazil.
The risks for the Multilaser they also include weaker demand, difficult future comparisons, exposure to imports, competition and loss of tax incentives.
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